Apr 2, 2009

Why $4 Gas Will Seem Cheap

By Jerry Robinson

One of the many economic trials and tribulations suffered by the American populace in 2008 was the runaway cost of oil. Remember paying nearly $4 a gallon for gasoline at the pumps? Well, those days may be back with a vengeance sooner rather than later. In my book, Bankruptcy of Our Nation," I highlight the global energy crisis and the ever-growing dependence America has upon foreign oil supplies. In the book, I explain in great detail how America's poor energy policies will eventually lead to massive future price increases in energy for every American.

By now, most Americans are familiar with the "China story." The emerging nation has experienced staggering economic growth, has an insatiable demand for natural resources and, most alarming, wields an enormous population that desperately seeks to emulate the Western lifestyle of over-consumption. This is an unfortunate combination for a globe that is running low on many vital natural resources and has no firm contingency plans.

Despite the current economic slowdown, China still leads the pack in several areas including the world's fastest-growing automobile market. In 2008, China produced an astonishing 14,000 cars...per day.

But last week, it was not China who was making news in the global automobile market. Instead, it was another up-and-coming global power: India.

India, which boasts the second fastest-growing automobile market in the world, has been aggressively promoting car ownership among its citizens and plans to quadruple its automotive sales by 2016. Of course, the obstacle of getting cars onto Indian roads has been an issue of price for India's poorer population. Last week, this obstacle was all but demolished when Indian automaker Tata Motors announced plans to begin mass production of the Tata Nano. The Nano, which the Guinness Book of World Records is already calling the world's least expensive car, will retail for an astonishing low base price of $2,000.

Tata made headlines in 2008 when it publicly acquired the high-class Jaguar and Land Rover brands from Ford Motor Company for $2.3 billion. The story made news, as many Americans were stunned that a relatively unknown automaker from India would be the top bidder for Ford's premier auto brands. The buyout smacked of irony, considering Britain's formidable colonization of India in centuries past. The world is indeed getting flatter with each passing year.

While these technological advancements and price breakthroughs may be a crowning achievement for India, it is far from good news for Western nations. Why? Because this low-price strategy will enable many of India's 1.1 billion citizens to be able to purchase their first vehicle. Unfortunately for the West, the majority of these new vehicles run on – you guessed it – good old-fashioned gasoline.

Many Indians, around 639 million, have been able to rise into the ranks of India's growing middle class over the last several decades. With the Tata Nano's low sticker price, this means automobiles will now be within the reach of hundreds of millions of new consumers in the coming years.

To further complicate matters, due to a lack of proven oil reserves, India currently imports 70 percent of its daily oil requirements.

Put simply, India's demand for oil will increase exponentially in the coming years as the Tata Nano and other similar vehicles begin to fill the streets of this emerging nation.

To say that Western expectations of energy supplies have been unrealistic and, quite frankly, irresponsible would be an understatement. Apparently, it is going to take severe supply constraints of energy in the West before decisive action is taken. And by then, it will be too late.

The writing is on the wall, and it is written in every language known to man.

And you thought 2008 gas prices were high?


Why $4 gas will seem cheap - WorldNetDaily

Related Links

Delhi Vs. Detroit? - Newsweek
Volkswagen Opens India Car Plant - Wall Street Journal
Small car props up value of Tata Motors' FCCBs - Economic Times