NATIONAL HARBOR, Md. -- Walter Zimmerman, chief technical analyst for United Energy Inc., Jersey City, N.J., gave fuel marketers a history lesson and a foreboding look into the crystal ball. He predicted "real risk ahead for the U.S. economy" and suggested the record-high gas prices and consumer discontent of 2008 were most likely forerunners to much harsher times ahead.
"The future is always a function of the past," he said in an address to retailers at the 2008 Outlook Leadership conference at the Gaylord National Resort and Convention Center near the nation 's capital. "Are we clear-headed [image-nocss] enough to learn from the past?"
He pointed to ancient Athens, which he said had eerie similarities to the 21st-century United States. In the 4th century B.C., Athens suffered from exorbitant grain prices, which its government blamed on speculation from traders. Grain was that nation 's "Achilles' tendon" as gasoline is the United States', he suggested. Athens wound up invading Sicily to shore up its food supply and ultimately wound up facing a horrible defeat. "Athens was never a power again," said Zimmerman.
The lesson for America: "If you're dependent on an imported commodity…you cannot afford to not have the most powerful military in the world," he said. "This must be the case to minimize the geopolitical price risk of oil."
He advised retailers and consumers to look beyond the "smoke of misdirection and obfuscation coming out of Washington," which has pinned the state of energy prices on oil speculators, rather than the real cause: the government 's own mishandling of the economy. As evidenced by the lack of a coherent national energy policy, he said the government lacks "the political will" to make the situation any better.
"Whenever you see the government blaming speculators, you'd better run for cover," he said. "What's going on here is a self-inflicted wound caused by Wall Street. If you really want to get at the causes, get a national [energy] policy and let 's not have the Fed bail out Wall Street," alluding to recent headlines.
Increases in worldwide energy demand, courtesy of rapidly developing nations such as China and India, have added more tension to the mix. These countries have slowly siphoned excess supply out of the global oil bank, leaving less and less cushion between demand and production capacity. As global demand explodes, oil-producing nations in the Middle East, South America and Europe have already reached or soon will reach their peak production levels.
Zimmerman suggested that without a significant correction somewhere, disaster looms for the world 's economies. "If we don 't do something about this," he said, "someone's not going to get what they need."
The United States, which has 4% of the world 's population but accounts for 25% of its energy consumption, can learn from Japan and Europe, said Zimmerman. Those countries are "20 years ahead of the U.S." in terms of alternative energy, efficiency and other means of tamping down national energy costs. While that situation can change, he believes any significant improvement cannot occur without a national energy policy.
The current recession has caused a "temporary vacation" from high energy prices, but "a recession is no substitute for an energy policy," he said. By not taking steps to improve conservation and efficiency, and march toward alternative fuels that can wean the country off foreign oil, the United States faces dire consequences: oil prices topping $300 per barrel by 2011 or, in a not-quite-as-bad scenario, “a longer temporary vacation” and $200-per-barrel oil in the midst of a depression.
The immediate future does not hold much promise, according to Zimmerman. He's concerned that easier-to-swallow prices at the pump of late will overshadow the underlying problem, thereby making Congress fall back on bad habits. "I'm afraid prices have fallen fast enough that we won't see [an energy policy]," he said.Wtch Zimmerman on CSPTV in this issue of CSP Daily News.As part of the "What's Right With America" theme at the 2008 Outlook Leadership, at the new Gaylord National Resort & Convention Center, National Harbor, Md., CSP Information Group's CARRE Foundation is collecting donations to benefit the USO.Click here to donate now.
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