Oil Nears Record Highs

You've heard for a few days now that the price of oil has set records in recent days. That's true in a sense, but not in inflation adjusted terms. However, at $91/barrell, the price of oil will exceed its all time inflation adjusted high price, which was set in the 1980's. Many people will remember price controls, lines at gas stations, economic turmoil, rationing, and general energy chaos.

Yet, today, it seems to be taken in stride. I think we can thank the fact that every day our economy becomes less and less energy intensive. Which means, that we are able to produce a dollar of GDP with less and less energy input. This is partly due to the changing nature of our industries, as we move towards more service industry and less heavy manufacturing, but it is also due to technological innovation that has made almost everything from homes to computers to light bulbs to air conditioners more efficient.

And, the optimistic view is that if the price of oil hasn't killed the economy yet, it probably won't, and every day that it is high is another day that adds impetus to diversifying energy sources and making things more efficient. I think all of that is pretty good.

Credit Problems Getting Personal

It may seem like I rant about far away things and esoteric topics, but in the last week my life has personally been touched by the credit problems currently going around:
1) My bank failed and was closed by the FDIC (the major bank regulator). NetBank was one of the first internet banks, and I never had much trouble with it, but apparently they bought the wrong sort of mortgages and the government forced a sale. The checking accounts and other liquid assets have been purchased by ING Direct.
2) My mortgage was sold. Not sure what the deal is, but ABN Amro closed down their mortgage servicing web site, and sold my mortgage to Citi Group.

Oh, well. The ING and Citi websites seem better than the others, so I guess its for the best.

FPL and solar-thermal energy

Isn't $80/barrel oil grand? Recently, Florida Power and Light announced that they would build a 300MW power plant (that's pretty big) somewhere in Florida. The system uses mirrors to boil water in pipes placed above the mirrors to generate steam. This steam is then stored, and used to drive turbines that generate electricity. The plant will be able to operate for up to 20 hours without sunlight, to help overcome cloudy days and nights.

The costs are competitive, and in some cases cheaper, than coal and natural gas plants. The company to build the plant is Ausra.

You will see a lot more of this.

Ah, normality

So, after all my hand wringing about corporate credit markets, it appears that today, the day that two very large banks announced the damage that the subprime mortgage mess inflicted to their profits, the Dow Jones Industrial Average has set an all time session high. Apparently, fears were a bit overblown, and a major risk seems to be evaporating.