Saturday, June 25, 2005

Mid-Year Forecast

Intelligent people know the foolishness of forecasting. No one remembers a forecast unless it is in error. The Author must admit to his addiction, so here goes:

The Economy, and this extends to the World economy, starts to drift in trouble. Economic development accelerates, but it relies on Oil for energy provision. Oil production stands at relative maximum (understand that Oil production could be doubled, but only with danger to long-term production capacity), and efficient production to achieve Conservation of existing Oil Production plant will require almost a 8-12% reduction in the supply of Oil within the next 36 months. This reduction of Oil supply will probably never be reinstated, though it may only last for 4-6 months.

An undeveloped Country engaging in industrialization can expect an average 6-8% increase in Oil consumption per year, while an underdeveloped Country should expect an average increase of around 2% per year in Oil consumption. Developed Countries should expect declining levels of Oil consumption, as efficiencies occur. Increasing Oil consumption within developed economies means inefficient allocation of Energy supplies (this is true even under conditions of a expanding economy).

Various Forecasts have estimated Oil consumption according to differing methodologies. The Author likes the ones which attempt to determine the Time necessary to double Oil consumption under current practices. Time schedules estimates range from 14 years to about 23 years--the Author likes the Later, because it incorporates almost all development delay factors which tend to suppress Oil consumption.

This knowledge integrated, the direction of the American economy can be studied. The current Housing boom consists of Housing dependent upon vehicular transport for residence. Outsourcing of physical Product demands a Transportation energy Cost which cannot be borne under conditions of reduced Oil production. Students should understand Oil production and supply is not simply a question of higher Oil prices, but remains an Equation requiring numerous variables consisting of Wellhead drilling, actual Pumping rates, transportation facilities to Refineries, actual refining capacity, and final transport to Sales market areas. All these Variables face bottleneck constrictions coming from insufficient geographic feature area, inadequate Capital stock, or the Time delay factor of Production.

Egregious uses of Oil will be the first to face constriction, as necessary Oil usage for economic operation are maintained. This Author actually expects Americans will have to cut Oil consumption by 3 million barrels per day, within the next 36-48 months. The Changeover will be rapid due to Oil Supply bottleneck, and Countermeasures should be enacted as quickly as possible.

A List of Countermeasures:
1) An immediate imposition of a $1 per gallon tax on all Vehicle fuels.
2) Recapitalization of Community Bus and Subway services.
3) Development of an automated Trolley system
4) Development of a National Sales tax based upon one Cent per 100 miles from the Product manufacture facility.
5) A Federal tax on Parking facilities in Cities, Shopping Malls, and Workplaces of $10 per Vehicle entrance which is charged to the Business to ensure non-provision of Parking alongside provision of Community Transport (At worst, businesses will maintain their own busing system).

This is how it must change! lgl

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