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Baltimore, Maryland

• Time to curb yo0ur enthusiasm for oil?
• The short road to the long energy emergency,
• Kunstler’s take on pixel pushers, falling dollars,
  rising oil and plenty more…

Eric Fry, reporting from Baltimore, Maryland…

In today’s edition of the Rude Awakening, we take a break from our recent diet of doom and gloom…to serve up a heaping portion of gloom and doom. But please don’t shoot the messenger. Sometimes bad news is the very best news that an individual can hear…especially if the news is timely and accurate.

James Kunstler’s version of bad news may not be either timely or accurate, but it is certainly outrageous and thought-provoking. Kunstler wrote a book called, “The Long Emergency,” in which he predicted and detailed the end of the privileged, energy dependent American lifestyle. Two months ago, at the Agora Wealth Symposium in Vancouver, Canada, Kunstler shocked a packed auditorium with a spirited version of this apocalyptic message.

Hopefully, Kunstler’s grim prognosis will not materialize…but aspects of it might. Either way, the issues he raises pertain directly to a wide range of long-term investment decisions. That’s why we value Kunstler’s unique, and somewhat bizarre, perspective.

Let the record state, however, that your editors here at the Rude Awakening do not endorse Kunstler’s entire perspective, nor his mildly profane vernacular. (We would have said “butthead” instead of “a**hole.”) But we enthusiastically endorse and applaud the discussion that Kunstler is spearheading.

——- Outstanding Investments Oil Report ——–

Urgent Investment Special Coverage:
 
The Full-on Oil War of 2007: Bloody New “Backlash” Set to Rocket Oil Past $150…and Send Gas Soaring to Over $6 per Gallon: Read On

Wed Sep 26 09:05:39 2007. US/Eastern

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America’s New Religion
By James Kunstler

Okay, here’s the big problem in America; we made this unfortunate set of choices to create the drive-in utopia, the happy-motoring utopia. America’s oil consumption is the greatest misallocation of resources in the history of the world. We’re not going to be able to continue this living arrangement and that makes it, by definition, the greatest misallocation of resources in the history of the world.

But we like things the way they are. So we will not change our behavior until conditions force us to change. We Americans have put so much of our resources, so much of our wealth, so much of our spirit into constructing and assembling this energy-intensive infrastructure for daily life, that we can’t imagine letting go of it.

But get this; no combination of alternative fuels or systems for running them will allow us to run Walt Disney World, Wal-Mart, and the interstate highway system. We’re not going to run those things on any combination of solar, wind, nuclear, bio-fuel, used French fried potato oil, dark matter, or all the other things that we’re wishing for, or even a substantial fraction of it.

I’m not against alternative fuels or making investment in alternative systems. But what you need to know is we’ll probably be disappointed in what they can actually do for us. They can do things for us, but not the things that we’re wishing they can do for us. One of the main implications of “the long emergency,” therefore, is that we’re going to have to downscale everything we do. So the 3,000-mile Cesar salad will not be with us that much longer.

Let’s talk about the thing that the American people really do believe: when you wish upon a star your dreams come true. This is what adults all over America believe. This is a nice thought for children, but it’s not a good thing for adults to believe. So what we’ve got now in the US is a tremendous amount of delusional thinking, especially around the issues of energy, and especially around what we’re going to do in the face of a probable energy crisis. And this delusional thinking is joined by a second idea – many people think that the leading religion in America is Evangelical Christianity, but it’s not. The leading religion is the worship of unearned riches.

This religion has now become normative throughout America. But this is a bad religion. The reason that it’s a bad idea to believe this is because it’s based on the fundamental unreality that it’s possible to get something for nothing. That’s why it has been a very bad idea to promote legalized gambling all over America for the last 30 years. I am not an Evangelical; I’m not a Christian. I’m not a campaigner for social reform, but I believe that legalized gambling is one of the most pernicious things that we’ve done to ourselves in society in my lifetime. It promotes the idea that it’s possible to get something for nothing. And when you join that idea with the idea that “when you wish upon a star your dreams come true,” you get a really dysfunctional, delusional country, unable to conduct a coherent discussion about what’s happening to us.

One of the reigning delusions is that energy and technology are the same things. If you run out of one, you just plug in the other. I had a very interesting experience about a year and a half ago. I was invited to give a talk at the Google headquarters, and I went down to the Silicon Valley, to the Google suburban office pod. The whole building was tricked-out like a kindergarten. They had the knock-hockey sets and the computer game consoles and the Lucite boxes with the gummy bears and the yogurt-covered pretzels. And you know, the impression I had was, “Wow! This is really a child-like kind of atmosphere!”

And then the Google employees came into the auditorium. These were Google millionaires: young people who had gotten in on the ground floor pretty early: engineers and executives, and had been paid in stock and stock options. And they had become millionaires by the age of 27 and they were dressed like skateboard rats. Their ass-crack was showing; they had the sideways cap on – dressed like nine-year-olds. And I gave my talk and they all got up afterwards for comments and questions. There were no questions whatsoever, just one uniform comment from 17 people, and the comment was, “Dude, we’ve got like technology.” Subtext: you’re an asshole.

That experience was very instructive for me because I began to understand a few things about where we are as a nation. What we’ve got at the highest level of American high-tech
enterprise are people who believe that technology and energy are the same. (How much trouble does that tell you we’re in?) And I think you can account for this ignorance in the following way: these are people who have become tremendously, personally, successful from moving little pixels around on a screen with a mouse. So they assume that that activity will solve all the problems of the world. But guess what? We’re not going to change out the hardware on the $2.7 trillion dollar fleet of Boeings and Airbuses all around the world. We’re not going to change them out to run on some other kind of energy. We’re either going to run these things on liquid hydro-carbons or we’re not going to run them at all.

This is the most important thing I’ve got to tell you today: the only conversation that’s going on around America is how are we going to run the cars by other means than gasoline. That’s across the whole political spectrum and from the lowest ranks of society to the highest. From the dumb people, the NASCAR morons, clear up to the Ivy League.

But we’ve got to have a conversation about a lot of other things besides how we’re going to run the cars. We have to make other arrangements for living. We have to behave differently in the Western World, but particularly in North America. We’re going to have to do farming differently; we’re going to have to do commerce and trade differently; we’re going to have to do schooling differently; we’re going to have to learn to make some things in our own countries again.

The thing that Thomas Friedman calls globalism and regards as a permanent condition of life: guess what? It’s not a permanent condition of life; it’s a set of transient economic relations that exist because we have been living in a period of extraordinarily cheep and abundant energy and extraordinary relative peace between the great powers. And that’s why we have globalism. When neither of these conditions obtain anymore, we will not have globalism and we will not have those trade relations any more.

One other thing; we’re going to have to occupy the terrain of North America differently. Suburbia is going to fail. You can state that categorically: It’s going to fail in terms of investment and it’s going to fail in terms of utility.

To be continued…

—— Energy Report: How We Got To $80 Oil ——-

Revealed: The Rogues’ Gallery of the world’s top oil producers. And every one of them is getting ready for…

The Global Oil Grab of 2007 Has Just Begun!

Alarming Predictions Signal a New Energy Crisis: Iran’s army surrounds U.S. troops in Iraq…Russia’s army invades a southern neighbor…Immigrants flood America’s southern border in unprecedented numbers…Oil soars to $150 a barrel - and beyond.

Those are just some of the events in store as a Rogues’ Gallery of world leaders scrambles for ever-dwindling oil resources. But you can join an elite circle of investors protecting themselves now…They’ve already pocketed gains of 135%…181%…250%…and more!

Read The Full, Groundbreaking Report Right Here

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Rude Endnote: “Goldman [Sachs] also predicted $85 oil by the end of 2007,” wrote Addison in yesterday’s 5. “[F]orecasters at Goldman raised their entire oil outlook through the end of 2008, predicting an average price of $85 for 2008 and a high of $95 by the beginning of 2009.”

For the record, oil closed over 80-bucks again yesterday. It looks like 80 is fast becoming the new 70.

A few weeks ago, after oil had just hit the $80 mark for the first time, I had dinner in Kuwait with a couple of people that work in the oil industry there. We were talking about American culture at one point in the evening. My Kuwaiti friends were commenting on American violence, guns…the usual. Then, and I think this was the funniest comment of the evening, one of them said, casually, “People in Kuwait don’t have too much time for guns these days…they’re too bust making money.”

“It’s interesting,” remarked the other, “that the price of many commodities, oil being one, has barely budged for the year when you price it in Euro or the pound.”

As for the languishing dollar, the general trend is down. Perhaps we could be seeing Goldman’s $95 oil sooner than even they predicted.

Be sure to check in with the lads in Baltimore when your 5 arrives shortly after lunch.

Cheers,

Joel Bowman
Rude Awakening