Sooner or later, we will change

Sooner or later — words I use a lot — gasoline in America will cost $8 per gallon. Which is what it costs today in Europe.

“Sooner or later” lends me a little erudition, which I don’t deserve, because whatever follows usually comes true. Not always, but often enough.

Eight-dollar gas is likely to happen, because the world’s population is growing and most of us will use more energy than before. The wealthier we are, the more energy — particularly, petroleum products — we consume. Countries that were low-petroleum consumers on a per-capita basis in the past — India, China, Saudi Arabia and others — are increasing their use.

At the same time, oil production is not keeping pace. Despite a 57 percent increase in price last year, the world’s 15 largest oil exporters — who make up about 45 percent of all supply — shipped 2.5 percent less, according to the U.S. Department of Energy.

When price goes up, supply is supposed to go up. So why isn’t oil supply going up? Read more

Rural subprime borrowers are hit, but most rural property is not

Here’s the story in most American cities—existing-home sales are down, pending home sales down, new home sales down and average home prices down.

Adjustable interest rates are up, delinquent mortgages up, foreclosures up.

The loans that are the source of this mess were made by big banks and mortgage companies to individuals who barely qualified for them on terms that do-si-doed with disaster.

As long as the loan originators could flip them to large investors, their high risks were shipped upstream to yield-focused folks who forgot that all the little people downstream were paddling for their lives to keep everyone afloat.

The situation in rural America is both the same and…different.

Where big lenders operated, subprime loans were made—resulting in the same pattern of delinquencies and defaults on high-interest loans to border-line borrowers. Read more