Sushi Money

While traveling to California this week I™ve actually had the opportunity to put gas in the car at $4.69 per gallon. The sum of money it takes to drive a vehicle around now is incredible to me, and it looks like people are cutting way back. Several times this week I™ve seen folks putting just a few gallons in the car at a time because they didn™t have enough money to fill it up, or to top off what they had already. Even with cutting back however, there’s a lot of cars on the road.

I really don™t believe the nation can sustain these fuel prices economically. Costs are going to continue to soar and consumer spending is simply going to shut down. Think America had a low savings rate before? Now we’re putting that little extra in the fuel tank.

I™ve called for an Energy Summit before, and I still believe we need to gather the experts and political leadership to develop a way forward. Certainly when the nation faces a threat to its people the government responds. Yet from an economic perspective the government has been slow to respond to the mounting pressures we see in the food and energy sector. And another round of rebate checks is going to help? Well tax rebates have helped soften the blow of reduced consumer spending so far, but it’s not a sustainble way to strengthen the economy.

As The Black Gold Rush continues, many people and companies are looking for ways to increase petroleum production. This is almost like the dot com internet bubble in many ways, but there’s little reason to think demand for oil will decrease over the short term. Over the long term, these prices are not sustainable especially as automakers finally produce viable hybrid vehicles en masse. Alternative everthing is all the craze and I think a lot of folks are going to change their spending and driving behaviors over the next decade. Which may prove essential to our future. OPEC is not going to help us if we don’t take charge of our own energy destiny.

Yet the oil boom has been good for some investors, and not so good for others. But prices have simply gone too far too fast. It’s hard to escape from the effects of oil no matter where you look. Most of the mutual funds in our IRA’s, 401(k)’s and pension plans are chock full of oil stocks or related companies. At some point their valuations will come down, but realistically that should be better for the stock market as a whole. If we can get past the inflationary pressures of higher food and energy prices, then the economy just may hang in there.

In other alternative news, we’re going to see a lot of change in the food industry as people demand better food products. When we read about Sumo Chickens and Tainted Greens on financial sites, you know it’s rapidly becoming a mainstream issue. This week I’ve been surprised by several relatives’ interest in consuming raw milk as a more healthful alternative to pastuerized store-bought milk. The food issue will be a biggie over the next decade, and there’s probably some key investing opportunities there as well.

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