The world's economy continues to die a slow death. The reason is simple. Any good economic news is followed by a spike in oil futures which quickly dampens any enthusiasm for the good news.
Today's example is from Europe. European leaders agreed on a plan to use bailout funds to directly aid banks in Spain and Italy. So boom, this leads to a surge in the euro, equities and commodities markets and a $4 a barrel increase in oil futures.
A Chicago trader, quoted by the Wall Street Journal, said "We got the good news from the EU and equities took off. That's what's driving us higher."
How can the world economy recover if soaring oil prices continue to choke any good economic news? It is like celebrating a pound loss in a diet by eating a box of donuts.
The U.S. economy is driven by the consumer. Seventy percent of our economy is built on people buying stuff. But anytime Joe Consumer gets a few extra bucks in his pocket from extra hours at work or a raise, higher oil prices snatch it away before he can spend it.
That is why I believe we cannot survive in this economic environment. Oil's stranglehold on our economy allows us to live but not flourish. The lack of competition allows oil companies to charge what the market will bear.
An improvement in our standard of living will only come when other energy sources compete with big oil. We need to encourage our elected leaders to push for faster development of renewable sources of energy.
Write your representative a letter or call them up and ask them what they are doing to promote renewable sources of energy. The status quo will not change unless we decide it is time to change.
Our oil-based economy is slowly killing us. The U.S. and Ohio's economy are sure to continue to stagnate as long as we have our addiction to oil. We either push for change or continue on our donut-eating diet.
John McGory can be contacted at jrmcgory@gmail.com.
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