American business will crumble with $200 a barrel oil

Just what will America look like if some of the most bearish predictions about oil prices come true? Charley Blaine has some scary thoughts in a must-read, and I’ll add a few of mine in parentheses.

(First, Blaine notes that über-bearish Goldman Sachs analyst Arjun Murti was also right on predicting $105/bbl oil back in 2005.)

Anyway, time to “document the atrocities,” as Atrios says on his blog.

First, if $1/bbl increase equals a nickel a gallon at the gas pump, $150 oil is $5 gas and $200 oil is $7.50 gas. While Europe adjusted to that with high gas taxes after the 1979-80 Iranian oil embargo, such rapid change here would be shock therapy.

• One, the Big Three might fold up. (I have five bucks that says Chrysler does that by the end of the decade. Dunno about Ford and General Misfits. Oh, and unlike 1980, our gummint doesn’t have money to bail out Chrysler, let alone Ford or GM.)

• Two, the “legacy” airlines might try to merge even smaller, if regulators allowed it, or just fold. (Ditto on lack of bailout money. And, I live in the home of one of those “legacy” airlines, American.)

• Three, convention cities are going to be in trouble. It ain’t going to be cheap to convention in Vegas with $500 coach tickets at the cheapest. (That’s Dallas, again.)

• Four, historic/arts type tourist destinations are in lots of trouble.

Beyond that, here’s additional thoughts of mine:

• Logistics hubs for intermodal shipping, like the Dallas Logistics Hub in southern Dallas and neighboring Lancaster, are going to be losing propositions. $200/barrel oil is going to mean a lot less made-in-China stuff. Yes, much of that, if it comes back across the Pacific, will be Mexico-built, not American. Nonetheless, much of it will be shipped via conventional semis, not on intermodal rail. And, a fair amount that is shipped intermodally will probably go to smaller sites. The big intermodal hubs will be like hub-and-spoke legacy airlines.

• American businesses, anti-union issues be damned, are going to come under more pressure from management as well as rank-and-file to stop relocating to sprawled-out Sunbelt cities.

• Lets not forget food prices. Higher diesel for the combines, and grain transportation trucks, down on the farm. Higher diesel costs to ship refined foods, and truck-farmed items, to the grocery. If natural gas starts pressuring upward, higher fertilizer and herbicide/pesticide costs. Maybe 15 percent or more higher than now.

• Just as an increase in gas taxes will become even more necessary for decaying infrastructure, the will to impose it will shrink even more.

• Unemployment will surge above 8 percent in modern faked (per Kevin Phillips) record-keeping, and reach a real rate of at least 12 percent. And, we would be tempted to call that something worse than a recession.

• And, my last thought – GOP wingers will say we need another tax cut because of this.