Energy Regulation Could Totally Change

June 17, 2022

Leyendecker Executive Search

June 17, 2022

China is willing to mutually support Russia on core interests and matters of paramount concern, such as sovereignty and security, as well as [achieve] closer strategic cooperation.

– President Xi Jinping on a call with Putin

THOUGHTS FROM DOUG

The more people there are in the world, the more waste and carbon we create. So why is there no carbon tax for having a baby?

Two significant economic changes we probably need to ponder: Because of constant fiscal and monetary stimulus over the last twenty-plus years, our domestic economy benefited greatly from the wealth effect—that is, the growth of financial asset values. Now this is reversing course. And over the last forty-ish years globalization became the world’s primary economy driver. Now this is also reversing course.

Here’s a graph of the rise in oil prices. Here’s a graph of inflation. Does inflation cause the price of oil to rise, or are higher oil prices really behind inflation?

Oil and gas prices could come down with higher interest rates, which generally lead to a higher dollar. A rising dollar has historically put a lid on commodity prices. But those higher interest rates will eventually lead to a wave of corporate debt problems, lower home sales and a recession. So maybe inflation starts to look better before the November 2022 election, but then the economy may look worse after. Maybe that’s why many pundits are calling for a recession in 2023 and not this year. Get the program here? Lower inflation before the November 2022 election and hold off a recession until 2023, which leaves enough time before the November 2024 election to “fix” it.

You think a windfall profits tax that takes money from oil and gas companies is going to incentivize those companies to reinvest more or less? If they invest less, then they produce less.

By the way, has Wall Street been earning windfall profits over the last couple of decades as Washington unleashed massive amounts of monetary and fiscal stimulus?

Why are global central banks tightening monetary policy when many parts of the global economy look weak, or worse, seem headed into recession?

Sixty years ago, pizza was an exotic food in the US. Today we seem to have nothing but exotic foods and exotic everything else. All around, people are trying to sell us luxury apartments, luxury homes, luxury appliances, luxury countertops and floors, luxury cars, luxury watches, luxury vacations and…you get the picture. In sixty years, we went from the land of a little to the land of luxury. What can we expect over the next sixty years?

It’s times like these that make me wonder if chaos isn’t really the norm and order really the anomaly.

THE ECONOMIC VIEW

US home equity values have doubled
Is there a bubble in home equity?
As average rents break $2,000 a month

CBO’s economic outlook through 2032
Trillion dollar deficits forever.

Are we already in a recession?
Philly Fed index goes negative

Monthly supply of new homes
Great graph. What’s your prediction?

THE INFLATION BOGEYMAN

Future oil supply is not enough
Oil prices and inflation may remain high.

Making computer chips
Has become much more expensive

Food prices to keep going up
Say food makers and restaurants.
Global food prices at record high
Food export bans will not help prices

Global inflation map
What it looks like around the world.
Is Japan ready for inflation?
South Korea’s inflation explodes

SOME GOOD NEWS