Crude Policy

Glen rubbed his temples while waiting for the rest of his team to return to the conference room. He had just read the confidential update on the latest oil and gas news, which only added more stress to an unrelenting situation. Glen turned to Dr. Jennifer Liepert, who stayed in the conference room while the others left to call their families, as she had no family to tend to. “This is bad, Jenny. We’re in a full economic war. This kind of financial collapse causes historical revolutions. How in the hell did all this fall to us?” Glen acting this way was incredulous to Jenny, and she gave an almost frightened look back at him. “How bad is it?” asked Jenny. Glen let out a deep sigh, and spoke while he rubbed his temples, “It’s bad. It’s real bad. China’s forecasting a twenty-five percent increase in their petroleum usage over the next ten years. This is utter bullshit. This kind of increase isn’t feasible.” Jenny’s eyes flew wide open, and she quickly grabbed the document. “Glen, they don’t have the reserves for that kind of oil…. Oh my God. They cut a deal with Venezuela. They have first rights to sweet crude in Latin America.” Glen looked up at Jenny, actually relieved that someone as astute as he picked up on the information so quickly. Jenny, stunned at the words she read, quickly looked up at Glen. “We’re not the primary customer to Latin America anymore. We have a supply crisis now as well. This will push oil pricing to incredible levels.” “Yep,” said Glen. “When this information hits the press, oil and gas trading will move sky high. China has just delivered a business shot across the bow. Petroleum prices at this level will effectively stop our economy and put us in a permanent recession.” A frazzled Jenny asked, “How did the meeting with Congress go this morning? I’m guessing it was dreadful.” “It’s a disaster, Jenny. The only thing that kept me from getting blasted even worse is they’re scared to death. Beating me to a pulp seems insignificant now. Even the most bearish economist didn’t see this coming,” said Glen in a tone of dread. Jenny listened to his every word as Glen said, “We had a couple of high end economists talk with us, and they both essentially said the same thing. With most energy crises, the economic curve is about a six month event. The high gas prices limit spending on expendable income, you know, travel, vacations, higher end items like boats, electronics and things like that. Then manufacturing starts to trend downward as existing inventory plans are met at a faster pace. Then manufacturing companies idle their plants, layoffs occur, bargain shopping commences, then spending almost comes to a halt.” Glen continued, “So, the lack of cash flow is a devastating event, causing existing bank loans to go into default, and new loans are shut off so banks can hoard their cash reserves. Things like this create a cascade effect that takes months for the full impact. Usually the good news is the economy rebounds at about the same pace.” Glen then moved towards Jenny to make sure she fully comprehended his next comments. She was his most trusted associate, and he needed her to perform. “Jenny, this one’s different. Gas prices go down in a depression, not up, and definitely not exponentially up. Energy prices aren’t coming down, they’re going up. Nobody even considered this kind of effect. You understand what I am saying?” Jenny was on edge, not really sure how to respond. “I understand, but I might not be grasping your full intention, Glen.” A frustrated Glen almost angrily said, “Gas prices are going up. It’s actually costing more to make the most basic of commodities. They’re not coming down. This cycle can’t last. We’re in a major recession, and prices are actually going up.” “What’re you saying, Glen?” asked Jenny, almost scared to hear the words. Glen looked towards the door to make sure nobody heard their conversation. “Congress is scared to death, Jenny. Our meetings are all classified because this information isn’t supposed to be out, but I need you to understand the full story.” “What do I need to know, Glen?” asked Jenny. Glen almost whispered, “This cycle can’t last, it can’t last. We don’t know how to get out of it. Imagine it, Jenny. Imagine not having a job, and clinging to your money. Basic items such as milk go from $4.00 a gallon to $8.00 a gallon. Inflation isn’t based upon demand, it’s based on real cost. Everything comes to a halt. We’re talking a total economic collapse. Total.” Glen shook his head back and forth, and took a deep breath. “They’re secretly beginning to ramp up the National Guard for fear of riots. Read your history tonight, Jenny. This kind of meltdown ended the Czar rule in Russia, brought the Nazis to power; I mean this is truly historical. Petroleum is the basis of our entire economy, it’s now truly unaffordable. We either get energy back where it needs to be, or you can only imagine what our country will become.” Jenny leaned back, almost like the words were pushing her. Glen said, “And they’re looking to us to fix it. That’s exactly what you need to know.”