I guess we didn’t build the base yesterday

Oil futures closed below $122.50 yesterday for the first time in a long time. Oil prices are down overseas as of this writing (7:15 am EDT) and show no sign of stopping. The ruckus that Sen. John McCain (D-AZ) is raising about drilling offshore coupled with the feckless response from Sen. Barack Obama (D-IL) have combined to put pressure on crude futures. Combine that with contracting demand and we have a recipe for the price of oil cratering below $100 within the month. And it won’t come back.

Four buck gas has had the same psychological impact that the attack on the World Trade Center did in 2001 – it woke America up. The 9/11 attacks woke up Americans to dangers of terrorism and the policies of appeasement. Just a few months prior, terrorists attacked and nearly sank the USS Cole, a sovereign ship of the US Navy in a foreign port. In the earlier part of the century, that launched a war (“Remember the Maine”). The attack on the USS Cole was greeted with a shrug by most folks here. Times were good and nobody was concerned with what “those crazy Arabs” did “over there”. The September 11^th attacks woke up everyone to the real threat of what not addressing problems can morph into.

The same is true of environmentalism religiosity. The neo-pagan attitudes of wacko environmentalists have locked up domestic oil productions for decades. There really is no other explanation for their vehement opposition to oil exploration on the outer continental shelf and ANWR. ANWR is the size of South Carolina and to bring the oil out, we’d need to drill in a area the size of RDU international airport. The idea that we should keep the place as pristine as say, The Grand Canyon, beggars believe. The Grand Canyon is designed for tourists. Indeed, millions of people visit every year. The same can not be said for ANWR, which is on the remote edge of northern Alaska.

But that brings up a point I made earlier – four buck gas was traumatizing. People who drive large SUVs are the objects of pity, not scorn. The folly of driving three ton trucks as daily drivers is quickly underscored when a fill up costs nearly $100.

The American automotive industry noticed somewhat belatedly and is shuttering SUV production. Ford is actually building their European line here in what are soon to be former SUV factories. This is good, as a Ford Fiesta – roughly the same size as a Ford Focus here in the States – can get 60+ mpg when equipped with diesel and driven at highway speeds. A Saab 9-3 with a diesel also gets more than 60 mpg on the highway. Why these cars weren’t built / weren’t imported to The States is anybody’s guess. My would be that there was no demand.

Well there is now. And since SUV production has been curtailed, we won’t be seeing many more coming off the line. People will remember this price shock for years and years to come.

The age of the SUV is dead. Long live the SUV.