Apparently cheap oil has ended for good and the oil economy has ended. Till a new form of energy is developed, mass air transport of heavy good is out of question, and also bulk ocean transport of iron ore, sand, etc. is becoming impossible. Colombia will not be able to supply by air flowers to Dutch markets. The transition will be faster than it is expected, as seen from the projection above.
Tuesday, June 24, 2008
A Pause in Globalization
Apparently cheap oil has ended for good and the oil economy has ended. Till a new form of energy is developed, mass air transport of heavy good is out of question, and also bulk ocean transport of iron ore, sand, etc. is becoming impossible. Colombia will not be able to supply by air flowers to Dutch markets. The transition will be faster than it is expected, as seen from the projection above.
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3 comments:
If history shows anything, it shows that markets do not move in a linear fashion - they are cyclical. If you project any trend with an upward slope out for a few years you come to some very high number. If you project a negatively sloped trend downward far enough you come to zero or even a negative number - it X # of years, people will pay YOU to take their US dollars.
I suppose $1,000/barrel oil is possible but remember that since energy is such a big part of everything, it would inflate the $ so that $1,000 would be no more "expensive" in real terms than $130/ barrel oil is today. People have been using oil because it was the cheapest source of energy, not the ONLY source. But once you make the cost of oil even $200/barrel, then all sorts of other alternatives become viable and some of them (solar, wind, nuclear) are permanent replacements for oil - once you have made the capital investment and built your rooftop solar electric panels you never need the Saudi's oil again, ever. So even if everyone in China starts driving a car, you still won't see $1,000/barrel oil.
I work with these equations and fully agree that some kind of sigmoidal equation would have been more fitting. Not that the future can be predicted by projecting current trends. What I was pointing out that something without precedent has started and will change all sooner than people realize.
PS: Please see and comment the new note on oil price function above.
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