T.J. Prebil

Cheap Oil

Wednesday, June 29th, 2011

My first installment of why I believe the economy will continue to flounder for foreseeable future has to do with oil prices. I don’t expect this post to come as a surprise to anyone, especially in light of recent trends, but the cost of oil will hold the U.S. economy hostage for the next decade, possible longer, because:

1. almost everything we surround ourselves with in our daily lives is impacted by oil in one way or another (Charles Hugh Smith put together an interesting list) and
2. we, as country, have no real solutions to a post, or reduced, oil dependent society.

The reality is that, as a limited resource facing increased competition, not to mention greedy speculators, oil prices can only increase. Sure, there may be some fluctuations but $5.00+ for a gallon of gas is inevitable; my prediction is that we are less than a year away.

A friend who follows the energy markets believes it would be entrepreneurial of the U.S. to allow more drilling in Alaska. To me, the greatest entrepreneurial opportunities exist in developing alternatives to an overly oil dependent society…might just boost economy too.

The U.S. Economy

Sunday, March 6th, 2011

In October 2010, Goldman Sachs’ chief U.S. economist – Jan Hatzius – made headlines when he noted the economy would be “fairly bad” or “very bad” for the next six to nine months.

With access to the best data, top industry analysts and decades of historic figures, Mr. Hatzius’ predictions are taken very seriously. After all, numbers don’t lie, right?

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Now I’m not an economist and I don’t follow the markets on a daily basis. As such, I admit that I’m nowhere near as familiar with the U.S. economy as those Wall Street, or many of my friends who work as traders, VCs or at hedge funds.

But even with all the data in the world and the best analysts in the industry, there are enough signs – provided one looks around – indicating it could be six to nine years before the economy returns to respectable bullish levels.

Over the next few posts, I will outline 4-5 observations – none are difficult to grasp – on why I believe nation’s long term economic growth could be much worse than what some of the best minds on Wall Street are predicting.

Stay tuned!