In the back half of the 1990′s, I lived in London. Each year I’d come home to the States, flying through several airports, spending time in New York and San Francisco, and getting a feel of the place.
The tech bull market was such a happy time for Americans. You could see it easily. The boom instilled alot of pride and was similar to other Great Age periods in US history when the culture was entranced with its own ingenuity. In contrast, the bull market this decade in energy has been a rather unhappy time for Americans. If the 1990′s was a new Age of Reason, the new millennium has been a time of fear. As I watched the year 2000 ring in, on a bridge over the River Thames, I could not have imagined things turning out this way.
The biggest concern I have right now is there is no new mission, for the country to undertake. At least the technology boom of the 90s continues to give us productivity gains. We’ve arrived in 2008, however, with little to show for all our recent spending. The wars. The housing boom. The end of the wars? The housing bust. We’re not in a good place.
But of course, good things usually begin from junctures such as these. My guess would be that energy and transport infrastructure(s) will become the next mission of the US. Given recent nationalisations, this effort will probably have to be kick-started by government. With the government in play already, I’ll guess the private sector will be happy to have Washington as a partner.
What we may have to face, however, is shared ownership of the infrastructure with investors abroad. Who else will provide the capital? I see a wave of Transport, Power Grid, and solar/wind power generation bonds coming in the years ahead. This is why I have advocated new, offshore drilling for Oil in the US. Not as a way to “bring oil prices down” (it wouldn’t), but, as a way to monetize the resources. Thus giving us capital to work with. If we don’t want to borrow, we’ll need to create the capital ourselves.
My vision, therefore, for a state like California, would be to drill offshore and monetize the oil and gas. Then devote the royalties 100% to infrastructure in the following order. 1. Light Rail for California’s cities. 2. Commuter rail for California’s cities. 3. Utility grade Solar and Wind projects. 4. Commercial and Residential incentives for solar installation. 5. Upgrades to the Power Grid and the Water systems.
California’s current (proposed) project to provide high-speed rail between San Diego and the North should be scrapped. It’s a silly project for a state currently in the hole 7 billion. It’s also a typical American project in the sense that its profile is much, much higher than its utility. Efficiency gains from spending the same sum on Light Rail projects would serve more people, obviously.
If the US needs a new mission statement, history suggests California must lead the way. Americans need to dial back the idealism now, and get down to practical solutions. It’s too disconnected from reality to oppose offshore drilling, while at the same time thinking someone else will happily provide the capital to build new infrastructure. As soon as California stirs from its slumber, you’ll know the US is close to its next mission.
-Gregor
