I was fortunate to have the opportunity to visit with family last week and take in the Oildorado festivities in Taft. Oildorado was bigger and better than any I can remember. The Taft Oilworker Monument was larger than life and a great tribute to all those who pave, and have paved, the way for our economy to flourish. For those of you somehow unaware of the Oildorado tradition, it is a Taft celebratory event taking place every five years in honor of the oil industry which was, and is, a huge resource and employer in the area. This year was dubbed the 100th Anniversary Party as they rolled the city’s anniversary into the Oildorado celebration.
As alluded to above, oil has a very rich tradition in Taft and the surrounding areas. Oil has paved the way for our economy to really flourish from the Industrial Revolution forward and is currently the lifeblood of our economy. I know analysts who forecast market and economic growth and rely on changes in the price of oil having a large input. Indeed, as the price of oil rises it can have a large impact on discretionary spending and if people are not spending more in our consumer driven economy it can lead to trouble. Also, as input costs increase with manufacturing and production those increases are passed through to the consumer compounding the problem of less discretionary income. Obviously, as oil prices decrease consumers will find there dollars going a little further than previously. Now there are many more variables than just oil affecting our economy but one does have to admit that it plays a rather large role.
Something interesting is currently happening with most hard assets, especially those denominated in US dollars. Supply and demand will always determine prices. As our Central Bank continues to add liquidity into our economy, the value of our dollar is decreasing with the excess supply. No surprise there. However as our dollar devalues, the price of hard assets will increase and the excess liquidity Central Bankers are flooding into the system will somewhat provide a floor for hard asset prices, even if demand stays weak especially in the industrialized world. My last article showed the price increase in a basket of different commodities and the main cause is a devaluing dollar. This is the main argument against currency devaluation as a cure for a stagnating economy. We will see how it unfolds before us, but oil prices should hold up pretty well and that can be beneficial for local communities who rely on the oil industry.
It is nice to know no matter how low or high the price of oil will go that Oildorado will take place every five years and be conducted in such a fun and tasteful manner. I would like to show my appreciation for all those city and community members who took part in bringing it all together. A special acknowledgement goes to Oildorado President Eric Cooper whose hard work in the event definitely showed. I also want to thank David Bosworth who was able to send me a picture of the Brick, my family purchased in honor of my father, before I had the opportunity to see it myself. The monument was a work of art and definitely hit home in its goal to honor the men and women who have worked in the oilfields. The whole event made me take some extra pride in my hometown of Taft, (as if I didn’t respect Taft enough already.)