Earlier this week oil closed above $100 a barrel for the first time. To make matters worse, wholesale gasoline and heating oil jumped 11 cents a gallon in a single day to their all-time highs. A lot of bad news triggered the increase of nearly $14 a barrel in the last two weeks. A 70,000 b/d refinery in Texas blew up and may take months to repair; floods, snowstorms, and power outages have the world’s coal markets breaking records; and to top it off OPEC is threatening to cut oil production, either officially or unofficially, because OECD stockpiles crept up a bit in January. When you can get $100 for every barrel exported you might as well save some for the grandchildren, because you sure don’t need the money.

Then there is the economic news. Last week, a Harvard economist opined to an energy conference in Texas that when we are through tallying up the credit crunch losses from real estate loans, car loans, credit card loans, and business loans all going bad at the same time, the total will be over $1 trillion. Now this is just an abstract figure until you learn that the total capitalization of all the banks in America is about $1 trillion.

It gets still worse. We recently learned about an arcane new financial product called the credit default swap. These are sort of marketable private insurance policies that you buy to cover financial assets that you suspect might go bad. This is all very nice until we learn that these “insurance polices” have been sold and resold so that the insured has no idea who is supposed to pay off his claim and whether or not the current insurer has any money. The scary part is that these things are now said to have a total value of $45 trillion.

If these credit default swaps start going bad and somebody is liable for even a tiny fraction of their supposed value, there is not enough money in China or all the sovereign wealth funds in the world, or the US Treasury to bail this out. All this is by way of saying that $100+ oil may turn out to be the least of our problems.

Now many traders are saying that $100 oil is just a short-lived speculative binge. The fundamentals don’t justify it and oil will soon be back to its “proper price” of $85 a barrel. Note how the “proper price” keeps moving up. Few talk of $40, $50, or $60 oil anymore. Even OPEC says that if oil goes below $85 a barrel, production will be cut until prices go up again. It just shows how easy it is to get used to being richer and richer.

For those who don’t follow such things, world oil production has been essentially flat for the last four years. Asian consumption keeps surging as China’s GDP grows by 10 or 11 percent each year. Domestic consumption in most oil exporting states, primarily Russia and Middle East is also growing rapidly. US and European consumption is growing slowly, so the difference between flat production and increasing demand is being made up by reduced consumption in the poorer nations of Africa, Latin America, and numerous small island states which are heard from occasionally. World stockpiles are also shrinking at a measured pace. As a world, we are burning more oil than we are producing.

Although there are endless debates about how fast oil production from current field is declining, everyone agrees that many million barrels per day from new oil production projects should start coming on stream in the next few years. These prospects leave many forecasting that all will be well for the immediate future.

Some are skeptical, however. If you have noticed the all-time high prices of agricultural commodities lately, you will realize that mandating the conversion of a significant portion of our corn crop into motor fuel is one of the worst laws the US Congress has ever passed. However, don’t worry, for within a year or so, all those voters who eat will bring them to their senses so that mandates and prices subsidies for corn-based ethanol will be eliminated.

When you connect the dots outlined above, it says there is a very big change coming, a paradigm shift far greater than any of us have known in our lifetimes.

At this point it is reasonable to ask that if so many bad things are about to happen, where are our leaders and aspirants, the President, the Cabinet, the Congress, the presidential, senatorial, and congressional candidates? The evening news, the talking heads, the syndicated columnists, the major papers? Isn’t anyone connecting the dots?

The answer is human nature. Nobody holding office or running for one wants to be associated with such devastating news. If you need an example remember poor old Jimmy Carter who was 30 years ahead of his time in warning us all — and was blown out of office as a consequence. Dire warnings do not win elections. All the incumbents will ever do is cross their fingers and hope that things don’t come unglued before their time in office is up. For the current US administration, it is going to be close.

Those in power justify themselves by saying they do not want to cause panics – widespread hording, market sell-offs, whatever. Let the panic, which will surely come, happen on somebody else’s watch. It is too much to deal with.

The downside of this collective denial is the loss of time to effect change. So far the only decisive action in the US was to turn our corn into SUV fuel. Much more needs to be done. It is looking more and more as if we are going to go over a cliff, while buying nearly unaffordable food and waiting in lines at the gas pumps before meaningful action is taken.