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Clear Thoughts
Maintaining Consumer Confidence
| The President warns against using too much oil and Clear warns against the effects of lessening consumer confidence. |
Early this week President Bush requested that the American people not take unnecessary trips with the intention to conserve gasoline. At the time it seemed conservation was a good idea to the administration. We feel the President was given bad counsel to have suggested this tactic.
As the strongest nation in the world, we believe we should stockpile gas, diesel fuel, heating oil and other essential processed petroleum products not just crude oil. Corporations have not until recently calculated a strong enough return on investment to invest in building additional infrastructure for refining oil which is another key cause of this dilemma. This author thinks that is embarrassing when energy is considered strategic enough for the government to stock pile oil, even for nonmilitary purposes.
This leads back to the request made by President Bush and its impact on the economy and consumer confidence. The President is influential, even with people that did not vote for him. The very suggestion that to support your country means staying home clearly seems misplaced and not well thought out.
Our economy is heavily dependent upon consumer spending. Retail, durable goods are truly substantial drivers of this economy. Consumer confidence directly effects housing, mortgage financing and major projects and purchases by both individuals and businesses. As investment managers we soak in (albeit usually short to mid term) the consumer confidence numbers as they make waves, both positive and negative, to the day to day ebbs and flows in the stock market. So much of the connections between the consumer, how they feel and the strength of the overall economy are self fulfilling prophecies. When confidence is reported down, some consumers may postpone purchases and not start major projects such as home improvements, which then influences business decisions and the dominos begin to fall.
Postponing that back to school trip to the mall, the drive to the country, the trip to a special restaurant or away for the weekend may seem small, but that small trip multiplied by millions of people dutifully following a request by the President, can all by itself drive spending down, further lowering consumer confidence and so on.
We challenge our law makers to look to the future, to investigate alternative sources of energy, substantial increases in efficiencies with fossil fuels and to spur on new technology and innovation.
Innovation is as American as apple pie. Innovation can solve much of the short term energy mini crisis; it is usually accompanied by creating new jobs, industries, new companies and may aid our transportation and manufacturing industries from a decline to a new ascendancy.
We look to our elected officials for leadership, to spur innovation, not to retreat to our homes. |
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