THE GREATEST THREAT TO THE AMERICAN ECONOMY?

A recent post highlighted the different opinions of Barack Obama and John McCain on the greatest threat to the American economy.

Here were there responses:

Obama: If we don't get a handle on our energy policy, it is possible that the kinds of trends we've seen over the last year will just continue. Demand is clearly outstripping supply. It's not a problem we can drill our way out of. It can be a drag on our economy for a very long time unless we take steps to innovate and invest in the research and development that's required to find alternative fuels. I think it's very important for the federal government to have a role in that process.

McCain: Well, I would think that the absolute gravest threat is the struggle that we're in against Islamic extremism, which can affect, if they prevail, our very existence. Another successful attack on the United States of America could have devastating consequences.

THE GREATEST “THREAT” TO THE AMERICAN ECONOMY, UNLESS AMERICA ADJUSTS TO THE NEW OIL AND ECONOMIC REALITIES, IS GLOBAL ECONOMIC DEVELOPMENT.

Surging energy demands from developing economies is the main reason for increases in oil prices. This demand, coming up against flattening supply, causes the price to increase. It is that simple.

As countries develop economically, their citizens want more goods and services. These include more rotting animal flesh (meat), cars, and bigger homes. All of these goods require oil that Americans could use to move farther away from city centers, heat McMansions and eat McDead Flesh Burgers.

LET’S PUT A NAME AND A FACE ON THE “THREAT”.

Tata is a large vehicle producer in India. In January it released the Nano, called the world’s cheapest car. The Nano will soon be released to the domestic Indian market at a price of one lakh (100,000 rupees). This equates to around $2,500 USD. Demand for the Nano and similarly low-priced autos will skyrocket in the growing Indian economy. And in China and in other developing economies around the world. Sales will be measure in the millions.

And guess what. Nanos and their counterparts will require gasoline to run. This increasing demand will cause further increases in world oil prices. Prepare to pay more for less.

WHAT THEN IS TO BE DONE. INVEST GLOBALLY, CONSERVE LOCALLY, IN THE DESERT OF THE REAL!