Oil surcharges are killing my business

John, why do you think readers want to continue to hear about how bad the economy is and how much their homes have lost their intrinsic value each day! Knock it off and publish something more financially and socially responsible!!
— Paul K., San Jose Calif.

Whenever the economic news and data get worse, you can pretty much count on readers to start asking that we knock off the “gloom and doom” and write something more upbeat. If we wrote that things were getting better, this thinking goes, people would be more optimistic, they’d spend more, hire more — and then things would get better.

For the record, as we’ve pointed out in recent columns we’re not yet in the “time-to-head-for-the-hills” camp. So far, this recession has been relatively mild. Unemployment is still relatively low. The stock market has had some rough weeks but is holding up fairly well. Inflation seems to be rising, but it’s nothing like the corrosive force it was in the 1970s. Banks have reported huge losses on ill-advised loans, but they can still get capital. The Fed has flooded the financial markets with money to put out the fire in the credit markets. Congress and the White House just doled out $150 billion in cash to keep consumers in a spending mood. Those medicines take time to work.

On the other hand (and we talk to those two-handed economists all the time), there are certainly troubling indications that tougher times may lie ahead. It’s hard to see how the world economy can keep growing steadily when its primary fuel — crude oil — is becoming so expensive few people can afford to use it. Unless our government gets serious about heading off millions more home foreclosures — bailout or no bailout — it’s hard to see how the housing market and the economy can recover.

You can construct plausible scenarios either way. Higher oil prices makes alternative energy sources more economically viable. And we may not be “running out” of oil after all; the Brazilian state-owned oil company Petrobras announced last week that it had found would could be the third largest pool of crude ever discovered. At 33 billion barrels — if proven out — it would be bigger than all proven U.S. reserves. (Back to that other hand: it would be a decade before that oil could be developed, refined and shipped to your gas tank.)

The point is that there’s really just no way to know how this movie will end. And it’s not our job to try to influence the outcome — other than to provide people with the information they need to make the best decisions they can about their own lives and the choices they make in November about who should represent them. Withholding information (good or bad) not only ill serves that goal — it’s dishonest. 

Besides, you don’t need me to spin the economic outlook one way or the other. There’s already an army of financial services publicists, corporate media specialists and government communications pros who are doing a terrific job.

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