Global monitor

Published on Saturday 5 July 2008 14:44

THEY gave it the traditional Stars and Stripes treatment, of course. That's the American Way come rain or shine, but Independence Day was a rather low key affair this time around.

And that included the Lone Star state, especially those folks who remain stubbornly attached to their beloved sports utility vehicle, the size of a tank. They're far too busy scraping together enough dollars to fill up their SUVs at the pumps, and are in anything but a party mood thanks to the price of gas hitting a record $4 a gallon.

Even in the state capital Houston, renowned for its slick Texas hold 'em negotiating style, the atmosphere is tense. US Federal Reserve chairman Ben Bernanke has attempted to calm Wall Street nerves by claiming the American economy will avoid major decline and any substantial downturn.

Try telling that to motorists as they pick up the petrodollar tab. The stakes are high for a United States now experiencing real financial hardship – by their standards – caused by a dual oil and sub-prime mortgage economic crisis.

Even the self-styled "global oil capital", Houston, is not immune to such economic pressures. It's no accident that 10,000 business executives meet in the city from tomorrow to discuss new technologically backed green energy sources and other related initiatives, at Microsoft's annual four-day Worldwide Partners Conference.

Contrary to Bernanke's version of events, rich Americans and rural workers alike are reported to be struggling to fill up with gas as they deal with low incomes and soaring utility and food bills. Somehow, a Saudi Arabian move thousands of miles away to release an extra 200,000 barrels of oil daily isn't easing the strain.

Some North American workers are having to borrow dollars from their bosses to fill up tanks and get to work, since petrol hit a record high.

Some have given up eating meat to buy fuel, "For Sale" signs are evident at local fried chicken restaurants, gasoline theft is on the rise and SUVs, pick-up trucks and mere cars are left abandoned until their drivers can scrape together fuel money. Meanwhile, numerous local authorities are leaving grass high along roadsides and making fewer highway repairs to save on petrol costs.

Former Bush adviser Matt Simmons, chief executive of the Houston energy consultancy carrying his name, claims that as oil runs out, the economic process of globalisation is over. BP, with a big presence in Texas, reports global oil production fell in 2007 for the first time in six years, while consumption continues to grow.

In his company's annual Statistical Review of World Energy, BP's chief executive Tony Hayward highlights an imbalance between oil supply and demand, blaming human, rather than geological, factors, such as lack of investment, high taxes and barriers to access where four-fifths of the world's oil is controlled by national governments.

Whatever spin is placed on such uncertainties, the solution is cleverer long-term use of technology, claims Raymond O'Hare, director of Microsoft Scotland, and chairman of IOD Scotland. "Only by harnessing the very latest in technologically grounded know-how can we all cut costs and boost productivity in almost every aspect of business life," says O'Hare, who is leading a 30-strong Scottish partners' group in Houston.

The States might be renowned for its winner-takes-all business attitude, but oil consultant Lawrence Goldstein sums up current US energy policy as "playing Russian roulette with every chamber loaded".

What's not in doubt is that we're all keenly watching over the shoulder of the world's largest economy to check what card it plays next.