The Stupidity Rolls On

The economic news is grim. Unemployment is near 10% and the meager recovery appears to be stalling. There is good news, however. Auto sales are picking up. Well, certain vehicles are selling well. The big gas-guzzling ones.

Sales of SUVs and trucks are up 24% this year. As long as the vehicle burns a gallon of petroleum every 14 miles or so it is selling well.

It has been 2 years almost to the day since fuel prices rocketed to over $4 a gallon. You would think Americans would have learned a lesson from the warning shot over the bow. But I guess not. Americans want big honking, gas-guzzling vehicles even if it destroys thier finances, puts the economy and their job at risk, or causes another spike in fuel prices.

To understand the depth of stupidity involved here we need to review some facts:

• Since 1981, worldwide consumption of petroleum has exceeded discovery of new reserves every year. Think about this sobering fact for a moment. If it doesn't run a shiver down your spine you have other issues to address.
• In 2008, worldwide consumption of petroleum was 31 billion barrels; new reserves discovered were 9 billion barrels. Do you feel that shiver again?
• Oil production peaked in 2005.
• To get the oil that remains requires very deep water drilling. How is that working out in the Gulf of Mexico?
• Oil prices are double from a decade ago while we are mired in a deep worldwide recession. How can oil run upwards of $70 a barrel when demand is so low due to the economy? Could it be...
• When the economy improves, and it will improve, demand for oil will climb. Without additional reserves available gas prices could soar higher than ever.

Is it just me or do the above facts, coupled with SUVs, sound like a really stupid idea?

I am making a prediction, so remember, you heard it here first. When the economy really starts growing, gas prices will race past $10 a gallon, and will probably hit $16 - $18 a gallon... before 2015.

Then we head right back into a recession. My only hope is that the people that squandered the resource are the ones that lose their job. Why should the responsible pay for the actions of idiots.

I am not hopeful.

Roundup

I've seen some interesting news articles this week that the masses should read. We already know unemployment is killing us, but China is growing double digits again and employers are having a difficult time finding help. And if you are looking for more depressing economic news, retailers don't need you either for the holiday season.


It seems China is spending 40% of its stimulus money on renewable energy, an investment that keeps on giving, compared to 12% for the U.S. There are ways we can encourage the rest of the world to save the planet. Okay, that was unfair. Makes you think, though, doesn't it? Good thing we don't spend 40% of our stimulus money on renewable energy. If we did, then we would have to deal with all those pesky high-paying jobs. And what about our friends in the middle east that need our cash? If we use less oil and spent our money here, who will do all the work? Com'on. Giv'me a break. Who needs a job. Just as long as you don't put a windmill or solar panel in my back yard. Let somebody else deal with oil rigs in their back yard.

At least we will never run out of oil. While the world's largest wind farm goes online in Denmark, we waste as much as we can and are proud of it. It's only money. The government can always print more.

When we get serious about energy efficiency will anyone believe us? At this point, we need to put our money where our mouth is. They need to see to believe.

Think about this the next time you hop in your SUV. China has an economy growing over 14% with plenty of employment opportunities. They are making serious investments in their future and have huge savings available to fund said investments. We are mired under a massive pile of debt and struggle to fund our future. And we love to drive our gas hogs aggressively and waste money anyway we can. The clock is ticking, boys and girls; the clock is ticking.

Energy Tax Credit Review

I received several questions on the energy credit this week and now is a good time to review this as the we head into winter.

The tax credits are available at 30% of the cost, up to $1500 for: windows, doors, insulation, roofs, HVAC, non-solar water heaters, and biomass stoves. The credit is available for tax years 2009 and 2010 and applies to existing homes only.

Tax credits for 30% of cost to tax year 2016 with no upper limit applies for: geothermal heat pumps, solar panels, solar water heaters, small wind systems, and fuel cells. These credit are for new and existing homes.

The questions this week focused on the amount of credit for those in lower income brackets. The energy credits are non-refundable, meaning you must have a income tax liability to deduct them. A good starting point is last year's tax return. Review your tax liability with your tax professional and make sure you benefit if taking the credit.