The new, ‘new economy’

Some time in the middle of the last decade excited talk about the “new economy” began to surface. All trends just seemed to be heading in one direction ”“ up ”“ giving the sense to those with little or no sense of history that the economy could only grow.

A recession became known as an anomaly ”“ the economy seemed to have matured past such annoying disruptions and the way was now clear for acquiring more and more wealth in an endless upward trajectory. Seemed to make perfect sense.

Well, we all know what happened to the economy as the result of that kind of thinking and we all know better now, right? From my perspective we have just exchanged one La-La Land for another.

The new one is based on the availability of an endless supply of petroleum, this in the face of a rising tide of evidence to the contrary. Even the U.S. Energy Information Administration at one point believed that whatever the U.S. needed to grow its economy, that amount of oil would be available.

End of discussion.

The oil men
On Aug. 8 a very important man died. He was Matt Simmons, who had spent the last 10 years of his life trying to alert anyone who would listen that our energy joy ride was headed for deep trouble.

As president of the largest investment firm specializing in energy, Simmons and Co. International, Simmons had access to the very top echelons of power and influence as well as in-depth knowledge of the energy field. The energy task force, a very secretive group chaired by Dick Cheney that convened soon after the inauguration of George W. Bush in 2001, was co-chaired by Simmons. Efforts to even find out who was in attendance, let alone what the agenda was, were unsuccessful. In any case, Simmons would surely have alerted members of the task force about the insecurity of the U.S. oil supply.

As we all know now the two oil men, Cheney and the new President Bush, kept the focus on fossil fuels and elected to put off any development of alternative fuels for the foreseeable future.
Four years later, in 2005, Simmons published “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.” It was a shot across the bow for the organizations and individuals who had heretofore managed to dominate the field with facts and figures always in harmony with the oil industry projections.

These entities include the U.S. Energy Information Administration and the Cambridge Energy Research Associates. Even Daniel Yergin, author of “The Prize” detailing the history of oil, preaches the glories of abundance. Only the International Energy Agency seems to have some solid information, though caution is recommended.

Consumption and global pressure
It was soon after the publication of Simmons”™ magnum opus that I came upon a feature article in the New York Times Magazine, written by Peter Maass, describing in detail why the amount of oil remaining in the reserves, as stated by the entities that own them, is open to serious question and here”™s why: When OPEC determines what level of oil production will be appropriate for the market at a given time, it is in the interests of each member of OPEC to overstate what his reserves are in order to receive a higher allotment. Hence the real fog that surrounds the matter of how much oil actually remains in the reserves.

The main character in the New York Times”™ piece was Salad al Husseini, a retired executive vice president of exploration and producing for Saudi Aramco. Husseini worries that the rising demand for oil will lead to the petroleum equivalent of running an engine at ever increasing speeds without stopping to cool it down or change the oil. Husseini says he does not want to see the fragile and irreplaceable reservoirs of the Middle East become damaged through wanton over-production, the result of global pressure.

Husseini”™s view of the U.S. out-of-control consumption ”“ “It”™s not our problem to tell a democratically elected government that you have to do something about your runaway consumers. If your government can”™t do the job, you can”™t expect other governments to do it for them.”

Well said.

Surviving the Future explores a wide range of subjects to assist businesses in adapting to a new energy age. Maureen Morgan, a transit advocate, is on the board of Federated Conservationists of Westchester. Reach her at maureenmorgan10@verizon.net.