SOME RANDOM THOUGHTS.

What A Deal. I filled my truck for $21 bucks today. Granted, it wasn't empty, but it would have cost me $52 just a few weeks ago. Perhaps its worth the recession and huge drop in the stock market just to keep all that money from going to countries who hate us. Russia and Venezuela are already feeling the pinch. Couldn't happen to a nicer bunch of folks. Perhaps these reduced prices will help end the recession. I am an optimist. I believe it will but not right away.

Some Bad News On Energy. Just what I told you a month or so. Its hard for us to develop new energy at prices that are competitive with fossil fuels when low cost producers in the middle east can undercut your price when they get good and ready. The technology isn't quite there for renewable energy resources and you don't have to be too old to remember what happened in the 70's. Just to refresh your memory, the Department of Energy poured $174 million into Solar One, a plant created to make steam from solar energy. It opened in 1982 and was shut down in 1999 because it wasn't commercially viable. Then there was the giant coal gasification project in Beulah in 1985. It still operates but is not expected to recover its cost (much less a return on investment) until 2010. Billions have been poured into projects to develop fuel from shale and we still don't have a viable process to compete with middle eastern oil. Much of the recent increases in crude oil prices were due to speculation about "peak oil" which says that current production has peaked and will begin to decline. Tell that to the Saudis who claim that, within 20 years they will increase their proven reserves from the current 260 billion barrels to 450 billion. In case you think its just in the middle east, just about all US oil companies are replacing their reserves faster than they are depleting them.

I Don't Want to Sound Too Pessimistic. Alternative fuels can replace fossil fuels but I also don't want to make it sound too easy. We cannot depend on companies or the government to continue pouring money into alternative energy as long as we can buy it cheaper than we can replace it. I don't look for many of the current projects to bear fruit until we burn up a larger proportion of cheap imported oil.

The Government Will Save Us. They're now talking about pouring billions into the auto industry. Although I hate to see those companies fail, I wonder if we are capable of preventing it. There is talk that the loan will allow Detroit to "retool" so that they can make more hybrids and other efficient cars. If the current drop in oil prices holds, hybrids will be the last thing our consumers want to buy. The government wants to put more money into the hands of consumers with the hope that they will spend more money. That just prolongs the agony. Consumers spend more than they can afford already and they've done it with borrowed money that they can't pay back. While I agree that putting more money into the hands of consumers is not a bad idea from a fairness point of view, I don't believe it will help if the consumers do what they should do which is save, invest, and pay down debt.