Replies

‘Yeah I am not too happy about where the economy is headed. However, it taking ‘generations’ is not true at this point. US Investors are confident OPEC can no longer control the price through simply flooding the market to reduce price as it once did.’

Given global demand, OPEC doesn’t have the excess capacity to “flood the market.” Only Saudi Arabia has about a 2 million bbls a day excess capacity above its OPEC cap. It is going to take generations to move us away from the internal combustion engine and a carbon based economy. There is too much capital investment to move that quickly from one source of energy to another.

I disagree. The same was probably said of the horse and buggy era and how in God’s name can we build all of those roads to support automobiles? Where will we get the fuel? Necessity is the mother of all invention.

‘As you stated, energy demand is going through the roof (as is the price of course). Your talking about a total of 20 years to be totally energy independant and I will say withing 10 years we will be importing 30% (or half) the oil we do now.’

It will take much longer than 20 years, if ever, that we will be totally energy independent. I don’t share your optimism. What do you base it on?

I base it on investments being made RIGHT now in the Boston VC community. It’s a 5-10 year ROI with big payoff for the Hydrogen economy. Honda has a Hydrogen car they are leasing next year, 100 vehicles for six hundred dollars a month. The technology is here and Honda plans for mass roll out (in other words becoming affordable to most consumers by 2012). GM is releasing the Volt, a complete electric car that will take you 40 miles on one charge, seat a family of four and go 65 MPH. There go to market is also 2012. Plus, I hear the pickup speed is awsome :)

Biodiesel investments are also rapidly scaling up with so many new viable technology to take almost anything and turn it into biodiesel. Coal liquification can supply all the heating oil the country needs right NOW. Do you think I am the only investor that has figured out you can make a killing when heating oil is $3.00 a gallon?!?

Automakers are creating flex-fuel engines to run on more ethanol, although I feel this is the least viable solution to become energy dependant. So with all of this, we will reduce consumption, my estimates are a reduction of imported oil by 30% over a ten year span.

‘At that point, the reduction in US consumption will lower the price of oil. The real problem is the pain the middle class and poor will feel in the next five years. With the perfect storm for inflation, consumer confidence is already waning. The bummer is they may vote Hillery despite the fact the Clintons know very little (or don’t care) about real economics.’

Here are population projections from the Bureau of the Census. By 2030 [23 years from now] the population of the US will have increased by 62 million or the rough equivalent of the current population of the UK. So we not only need to reduce our current demand but factor in new demand, which will be considerable. And then there is global demand:

“While in Beijing there are still 2.4 million people who ride their bicycles to work every day, nearly 1,000 new cars hit the streets daily. China’s roads are expected to be clogged with 170 million vehicles by 2020 says the World Bank — by which time the country would have surpassed the United States in total car ownership.”

“No one is doubting that more and more Chinese people are going to reach that threshold of affordability — to buy their own car,” said John Humphrey, manager of China operation for the U.S.-based car industry consultants J.D.Power Asia Pacific. “The pace of change we have seen in China’s auto market is astounding but demand is still growing.”

Seven million cars are sold in China each year. That means China this year left Japan behind to become the second-largest car market in the world after the U.S., where more than 16 million cars are sold annually.

No argument with any of that. Nations such as France and China are being shrewd with France relying on nuclear power and China quickly scaling out the next generation of pebble reactors. If we do not achieve full energy dependance within 20 years it will be because we do not also build out nuclear power. But that still would only leave us reliant on 30% of imports making supply and demand economics kick in and reducing the cost of oil. What moves do you see the responsible Arab nations making? They are investing heavily into hard assets of every type and some soft assets such as Wall St. :)

There is no doubt that we will move from one source of energy to another. The only question is how much time will be involved in doing it and the transition costs involved.

Sounds good. We have about 250 million cars [including SUVs and pickups] in the US and another 7 million trucks plus 6 million motorcycles. There is a lot to be replaced along with the infrastructure, i.e., gas stations, repair facilities, etc. And there are homes that rely on heating oil. I still find it hard to believe that this is all going to be done in 20 years. Starting when?

Given all the hoops we have to go through to get a nuclear power plant approved and built, I wonder how many will actually be put on line in the next 20 years. I believe it takes about ten years from inception to production of energy.

What moves do you see the responsible Arab nations making? They are investing heavily into hard assets of every type and some soft assets such as Wall St. :)

Many of the Gulf countries know that they are running out of oil and must put their money into other investments realizing that they need to replace the lost revenue. The Saudis have enough proven oil reserves to pump out 10 million bbls a day for the next 200 years. They will need the revenue because their population is exploding.

The US will move to other energy sources as a result of market forces. I would much rather see that than have some government mandated solution that could send us down the wrong road.