One year ago, the annual cost of energy imported into the United States was $300 billion. Now in March 2008, the price is about $600 billion — for the same amount of energy. What can we expect to be the course of this price in the future? I expect this price to rise to a maximum and then decrease to essentially zero. U.S. importation of energy will end.
Will it end because the American people build sufficient nuclear and hydrocarbon energy generation capacity to provide this energy for themselves or because Americans do without this energy? Tragically, the answer is almost surely the latter. U. S. politicians are not showing the slightest interest in rolling back the taxation, regulation, and litigation that has stifled American energy production.
Not a single nuclear power plant is under construction in the U.S., and the current waiting period for government approval for construction is now estimated to be four years. Demonized by the myth of human-caused global warming, expansion of American hydrocarbon energy has essentially stopped, too. For technological reasons well familiar to American engineers, there are, at present, no other practical means of generating lots of useful energy.
So, if we cannot produce energy, why will we cease to import it? The reason is simple. We can no longer afford it. We are being outbid for energy in the world market.
Prices, as denominated in U.S. dollars, of the most valuable material things in the world are now rising at historically unprecedented rates. Energy, grain, metals, machines, and luxury real estate are all rising far faster than even the most extreme estimates of monetary inflation would justify.
Everywhere one turns, the price of the best of everything is being bid to levels beyond the reach of most Americans. A mundane example is found in used earth-moving equipment — for which a large auction market exists. At auctions in the U.S. of such equipment today, the newest and best one-third of the equipment is purchased by foreign buyers — the poorer, more worn out equipment is purchased by Americans.
Money is no more than a medium of exchange. Anything can be used as money. Historically, the best money has been gold. People cannot arbitrarily increase its quantity. Any generally-agreed-upon medium of exchange can be used — even, as is increasingly the case today, computer entries.
The real market exchanges, however, are goods for goods, services for services, goods for services — things of value for other things of value. The medium of exchange merely facilitates these transactions — and, if the money is sound, provides a storage medium for unspent capital.
Americans are being outbid for energy — and all other things of great value in the world market because they no longer produce sufficient things of value to offer in trade.
With a government-controlled educational system that has sharply reduced the number of productive Americans and with policies of high taxation, regulation, and litigation that constantly increase restrictions upon the activities of the productive people who remain, United States production of useful goods and services has declined to a level that
will no longer sustain the current American way of life.
So far as energy and other valuable items are concerned, the American people are now attending a world auction. They are weaker buyers than are the people who now supply most of the world’s goods. They are being outbid by these people.
Prices at this auction will simply rise until the weaker bidders fall away. These weaker bidders are over-governed, over-taxed, over-regulated, over-litigated Americans who simply can no longer compete in world markets — because their government has placed such huge unproductive burdens upon them.
As the 30% of energy that is now imported into the United States is lost to other bidders, a lot of things are likely to change. Of the remaining 70%, more than half is used for essential activities such as food production and distribution and winter heating. So, at least 60% of U.S. discretional energy use will end.
With this end will consequently come the end of many luxuries. Air conditioning, night-time lighting, vacation and other non-essential travel, non-essential computer and Internet activities, and many other things that Americans now take for granted will become unavailable to them.
It is much easier to rise in prosperity than it is to fall. The political repercussions of the coming sharp fall in American prosperity — which is now inevitable — will be severe.
As a result of this fall, Americans will either succumb to the greed, fear, irrationality, and envy that has led them to elect those who have caused these problems — thereby worsening their plight, or they will cast off their chains and rebuild their once great country. In the current election cycle, they are clearly choosing more politicians of the kind who have caused this tragic disaster. When conditions become much worse, whom will they choose?