When Oil Goes to $200 a Barrel, Where Will You Want to Live?
May 12, 2008
Oil is going higher.
In this run, I don't think it will stay high. I think the commodities bubble will burst. I think oil is going back to $75 or lower. I just don't think it will stay there.
As the reality of competition for oil from residents of China and India finally gets through to Americans, they will have to readjust their budgets permanently. What they are doing now will become permanent.
Americans who must drive long distances to work will have to reduce their lifestyles. A falling dollar will force this anyway.
You should make plans to move to an area that has train tracks and existing freight. If there is passenger train service, even better.
If there is local employment, this is ideal. If people can drive to work in 10 minutes, this is ideal. If the employers are less dependent on physical deliveries, this is ideal. "Sell electrons, not atoms" is Bill Myers' motto.
If you are looking for towns to buy real estate in this downturn, look ahead. Think of what $10 a gallon gasoline would do to that town. The more dependent it is on freeways to and from work, the more risky the investment is.
People must pay for gasoline. Two-income families have no leeway. Next is the monthly mortgage. People can cut back on food costs and clothing.
Day care is recession-proof. Two-income families require it. There will be more of them as the economy tightens. Fast food restaurants are not recession-proof. New car dealerships are recession-vulnerable.
Choose your career and your geography on the assumption that fuel costs will rise. There may be one last hurrah, where there seems to be hope: lower oil. Don't get sucked in. The alternatives to oil will take decades to switch to in the U.S. In the meantime, energy expenses will rise.
A good introduction to the whole question of commuting and lifestyle, click here.
For my analysis of Lindsey Williams' 1980 unrevised book on the energy non-crisis, click here.