The Next Century- After the Age of Oil & Autos

[drbubb]

The ideas from which this thread is based, arise out of the recent article on FS:

ENDING A CENTURY OF OIL ADDICTION

The Challenge of an Outmoded Transport and Living Infrastructure

by Michael Hampton / May 22, 2007

 

Link: http://www.financialsense.com/fsu/editorials/2007/0522.html

 

Energy Efficiency per capita

 

COUNTRY-------- OIL DAILY ELECTRIC PER ANNUM

United States.... 68.81 bbls 12,187 kWh/year (2006)

Japan............... 42.01 bbls 7,424 kWh (2006)

France.............. 32.43 bbls 7,142 kWh (2003)

United Kingdom. 30.18 bbls 5,784 kWh (2003)

Russia.............. 17.66 bbls 5,674 kWh (2004)

 

World............... 12.55 bbls 2,215 kWh (2003 est.)

Brazil............... 11.67 bbls 1,975 kWh (2003)

China................. 4.97 bbls 2,140 kWh (2006)

India.................. 2.18 bbls 481 kWh (2003)

 

EXCERPTS:

1/

What is very clear is that America and other post-industrial countries are today facing a huge new challenge. The age of oil and the automobile is ending. Companies and countries which led in the 20th century are not likely to maintain their leadership in our current century. Past successes have bred complacency, and a resistance to change.

2/

America's love affair with the automobile, also brought an addiction to oil, and committed the country to building (with help from federal subsidies) a huge highway system to accommodate private cars. America now has about 250 million automobiles, and by far the world's largest network of national highways, with 6.43 million km. This network is present in every state and connects every major city, and has made possible "the American way of life" with its trademark suburban areas, with one or more cars in every driveway. Let's look at how this compares with the world's second largest highway system. China has 4.3 times as many people, a similar land area (3.7 million sq. km), and only 1.55 million km of highways. That's only 24 percent as much highway. America has 18 times as much highway per capita, and uses 14 times more oil per capita, when compared with the Chinese.

3/

The US has created a 20th century living standard, the suburban lifestyle, which consumes oil with a voracious appetite. The US must put itself on a diet, and perform radical surgery on its energy consumption, its housing arrangements, and its transport infrastructure. If it fails to do so, the the rest of the world will force a diet upon it. For some years a crisis has been delayed, as the exporting nations bought dollars to keep their currencies weak, and to buy time to make changes of their own

 

COMING??

 

+ Inflation will rise in the US because imports will become more expensive in terms of dollars. Oil will be the critical commodity to watch. For the US, there will be a vicious cycle, of a falling dollar, leading to rising oil prices and higher inflation.

 

+ Eventually, the oil price will reach a point ($100, $150, $200, or higher?) where the economic slowdown becomes a full-blown recession within the US.

 

+ Expect some big adjustments in real estate prices, with suburban properties far away from public transport likely to lose value in relation to those that have mass transit connections. There will be more "urban" shopping malls, where shoppers visit by foot, train, or bus, rather than the suburban malls surrounded by parking lots.

 

+ The weak dollar may require a rise in interest rates... If the Fed ignores the falling dollar and cuts rates, then inflation will just get worse, and hyperinflation will become a real possibility.

 

The winners in this brave new world, will be the countries that embrace the change, innovate their sources of energy, and reconfigure their transport infrastructure away from oil, the automobile, and a suburban way of living. Meantime, countries that behave like the US and maintain an oil and auto infrastructure will find that more and more of their wealth is burnt up by this outmoded and expensive way of living. And the apparent free-lunch of over-consumption, will not be free much longer. Instead of being innovators, they may find themselves left trailing behind, reacting in a world where the important changes are wrought by others.

 

 

 

= =

 

SO WHAT is the next Century goiung to be based upon:

 

CHINA and NUCLEAR POWER (Uranium & Thorium) are my guesses

 

Let's discuss these, and some other investment themes for the 21st Century

 

= = =

 

Clone threads:

HPC- : http://www.housepricecrash.co.uk/forum/ind...showtopic=54836

GHPC:

[malco]

I think we are quite a long way from ending the oil age. The problem is not lack of oil. Every year, the world produces enough oil to fill Loch Lomand, and it will continue to do so for the time being. Even the US is not short of domestic oil resources, it's just that the culture is so infantile in its squanderful habits.

 

Bear in mind that modern cars are actually very inefficient. They are far too powerful, far too heavy and they are driven too aggressively. Under duress, small, light, slow cars getting 100mpg will be attainable with only slight developments of the Victorian technology we currently use. People who have cars won't give them up until they simply have to. Then they will be pissed off, not "beyond the car".

 

I'd foresee a world in which the currently technically advanced world just carries on as usual whilst the weaker nations steadily shrivel. We'll see mass starvation, and our pop stars will do good touring these places, but few will join the dots as to why starvation has suddenly increased. The cost of this will be progressive securitisation of life in the developed countries against terrorism, both home grown and from elsewhere.

 

I cannot see people being sensible about falling oil production - suddenly deciding to be "fair" and share it all out. That just is not how the world works. The moral credibility of democratic states will decline as they are seen as more and more just enabling a doomed lifestyle to last a bit longer in a military citadel. Maybe at length democratic states will fail through voter apathy, as is happening in the US. And beyond that, likely these states will lose their basic rainson d'etre, which is to protect their taxpayers, so perhaps a multitude of private petty states will spring up to replace the national states. This process will further disrupt economies of scale and scope, accelerating the decline of technical competence, with real living standards slipping back in time into the Victorian Era (although those who own a lot of land and gold now will inheret the earth, quite literally, to form an ultimate super-class).

 

This is an idea I have explored in a novel I am writing. The progression to the failure of national states appears credible, as political unreality meets the harsh truth of national bankruptcy eventually. The social state luxuries we now have may not be affordable in 30 years' time.

[drbubb]

Bear in mind that modern cars are actually very inefficient. They are far too powerful, far too heavy and they are driven too aggressively. Under duress, small, light, slow cars getting 100mpg will be attainable with only slight developments of the Victorian technology we currently use. People who have cars won't give them up until they simply have to. Then they will be pissed off, not "beyond the car".

 

I'd foresee a world in which the currently technically advanced world just carries on as usual whilst the weaker nations steadily shrivel.

 

maybe.

but here's an alternative:

 

+ china moves towards those smaller lighter cars

+ in the usa, the wealthy stay with heavy vehicles which they can afford to run, while poor and normal folk get squeezed

+ oil prices shoot up to $100, $150, then $200, as the dollar drops

+ china can continue to fuel its lighter vehicles, thanks to a strong RMB

 

+ in the us, $200 oil puts co's out-of-business, while non-rich commuters find themselves squeezed enormously, and

.. retail sales plummet, as a larger share goes into expensive gasoline

.. people seek new ways of getting to work, and work closer to where they live

.. political pressure favoring mass transit rises

.. the rich become targets for gas-guzzler taxes

.. suburban home prices plummet in a weak real estate market

[drbubb]

Good (and relevant) podcast on FS to day:

2nd Hour Guest Expert:

Bill Paul, Author

"Future Energy: How the New Oil Industry Will Change People, Politics and Portfolios":

http://www.netcastdaily.com/broadcast/fsn2007-0623-2.asx

 

Concerns over the availability and security of world energy supplies, especially when it comes to crude oil, have many people wondering what the future of this industry holds and how technology will continue to change it. Thanks to the energy technology revolution currently taking place, a promising "new" oil industry is quickly beginning to take shape-and it will, without a doubt, affect every company, household, and investor.

 

In Future Energy, author Bill Paul--a national energy and environmental journalist for more than thirty years--skillfully addresses the investment implications of this new oil industry and shows you how to profit from the changes that lie ahead.

 

Book: http://www.amazon.com/exec/obidos/ASIN/047...inancialsenseon

 

Bill Paul is a former Wall Street Journal energy and environment reporter and a former special energy correspondent for CNBC TV. He is the editor/publisher of Earth Preservers, an award-winning energy and environmental newspaper for school children. He also is the managing editor and majority owner of a new financial news web site called EnergyTechStocks.com.

 

see also : http://www.energytechstocks.com/ (not ready yet?)

[HollandPark]

Orlov's presentation on how poorly the US is prepared for a crash, is relevant here too

see: http://www.greenenergyinvestors.com/index.php?showtopic=1970

and

presentation:

http://energybulletin.net/23259.html

 

"I've described what happened to Russia in some detail in one of my articles, which is available on SurvivingPeakOil.com. I don't see why what happens to the United States should be entirely dissimilar, at least in general terms. The specifics will be different, and we will get to them in a moment. We should certainly expect shortages of fuel, food, medicine, and countless consumer items, outages of electricity, gas, and water, breakdowns in transportation systems and other infrastructure, hyperinflation, widespread shutdowns and mass layoffs, along with a lot of despair, confusion, violence, and lawlessness. We definitely should not expect any grand rescue plans, innovative technology programs, or miracles of social cohesion."

[drbubb]

@: http://www.housepricecrash.co.uk/forum/ind...showtopic=50524

 

Off the top of my head, in order of severity, I would say the following:

 

1. New build, "executive" flats (particularly suburb/in the middle of nowhere)

2. New build, "executive" flats (city centre)

3. New build houses (suburban)

4. Period conversions (city centre)

5. Period mansion blocks (city centre)

6. New build houses (country)

7. Period houses (country)

8. Period houses (city centre)

9. Period houses (suburbs)

 

Thoughts?

 

Makes some sense... But I would summarise thus:

 

+ Anything widely held by the BTL brigade

+ Properties in the suburbs that will be hit by a jump in Oil prices

 

If the oil price really soars, then you may have to move your #9 up to #1,

since detached houses in the Suburbs would get hammered by a doubling of oil prices

 

See: http://www.financialsense.com/fsu/editorials/2007/0522.html

[drbubb]

US demand is not what has driven the Oil Price higher. It must be China and India, etc.

 

 

Thus, on a per capita and on a per household basis, oil consumption has been relatively inelastic since 1986. (For a discussion of elasticity see “The Elasticity of Oil Production and Consumption” . At this point in history, it will take a significant recession, an incredible shift of consumption to alternative fuels, or a deep transformation of lifestyle to bring down oil consumption.

 

The relationship between oil consumption, expenditures and recessions has been graphed in the chart below. Significant increases in the amount of money America spends on oil (1973, 1979, 1990 and 2000) have been followed by a recession. Yes. Other factors contributed to the decline in GDP that characterized these recessions. However, one can not escape a nagging fear that sharp increases in oil expenditures may cause a subsequent recession. The huge increases that occurred in 2004 and 2005 suggest the possibility of a coming recession in the 2007/2008 timeframe.

 

...more: http://www.evworld.com/article.cfm?storyid=1275

[drbubb]

(from a posting on the August Market comments):

 

Markets are sliding- apart from China, someone said. This was the reaction...

 

Except in China.

 

Like Bill Bonner said,

+ The US is experiencing a fragile "crack-up boom" based on excess leverage and consumption, while

+ China is experiencing a genuine boom, building its productive capacity

 

After the crash, China will strengthen as the US slides into a long recession or worse.

It will take years for the US to deal with its structural problem: 50% of its citizens live a wasteful

life in the suburbs. They will need to move, build new mass transit infrastructure, and go back to

work. If they dont, they will experience a prolonged period like Britain in the 1970's- an American

version of the "British disease". (ie. thinking they're great, deserving a better fate, and unwilling to

help themselves create it.)

[drbubb]

ANOTHER WAY of looking at it: Cheap Heroin(Oil) feeds a Habit

 

 

The United States consumes more Gas than 20 other countries combined...

 

/from: http://www.speculativebubble.com/

[drbubb]

Interview with Richard Heinberg - talking the economic catastrophe caused by Peak Oil