The psychological barrier of 100 dollars has now been broken in the other direction; heading downward. In early July, the price of crude oil flirted with 150 dollars per barrel, and yet a few years ago the idea of 100 dollar per barrel for oil was unfathomable. For me, the reasons behind this decrease are fairly obvious. Most of the western world is in the midst of a giant economic tail spin. The world market at large is going through a correction phase. The era of cheap fossil fuel energy has ended. The initial shock, 150 dollars per barrel, has subsided and I believe we will see a steady price between 80 and 120 dollars per barrel in the near future. Now we’re past the shock phase and into the correction phase, where economies are slowing down to meet the higher costs of ‘running’ with expensive fuel.

The most important question is, should we continue to prepare for the worst? Are SUV’s a dying breed? Will electricity prices and corn prices continue to skyrocket? I am no expert in predicting the future, but I do think it is important to realize the broad reaching effects of a tighter energy supply. Electricty prices, for instance, never had time to correct for increased fuel prices. This winter we may see additional bumps in electricity prices paid along with higher prices for heating oil and natural gas.

It’s interesting how so many intricate connections there are in this world market. Take Wall Street for instance: they didn’t diversify, everyone got sucked into subprime mortgages, overstated their available cash, and got a little too tied into the real estate market. Look what happened when just one sector, the real estate market, crashed; too many eggs in one basket can lead to disaster. What a shame, as Lehman and Bear were two of my personal favorites, both because they have been very respectable banks and also happened to employ more than one of my recently graduated friends.

With a lot of investment opportunities up in the air or now bankrupt, where can we turn with our money? How can we best make our money grow? Pretend you’ve got the world’s energy sector at your fingertips. Imagine getting to ‘invest’ in our energy future, and your options are not just the fossil fuel generation options but the alternatives as well; solar, wind, biomass, wave energy, and more. Think of our energy sector as one giant investment portfolio. How would you invest?