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Sunday, June 15, 2008

The End of the World - Part Two




In part one of this thread, I tried to sketch a possible logical domino effect that would arise from a shortage of oil in the market, or oil that simply cost too much. I wrote that the problem would spread right throughout the economy, and gave as an example how the farmer would be hampered in raising livestock or growing produce, and what little was sent to market would cost so much that the average person would be shut out.

I also wrote of the impact on jobs and the ability to earn a living and pay the mortgage. This would bring ordinary people in conflict with one another, people who normally can be counted on to live in peace and harmony.

Well, it has started. The long gas lines are back; transportation sector workers, who are in many cases independent contractors with one or two trucks, are now feeling the pinch as they see the cost of fuel escalating and their disposable income disappearing. The truckers are on strike with ugly scenes appearing daily on the evening news.

Here in Spain, where I live, transportation of goods by road has all but come to a halt, and that includes the delivery of petrol. As I write this, several gas stations have shut down, the supermarkets have no meat of any kind, and all other consumables are fast running out.

Two people have been killed as a direct result of the conflicts on the road, and a third driver was burnt over 95% of his body while he slept in his truck. He was a strikebreaker. He is not expected to survive. Now, fuel is being delivered again by armed police escort and in convoy.

The fishermen have come into the protest refusing to sell their fish, instead they are throwing them into the street, as are many farmers who are dumping produce rather than sell it for the low profit, or no profit that sales would represent. Taxi drivers are protesting as well they might be expected to do.

What comes next: Food fights; food riots; hunger; theft of fuel and food; unemployment; homelessness; mortgage repossessions; the army on the streets, and more?


The good news is that as I write this things have returned to normal as the security forces have brought things under control. However, the root cause of the problem goes unaddressed.



Where and when did this all begin? Certainly the answer to that question will be highly debatable and complex, but I’m fairly sure that one key element was the very unwise decision for the United States of America to engage in an unnecessary war with Iraq.

I’m aware that is a controversial thing to say. However, that could not have been helpful at all. One direct impact was to weaken the dollar overseas, and that may have encouraged OPEC members to directly seek to increase the value of their product to compensate for the exchange losses suffered because oil is quoted in US dollars.

The fact remains that within a two-year period oil has gone from $35.00 a barrel to $139.00 a barrel. You don’t have to be an economist to know that such a development means big problems throughout the world. While consumers may take to the streets by the millions, the only useful thing that we can do is reduce significantly our demand. Start by asking yourself before setting off in the car, “is this trip really necessary? Can I achieve the same end by fax or e-mail or telephone?”

We did exactly that for the few days of uncertainty when petrol stations ran out of fuel. We also better organised our trips so as to optimise our fuel usage. It would be a really good thing, both for the environment and for our own economic health to make that a part of our daily routine.

Copyright © 2008 Eugene Carmichael