America and the American Empire were built on the back of cheap energy. Now that energy is not at all cheap the empire is running on gas fumes. The growth model has been broken, even if most Americas don't yet realize it.
Just think about how American developed as a nation. The concept of manifest destiny meant that we pushed ever westward, until America controlled all of the vast territory from the Atlantic to the Pacific, from sea to shining sea and beyond as we added Alaska, Hawaii, Puerto Rico, Guam , and a few other American tidbits.
America was build as a nation without limits. Americans were lead to believe by their leaders that there was nothing we could not do. We still hear that kind of out of touch rhetoric from today's political leaders even thought we are more dependent on foreign oil and loans from far away places, especially China, than ever before.
How did America develop and connect their vast land territory? First there were the wagon trains. This means of transportation was cheap but quite inefficient. And slow. Soon the railroads and canals were being developed. Both provided cheap and relatively efficient means of transport. The railroads burnt coal, which is abundant in America, and the canals depended upon water ways and draft animals to pull the barges along. Goods and people were moved about in reasonally good order.
Than a tragedy occurred. The birth of the automobile brought to America a new and exciting means of personal transportation. The independent American spirit loved the automobile. A new industry was born that was to change the American landscape and the way that Americans lived in almost every way possible. A huge infrastructure system was put into place to accommodate the growth of the automobile.
Even what began under President Eisenhower as a military transportation system was taken over by the American love of driving from coast to coast and to all points in between. The automobile and the Interstate highway system made it easy to drive long distances and American development patterns were altered forever. The American suburbs were born because Americans could easily drive about and didn't seem to mind long commutes from home to office. And Americans had vast tracts of open space to develop.
Interstate highways that were built to carry traffic around major cities at a high rate of speed were instead used as development corridors. Shopping centers being developed at major intersections turned a system meant for long distance travel into local access ways to regional and neighborhood shopping centers and to office parks.
Since shopping and offices were now so abundant along major expressways the open land along the Interstate highways and the outlying countryside was developed into ever more remotely located subdivisions. Pity the poor American who was without an automobile.
All of this driving about was possible due to cheap energy. Until the mid 1970's America was an oil producing nation that was able to satisfy the enormous demand for gasoline and other products derived from oil and export a surplus to world markets. The American economy thrived in an age of surplus oil and cheap energy.
I said earlier that the birth of the automobile and American's love for the automobile was a tragedy for America. Here is why. First, land use patterns in America largely gravitated to low density development as there was a lot of land available to develop and Americans didn't seem to mind commuting long distances. After all energy was cheap and cars were fun to drive. Americans seemed to like being spread out in sprawling suburbs rather than living closely together in densely populated urban areas.
The reliance upon the automobile caused the neglect of the railroad system which can carry large numbers of passengers at low cost. America is far behind a large number of nations in comfortable high speed train travel. Americans love their cars.
Air travel is heavily developed in the US but airports depend upon automobile transportation more so than public transportation by commuter trains to and from airports. Americans still love to drive. Then air transport consumes vast amounts of aviation fuel daily. This jet fuel and general aviation fuel is no longer cheap.
So the great tragedy of America is that the nation was built on and still depends upon its normal functioning upon sources of cheap energy. The habit of driving around in big energy inefficient vehicles is so strong in America that Americans have been very slow to adapt to a different world of high energy prices.
The words "energy conservation" hardly seems to be in the American dictionary. Instead of rapidly downsizing automobiles and houses and learning to live in communities where you can walk rather than drive to secure the things that you need for daily living Americans continue to drive long distances. Many feel it is their God given right to drive a SUV although the pain of filling the darn thing up is beginning to be felt.
What expensive energy means for America and the rest of the world will be covered in future postings. With crude oil prices above $125 a barrel, heading perhaps to $200 a barrel, the American empire is now a broken model running on gas fumes.
Is there hope for a resurgence of American power and influence in the world? Of course there is, but it is going to take some drastic adjustments on the part of American government policies and in the lifestyles of the American people. We shall take a good look at that issue soon.
Gerald "Taipan" Greene is a retired forex trader and portfolio manager who worked in Asia for over 20 years. The nickname was acquired in Hong Kong and is now used for a number of financial, political, and Internet business related blogs. One of them is at Bold Messenger