Markets

My View of the Future

The end of the era of cheap energy will change our housing, transportation and vacation lifestyles.

My friend Jim calls to suggest that I sit back and think about the subtle and not-so-subtle consequences of today's energy prices. That's what Jim used to do for a living. He was the corporate strategist for a multibillion-dollar company. His job was to ask "What if ...?" and then connect the dots.

"For example," Jim says, "we are rolling back the transportation clock 30 years. Airlines are toast. People think nothing about flying somewhere for the weekend -- to their second home, for instance. To them, cheap fares are a birthright. No more."

Running on fumes

It's so bad, Jim adds, that one major airline didn't operate a single profitable route within the U.S. this past spring. Now fuel prices are even higher. "Instead of seven or eight major airlines," Jim continues, "imagine just two or three, at most. Instead of $400 discount fares to fly from coast to coast, think $800 or $900."

Then people will take trains more often, I suggest. No they won't, Jim replies, reminding me that since the government nationalized intercity passenger service in 1971, politicians have kept Amtrak on a starvation diet, giving the train service just enough subsidy to stay alive but not a dime to grow. Every budget director and every president since Richard Nixon has hated Amtrak. Why expect that to change? my friend asks.

Jim hangs up, but by now I'm in a groove and begin connecting my own dots. I think of where people live. My family's house, just across the Potomac River from Washington, D.C., will probably rise in value -- we live close to our jobs. But people in the far suburbs won't be so lucky. Maybe our housing developments will begin to resemble those in Europe -- denser and closer to central cities. Our homes could be smaller, too. The 10,000-square-foot McMansions built during the past decade will cost a fortune to heat and cool.

What happens to family vacations? We'll make fewer road trips. Sell your Walt Disney Co. stock! I just cannot see people continuing to flock to Orlando. Or Las Vegas, for that matter. Beach cottages an hour away are in. Mountain homes four or five hours away are out. Simple pleasures are in. Expensive ones are out.

I'm not suggesting that our lives will deteriorate in quality, although I suppose that's possible. I am saying that they will change. We'll adjust. We'll drive less, fly less. Instead of commuting 30 or more miles, we'll seek jobs close by or ones that let us telecommute and teleconference. Is that so bad? No, but it's different.

And speaking of jobs, the U.S. auto industry will undergo wrenching change. General Motors, Ford Motor and Chrysler are already struggling to stay alive. Maybe there won't be room for all three in the future -- or for all the nameplates from Europe and Asia. Please don't start a trucking company -- ouch. But freight railroads, many times more fuel-efficient, are sitting pretty. I can imagine colleges offering degrees in windmill engineering. Flight schools are in trouble. But going through security at an airport will be a piece of cake.

The end of eras

In lamenting the closing of the American frontier, historian Frederick Jackson Turner said in 1893 that it had molded the national character -- made us who we are. But the end of the era of cheap (if not free) land didn't fundamentally change us as a people. Nor will the end of the era of cheap energy. But we will have to adapt, and those who do it best will prosper most.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
7 Best Commodity Stocks to Play the Coming Boom
commodities

7 Best Commodity Stocks to Play the Coming Boom

These seven commodity stocks are poised to take advantage of a unique confluence of events. Just mind the volatility.
September 8, 2021
Stock Market Holidays in 2021
Markets

Stock Market Holidays in 2021

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2021.
September 2, 2021

Recommended

These 2 Emotional Biases Could Kill Your Retirement
Investor Psychology

These 2 Emotional Biases Could Kill Your Retirement

Are your emotions sabotaging your retirement plans? Some basic knowledge and careful introspection can go a long way toward avoiding major pitfalls.
September 20, 2021
Investment Strategies for the 4 Stages of the Economic Cycle
Markets

Investment Strategies for the 4 Stages of the Economic Cycle

The U.S. economy is cyclical in nature, surging ahead and pulling back in waves over time. Investors’ portfolios need to change with the rise and the …
September 19, 2021
Is a Target Date Fund Right for You?
investing

Is a Target Date Fund Right for You?

You're busy, and poring over investments is a pain. Wouldn't a target date fund be easier? Take a look at their pros and cons to see if incorporating …
September 14, 2021
Is the Stock Market Closed on Labor Day?
Markets

Is the Stock Market Closed on Labor Day?

Stock markets and bond markets alike will enjoy their annual three-day weekend as America observes Labor Day.
September 5, 2021