by Ian Mosley

The combination of Hurricanes Katrina and Rita with the stunning incompetence of George W. Bush and the neocons may well plunge the United States into a full-blown depression especially if oil hits its predicted new high of $80 a barrel.

The International Monetary Fund is now conceding cautiously that there is “some possibility” that oil could reach the $80 a barrel mark. And even if it fails to get that high, the fund expects oil to hover around $61 a barrel -or close to the current price – right through next year. In other words, gas prices will stick close to $3.00 a gallon for the foreseeable future.

Hurricane Katrina and Hurricane Rita have devastated the Gulf oil rigs, hitting production and also the refineries along the Gulf Coast. This damage isn’t completely catastrophic; it can eventually be repaired. But the continuing war in Iraq has virtually shut off all supplies from the second largest oil fields in the Middle East, and if the Iraqi rebellion spreads to the port city of Basra and Basra’s tanker terminals are shut down, then even the tiny driblets of oil coming through will be shut off.

The other OPEC states are maintaining production at record levels and will continue to do so throughout this year, but with the northern hemisphere winter approaching, demand is likely to increase strongly which will in turn push up prices. An IMF spokesman said, “Based on option prices, the probability that the price of West Texas intermediate will rise above $80 by December is now 20 per cent, compared with zero per cent in early 2005.”

The United States economy is completely dependent on petroleum. Our national rail system in America has been allowed to decline. Bulk goods are increasingly moved around the country in eighteen-wheelers that guzzle diesel like a bar full of bikers guzzle beer. Almost all factories and what remains of our heavy industry runs on petroleum. Nuclear power is extremely under-utilized, which considering the effect of quota-hires on safety is probably for the best. There are still a few coal-burning power plants and other facilities, but basically it’s all down to oil.

We should be developing alternate energy sources on a large scale right now. Denmark gets 19 percent of its power from wind turbines. America has hundreds of thousands of square miles of desert –more than enough space to generate all our electricity with solar arrays. Massive flywheel generators could store energy for use at night. We should also be switching from gasoline to bio-diesel fuels, but Big Oil won’t tolerate that. Clean alternative energy systems require a lot of start up money to begin mass production –which our government won’t provide even though they give substantial subsidies to the oil industry. Don’t hold your breath for the likes of Bush and Cheney to do anything to upset Big Oil.

The sky-high gas prices will create a domino effect that will affect every aspect of American life. Already, this is the worst tourist season in living memory as Americans crucified at the pumps simply stayed home and puttered around the house on their vacations. People will stop going out to eat to save their gas to get to and from work, so that’s the restaurant industry gone, which in turn will cause job losses in the food packing and processing industry. Laid-off restaurant and food processing workers won’t be able to hit the malls at Christmas, so that’s the retail trade clobbered, so forth and so on down the line. One toppled domino in this fragile economy could send all the others crashing down.

The Chinese have a saying that foretells doom and disaster: “May you live in interesting times.” It looks like we’re in for interesting times.