Never let a serious crisis go to waste

The famous quotation by Rahm Emanuel: "You never let a serious crisis go to waste. And what I mean by that, it's an opportunity to do things you think you could not do before" is entirely fitting for Alaskans, and perhaps the nation, to ponder this week. At last check, the price of sweet crude was in the $44 per barrel range, gold was about $1,108 per ounce and copper was $2.32 per pound, more or less. For Alaska, as dependent as it is on revenue from resource development, these are dire times. Our state operating budget is on the ropes with no hope in sight, the capital budget no longer exists and our safety nets are at risk of being severely tested.

It is no trick to play Cassandra in these troubled times. Cassandra, you will recall, attempted to warn Troy that Greek warriors were hiding in the Trojan horse. The people of Troy disbelieved her, so she grabbed an axe in one hand and a torch in her other, to stop the Greeks from destroying the city. The Trojan people stopped her, and the rest is history. For today's Alaskans, Cassandra would be warning that 2016 is going to be 1986 redux, in spades.

On the other hand (lawyers always have an "other hand"), low commodity prices have some extremely positive aspects. If you are a fan of accumulating gold in your portfolio, it is a terrific time to buy. Gold hasn't been this cheap since 2011.

Globally, of course, Greece is teetering on the edge of total economic ruin, with at least Italy, Spain and Portugal at risk of following Greece over the cliff. The Iranians are about to embrace a 10-year plan for the development of nuclear weapons. The Saudis seem hell-bent to replace any western economic sanctions we negotiate away with the denial of Iran's ability to make a profit from selling oil by keeping it dirt cheap. As an added benefit, the Saudis get to give Russia a free poke in the eye and undercut Bakken production, as well. In addition, the Chinese determination to devalue the yuan drives the price of oil even lower.

The good news is that, in due course, cheap oil means that the distribution of energy will become more widespread. The Chicken Little Climatologist Club to the contrary notwithstanding, the widespread distribution of low-cost energy means more of everything for everyone. More food, more water, more transportation, more communication, better health care and generally more of the modern amenities that we all regard as indispensable.

This doesn't mean that there won't be a rebalancing over the next several years. The questionable national statistics that suggest a decrease in unemployment will undoubtedly be belied in retrospect. The excitement about a recovering housing market may be muted for a few more years. The inability of the Federal Reserve to justify an increase in the prime interest rate is likely to be attenuated. In brief, we may simply have to live with the status quo for a while.

To the extent that the environment and the economy are joined at the hip, it seems likely that there will be more carbon dioxide - not less - disbursed in the atmosphere for the trees and plants to process. Verdant flora should be expected to flourish in a carbon dioxide-rich environment. More agriculture and silviculture, of course, will spawn opposition. Accordingly, the Group Against Global Stasis ("GAGS") will undoubtedly finally get the traction they deserve.

Essentially, it seems fair to say that despite all the disruptive re-positioning taking place as a result of low commodities prices, we will all have "an opportunity to do things you think you could not do before."