Just about the time we were gaining some confidence and felt that we no longer needed to preface every sentence with “In this economy” (ITE), the Middle East has erupted into chaos. With consumer confidence still very tentative, it doesn’t take much to torpedo optimism. Business may be up, but the fear of the unknown is a powerful force, and people are afraid to spend the money that will help them grow their businesses. The result is paralysis. Extended paralysis results in a recession, which is defined as two quarters of negative growth. Negative growth is a polite way of saying that your business has stalled, but you don’t need Ben Bernanke to tell you that.
Yes, gas prices are scary, but remember that European countries have been paying these prices for years, and have always driven little energy-efficient vehicles. For those who are shocked at the cost of filling your tank, remind yourself that nobody forced you to purchase a behemoth.
I believe this panic over what’s going on in the Middle East need not destabilize the world economy. What many people don’t realize is that the U.S. imports only about 25 percent of its crude oil from the Middle East and 15 percent of that comes from Saudi Arabia–this is important because Saudi Arabia is probably the most stable country in the Middle East. That means that only 10 percent of our oil comes from countries that are engaged in conflict. The countries from whom we receive most of our crude oil are Canada, Mexico, Saudi Arabia and Venezuela.
It’s here that my friend Jim always looks at me and says, “so what’s your point?”My point is that there is no reason to panic. We will continue to get oil from traditional sources, and just maybe people will realize that it’s time to get serious about alternative energy sources, make nuclear energy safer and finally wean ourselves from the tyranny of the Middle East. I remain an optimist, and I still think this is going to be a good year.