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A Solar Panel: The Neutralizer

In response to Gas Pains: Falling U.S. Demand Doesn’t Make a Difference; Keith Johnson, Environmental Capital, Wall Street Journal; posted July 11, 2008

The real reason that oil consumption has slowed down is once again – the housing market. Think about how much less oil is needed to move all those materials (wood, steel, concrete, appliances, etc.) as well as construction laborers for all those houses and condos we were building. All that consumption from our housing construction has come to a stop, and with it the end of a major consumer of oil. The next oil demand decrease is on its way from both China and India.

Obviously, when the U.S. consumption slows down, China’s and India’s manufacturing will also dramatically slow. The last scary shoe to drop oil demand would be unemployment in the western world service sector (i.e. financial services). We waste the most gas commuting back in forth in hours of traffic to and from our jobs.So with this decrease in demand, why is the price still rising. Its kind of like why prices for seats on airplanes are rising even though there is much less demand for air travel. It is called inflation of the dollar. The price of oil will continue to drop as a result of lower and lower demand for oil, but continue to rise as a result of a falling Dollar value.

So where does the price of oil end up? Enter renewable energy (is there any other kind?) as the neutralizer. Both the dollar and oil will eventually be pegged to the equity dividend return on a solar panel asset. It is all a matter of time.


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