Even from halfway around the world you can sense a sea change. Hillary’s campaign is running on fumes and she just needs a few days to find a graceful exit. Former Speaker Newt Gingrich warned the Republicans were headed for a November blowout.
Gingrich says the Republican loss in the special election in Louisiana’s sixth congressional district this past weekend should be “a sharp wake up call” for party members.
Gingrich noted President George W. Bushcarried the district by 19 percentage points in winning reelection in 2004. In the end, Democratic State Rep. Donald Cazayoux defeated Republican Woody Jenkins. Republicans tried to cast Cazayoux a liberal by comparing him to Democratic presidential hopeful Barack Obama, but voters didn’t seem to buy it.
The former Georgia lawmaker also pointed to polls that show Americans now favor Democrats on a host of issues, including taxes and the war on terrorism.
But the real bad news for McCain is that the economic headwinds are getting stronger. Goldman Sachs predicted we will see $150-200 oil within the next two years. $150 oil would translate to $5.00 gas, if not more. There was an article in the WSJ regarding the giant Saudi oil field, Ghawar, and whether it’s in decline. If you have to argue about it, it’s in decline. The field is over 50% of Saudi production. The Saudi’s are employing three times the number of drilling rigs now compared to just a few years ago, and production is not increasing.
In the region where I am, the inflation story is getting scary. There is a great deal of rice hoarding and the price has climbed 20% in the last month alone. Gasoline is $10 a gallon and there are often lines at the gas station on TV. There are reports that Indonesia, a long time OPEC member will drop out of the organization as early next year as they will soon be a net importer of oil. Production from aging wells is in decline and investment has lagged. The environment in Indonesia is not likely to attract investment capital any time soon. Back in the 80’s I made a documentary series for PBS and The BBC called “The Prize”, based on a book by Dan Yergin. Dan has been a peak oil skeptic his whole life. Reading the Wall Street Journal yesterday, I almost fell off my chair.
“It’s not that the genie is out of the bottle — it’s that 100 genies are out of the bottle,” said Daniel Yergin, chairman of Cambridge Energy Research Associates. Normally known for optimistic forecasts of lowering oil prices, Mr. Yergin’s firm now says the price could rise to $150 a barrel this year.
The world’s diminished spare production capacity remains the strongest single catalyst for high prices, Mr. Yergin says. The world’s safety cushion — the amount of readily available oil that could be pumped in a moment of crisis — is now around two million barrels a day, according to most estimates. That’s just 2.3% of daily demand, and nearly all of the safety cushion is in one country, Saudi Arabia. Everyone else is pretty much pumping all they can, which makes the world vulnerable to political or other shocks.
John McCain is running for George Bush’s third term. He doesn’t stand a chance, short of some “October Surprise”