[With debt metastasizing out-of-control and the States threatening rebellion against Washington, we asked some frequent contributors to the Rick’s Picks forum how they thought the nation would look five years from now, economically speaking. In the essay below, Ross Moyer predicts that America’s growing energy needs will force the exploitation of heretofore off-limits local regions such as the energy-rich Bakken Formation, which includes large swaths of North Dakota and Montana. He also expects physical gold to increasingly become the world’s standard of value relative to fiat money, even if a gold standard itself has not taken root. RA]
If, by some strange quirk of fate, some of us have forgotten the following fact of life, we have, of late, been only too well reminded that a great many things in the realm of human affairs can change drastically in a very short period of time. Sometimes immense transformations are wrought by acts of God, as in the horrific earthquake and tsunami in Japan; but, more often than not, it is our own collective actions that leave us absolutely stunned at how radically altered, literally and figuratively, mankind’s circumstances can become in what seems like no time at all.
With this less than cheery idea firmly in mind, I was asked by Rick to compose a piece on my vision of what the economic landscape will look like some five years hence. While I was honored to be asked, I have to admit that I’ve found the task daunting. The truth is, I have just a few firm convictions about what will constitute our collective financial and economic condition in the U.S., let alone globally, come the year 2016. Still, I do have a few ideas, so, for good or ill, here is some grist for the mill.
The events of the last few weeks and days in the Middle East and in Japan strike me as being portentous in a number of ways, particularly with respect to the unrelentingly worrisome problem of global energy supply. Putting aside the fact that I am a subscriber to Peak Oil, and, more generally, Peak Resources, it seems clear that the collective political upheaval in and around the major oil producing nations, however it may play out, starkly reminds us, yet again, how tenuous is our access to oil. In short, it is becoming evident that foreign oil, for a variety of reasons, is, despite the fearsome presence of the U.S. military, well down the path of being removed from this nation’s list of reliable energy options.
Likewise, nuclear energy, whatever the final outcome of the reactor calamities in Japan, and regardless of whether some number of the population continue to advocate on behalf of nuclear power as a worthy, even, essential, contributor to our energy needs, is likely, for political reasons, to diminish as an option, at least for a decent interval. Where does that leave us? What are our other choices, and which of the remaining ones are we most likely to have availed ourselves of as we arrive at 2016?
‘Green’ Won’t Cut It
Quite simply, our other choices include developing the so called green technologies- which, quite frankly, show insufficient capability at present to address our prodigious needs — or, less nobly, putting a full-court press on initiating domestic efforts to dig up and gouge out of the earth that which keeps the heat on, the autos running, ships sailing, freight moving etc. etc. By my lights, as 2016 comes into view, the U.S. is likely to be well down the road to shoring up its own energy needs by exploiting heretofore off-limits local regions such as The Bakken Formation. Whatever the well advertised pitfalls and difficulties inherent in fracking, and horizontal drilling consist of, they will prove to be far less of an obstacle to the collective will than trying to secure the productive capacity of oil fields in hostile regions of the world.
The Bakken Formation, for those who are not familiar with it, is a large, energy resource rich area that includes, among other parts of North America, large swaths of territory in North Dakota and Montana. As Wikipedia succinctly puts it: “Besides being a widespread prolific source rock for oil when thermally mature, there are also significant producible reserves of oil within the Bakken formation itself.“
Custer’s Last Stand
By the time 2016 appears, a sense of necessity will have long since impelled a veritable locust plague of mining and drilling operations to descend on The Bakken for the sole purpose of churning up the earth for every scrap of energy and mineral wealth available from approximately The Little Bighorn to White Butte. As many of you may know, Little Bighorn was the legendary spot in Montana where General George Armstrong Custer came a cropper at the hands of an intrepid army of amalgamated native American Indian tribes. Time will tell if Custer’s last stand will be, on some level, an apt metaphor for a major energy gambit in the heartland of America?
On a final, and rather different, note, with respect to currency, particularly the world’s tottering reserve medium of exchange, try not express surprise when I offer that the dollar will continue to lose purchasing power. That condition has been ordained, and the only question is how orderly will be the loss of the greenback’s purchasing power. I expect that as we arrive at 2016, if civilization is still a going concern, odds are quite high that physical gold will have resoundingly reestablished itself as the planet’s reference point of value. I do not believe that an old fashioned-style gold standard is in the cards, but, rather, that physical gold will float freely — it does not presently — against all fiat currency foreign and domestic. Very powerful players are positioned, and positioning for this, and a bet against the arrival of what some call “Freegold” or, what Robert Zoellick of The World Bank has dubbed “Reference Point Gold,” is a bet against, among other entities, every central bank in the world.
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Remindful of Cold Fusion two decades ago, only with a better pedigree:
http://www.mit.edu/~chemistry/faculty/nocera.html
Then there’s also the BloomBox in use in Silicon Valley:
http://bloomenergy.com/customers/