Like many of you, I am frustrated almost to the point of anger by the recent unprecedented rise in the price of oil. I’m upset because we’ve known about the potential for this kind of situation for almost four decades and have done almost nothing to prevent it nor to prepare for it. I’m unhappy because even now the government seems to show little concern for this situation.

The chart below shows Fidelity Select Energy (FSENX). You can see how the recent rise in the price of oil is unprecendented, even though this is an extremely volatile sector.

One argument I’ve heard repeatedly in recent days is that gasoline is still more expensive in places like Europe than it is in the United States. The implication is that somehow people in those countries are superior because they are able to adjust their lives to accommodate higher energy costs.

Unfortunately, most of us do not have the variety of transportation alternatives available in places like Europe. I would be happy to take mass transit to work each day, but it isn’t a practical option in my area. I also have horses and a horse trailer that can only be pulled by a heavy duty truck. Although I will travel with them less frequently, I am still essentially forced to drive a gas guzzler. 

We are a nation of homeowners, not a nation of apartment dwellers. A home with two cars in the driveway is not just the American Dream, it is the dream of virtually every country whose citizens aspire to have the type of lifestyle we enjoy. I’m not ready to give that up just because some oil company has decided to triple the cost of their product.

Much of my anger is focused on our government, which has done nothing to avert or to deal with the current situation. Alternatives to crude oil already exist and have for some time, yet there has been little effort to develop them in the U.S. For example, public buses in Iceland have been running on hydrogen for more than a decade. So obviously that technology already exists. The United States has an abundance of natural gas. Vehicles that run on natural gas cost about the same to produce as traditional cars. Here in Utah natural gas is currently selling for 64 cents a gallon. 

I’m upset because we are being told that any solution to this problem is still a long ways off. Here is an example: A few weeks ago, Utah introduced a commuter rail line called Front Runner. Plans are currently underway to extend that rail line to communities in the county where I reside. The projected date for that service is 2030. That is 22 years to extend the line about that many miles! It took less time to build the transcontinental line across the entire United States which was finished in 1869.

During World War II factories were retooled in a matter of weeks to stop producing consumer goods and start producing weapons. Factories that made washing machines and cars were quickly switched over to making tanks and fighter planes. Why were we able to make the conversion so quickly? Because we believed our way of life was threatened. People were trying to take away our freedom. 

I believe the situation today is just as dire. If a conquering power told us that we would all have to take a 40% cut in our lifestyle, we would be outraged. Yet that is essentially what is happening. Are we prepared to live in a society were 800-square foot apartments constitute the vast majority of all housing? Are we going to accept families with only one child because that is all we can afford? Are we ready to sacrifice the opportunity for our children and grandchildren to travel to Disneyland for summer vacation? If oil costs continue to rise, those are the choices we will face.

In spite of Federal Reserve Chairman Bob Bernanke’s assurances that all is well and a recession has been avoided (simply a way to hint that interest rates will be rising again soon), plenty of evidence still points to a weakening economy. Each of us can get an idea of how these higher prices will impact the economy by looking at our own families. Less disposable income means fewer meals at restaurants. One movie a month instead of three. Making the old car last another two or three years because you can afford a higher car payment because the price of gas is higher.

As we approach the next presidential election, I am looking for a leader who can solve this kind of problem. I want someone who can stand up and say: “In five years we will no longer need to depend on any other nation for oil. Here is how we can accomplish that.” I don’t want a president who is going to ignore this problem if the price of oil drops or who is willing to defer until the next president or the one after that.

I don’t want executives at British Petroleum or Chevron to dictate the type of lifestyle my grandchildren will enjoy. 

Here is hoping that someone in Washington will find the courage to do what needs to be done to protect our way of life.
F.S.