OIL: The Real Outlook

Much has been written about Solar Power:

• Benefit to the environment

• Global Warming

• Saving money on Electric Bills

• Government Support

• Government Funding

• Tax Incentives.

• And so on…

However, all of this had lead to little, if any, advancement in the field.

To make my point:

Dateline: 1964

Science Class

Teacher: Mrs. Hohman

Report: Solar Power.

That was 50 years ago.  In the past 50 years, little or nothing has happened. The reason for failure is that Government pays for activity, not for accomplishment.

Now let’s take the business approach.  This should go a long way toward my explaining why Big Oil should invest in Solar Power.

There are some sound business fundamentals coming to the fore.

• Rising Demand Curve

• Declining Costs

• Innovation

• Economies to scale

• Revenue growth curve

• Tax incentives

• Increasing return on investment

In addition, Solar Power is Clean Energy.
 

• Less Government Regulation

• Less Government Push-back

• Less Consumer Push-back

• Less Global Push-back

There is an incentive to do business in a country with a Solar Power Industry. (Invest in it)

Solar Power is an easy sell in a country that does not have domestic oil production and/or does not have the money to import oil. (Invest in it.)

Solar Power is a very cost-effective source of Energy. (Invest in it.)

Sunlight is the fuel for Solar Power Generators.

Sunlight is

• Free

• Globally Available

• In abundant Supply

• Unregulated

• Not Subject to Embargo

• Not Subject to Supply and Demand.

Of Course, there are a few problems attached to Solar Power.

Sunlight is

• Free

• Globally Available

• In Abundant Supply

• Et. Seq.

Bottom Line?  If the input is Free, the output is Profitable. The more people use, the more you make.

Then there are the home grown revenue enhancement opportunities—Plastic.  Plastic, the by-product of the Petroleum industry. (Another reason that Oil will never go out of business.)

When Engineers apply their skills to plastics, it will become less necessary to defoliate the landscape. Also...

Plastic Girders will 

• Replace steel in countries where it is cost-prohibitive or impractical or impracticable to use steel.

• Replace wood where wood will suffer from mold, rot, warping, infestation, cracked and breaking.

• Replace wood and steel where cost and weight and logistics make assembly, dis-assembly, construction and reconstruction become compelling factors for using plastic products.

• Everything from Archimedes’s Screw to bring water to a higher level to pipes to irrigate fields can be made from plastic.

Warmest regards,

Slim

Slimfairview@yahoo.com

Copyright © 2014   Bob Asken as Slim Fairview

All rights reserved.

Creating 3rd World Wealth

• 1.5 Billion people live on less that $1 a day. 

• 2 Billion people live on less that $2 a day.

• The Haves are increasing arithmetically. 

• The Have-nots are increasing geometrically

• The multitude may oppress the few, but the few may not oppress the multitude.  Not for very long, anyway.

To understand helping people in emerging nations, we must deal up front with two impediments.

1st:  Those who want to exploit people in emerging nations.

2nd: Those who believe they are helping people in emerging nations.

To have a clear picture, we need an economics lesson.  By Metaphor.

I have but two skills: an analytical mind, and the ability to speak in metaphors.  Here we go:

The biggest problem is the word wealth.

Some want to promise riches. Riches that never arrive.

Others define wealth a language for helping the rich get richer, but in fact, only keep poor people shacked to poverty by keeping poor people shackled to poverty programmes.

According to The Random House Dictionary, you can define wealth two ways.

A great quantity of money or property of value.

All goods that have monetary or exchange value.

To understand helping people in Emerging Nations, it is the second definition that will help us to better understand how to help people in Emerging Nations.

From The Definitions of Slim Fairview:

• Money: what you make.

• Wealth: what you have.

To a youngster who wants to mow lawns for pocket money:

• Money: what people will pay him to mow their lawns.

• Wealth: A lawn mower.

• Wealth: all goods having monetary or exchange value.

Here is the metaphor to explain the economics lesson.

NB  From the Bauhaus: Form follows function.

CAVEAT! 

This is an economics lesson.  Focus on the Economics ONLY!

Back in the day, a kid with a lawn mower could earn money mowing lawns.

With two lawn movers, he can

• Make money mowing lawns with lawn mover #1

• Make money renting lawn mower #2 to another kid to mow lawns.

• Hire another kid to 2work for him mowing lawns with lawn mower #2.

The question is, How much money can the first kid save up to buy the second lawn mower?

This leads us to a question of skill.

With mechanical ability, Kid #1 can buy a broken lawn mower, repair it, and put it into service.

Ultimately, the 2^nd kid gets paid for what he does. 

The 1^st kid gets paid for what he knows.

As demand for services rise, it will become necessary to buy more lawn mowers and to hire more kids to mow lawns.

If demand rises faster than growth, the kid will lose market share and revenue.

If the business grows faster than demand, money will be tied up in idle (unused) lawn mowers. This will reduce the return-on-investment.

Then there is Time Utility.

A lawn mower in May is worth more than a lawn mower in November.

Also, there are Threats.

Another kid with a lawn mower can penetrate the market and steal customers.

Two or three employees can pool their resources, quit and go into competition.

However, There are also Opportunities.  These are called Mid-term and Long-term Strategic Planing.

The1st kid can buy one riding mower instead of 3 push mowers and big for bigger and more lucrative jobs.

The 1^st kid, or his competitor can

• Invest in rakes for when the leaves start to fall.

• Invest in snow shovels for when the snow starts to fall.

• Invest in snow blowers. (Op. cit. riding mowers.)

• Invest in lawn mowers for when the grass starts to grow. (Op. cit. Time Utility.)

 

Now, having established the premise:

People in Emerging Nations neither need nor want charity.  They need and want capital investment.

From the Economics of Slim Fairview:

Capital Investment = Economic Development + Growth.

NB  

And when I say Capital Investment, I do not mean people from Industrialised Nations building lawn mower factories in Emerging Nations so poor people can earn low wages making cheap lawn mowers for people living in Industrialised Nations.

To elevate people in Emerging Nations from poverty, embrace the paradigm that has been used successfully in the past in:

• China

• Post War Germany

• Post War Japan

• Put people to work.

Now, here is a thought question:

• Your kid gets a job with a landscaper.

• You hire the landscaper to mow you lawn.

• The landscaper sends your kid to mow your lawn

• The landscaper pays your kid less money than you pay to the landscaper.

Does that make sense?  No…unless…you can’t afford to buy a lawn mower.

You have money to pay a landscaper, but you do not have wealth—a lawn mower.

To focus on the problem in Emerging Nations, ask yourself, How did the fist kid get the first lawn mower in the first place?

This is the predicament of the poor in Emerging Nations that is sustained with each new and failed initiative to help the world’s poor.  People cannot each symbolic gesture.

• Industrialised Nations

• Know what to do

• Know how to do it.

• Know where to do it

• Know when to do it  (Now!)

• Industrialised Nations have no excuse to fail to do it.  

• Industrialised Nations have No Excuse to Fail.

Warmest regards,

Slim.

Slimfairview@yahoo.com

Copyright © 2014 Bob Asken as Slim Fairview

All rights reserved.

OIL

A while back I wrote,  The Middle East will have to find ways to protect future oil revenues. It appears that they have. Despite the falling price of crude from $100 a barrel to $80 a barrel and now to $75 a barrel, Saudi Arabia is maintaining production and other oil producing nations seem to be in sync.
Remember, I said protecting revenues.  Not prices, not profits—revenues.

Falling oil prices, Middle East supply and a slugging global economy are bad news for U.S. Oil Company revenue.  

Remember the basic business paradigm: increased revenue and a rising demand curve ultimately effectuate a rise in capital investment and operations spending: buy more equipment, drill for more oil. (And now, natural gas.) 

However, spending money to increase supply is valid only if there is a demand curve growth and a reasonable expectation of increasing r.o.i.

However, he oil producing nations are maintaining output to maintain market share.  Add to this that sluggish global economy; US production increases, and competition, and we have analysts predicting energy stocks will fall along with profits.  In addition, advances in alternative energy may further impinge on market share and influence future R&D--both the activity and the strategy & planning aspects.

Nothing succeeds like success.
Success Breeds Success
We're on a roll

And the momentum becomes the movement creating a shirt in the paradigm.

Fossil fuels will be around for the foreseeable future...an maybe a bit more. However, the fossil fuel industry may need a new business model. A Plan B to adapt to that shift in the Global Paradigm.

Now, up front, I am a firm believer in solar power.  I did a report on it for science class in the 6th grade--50 years ago almost to the day.  I was11 years old.

Further, I believe that there is nothing dirtier and more dangerous than nuclear power.
If you have an oil spill, you can use a bottle of Dawn® to clean a greasy duck.  If you have a radiation leak, you have dead duck.  And new and improving technology will make it easier and more effective to deal with oil spills.  Radiation leak? Not so much.

However, we are talking about a shift in the Global Paradigm. Hence: the SWOT Test.



Strengths: 

The global economy is heavily reliant and dependent on fossil fuels.

Oil has a large capital investment infrastructure.

Oil has experience and expertise.


Weaknesses:

Fluctuating supply and demand

The global Market structure leaves P&L subject to foreign competition and political ans well as economic vacillations.

Greater production means lower prices, hence lower revenues, and lower investment.
  .
Higher prices move the market to alternative sources.

Propensity of other countries to develop their own energy assets.


Opportunities:

There is a growing need for, hence, a growing demand for petroleum by-products. 

Investment opportunities in renewables and alternative energy sources.

A growing global population and the attendant increase in energy needs and petroleum by-products.

Funds to invest in alternative energy and renewable


Threats:

Accelerated demand for and opportunities in technology, in renewables, and in alternative energy sources.

Competitor investments in same.

Other nations are less dependent on high oil prices and revenues.

Propensity for other regions and nations to develop their own oil reserves.


It may seem to be counter intuitive to suggest investing in your own competition. However, if you look at developing oil reserves elsewhere and alternatives, Big Oil can see the analogy when I admonish big oil to being investing more heavily in alternative energy.  

And there is this to consider: though fossil fuels will be around for a long time, perhaps, even a bit longer, very soon, gasoline (petrol) may become a by-product of the petroleum by-product industry.


I’ve written a few articles to help round out the discussion.


Plastics


Memo to Big Oil:


Nuclear Power has lost its luster but not its glow.



Warmest regards,

Slim

slimfairview@yahoo.com      

Copyright © 2014 Bob Asken as Slim Fairview

All rights reserved.

G 20 Summit! E 20 Invited?

Long Story Short: 


The G 20 is holding a summit in Brisbane, Australia.  I also discovered the existence of a B 20 group: Business leaders who advise the G 20.  What have not heard is that the G 20 is inviting the E 20 to the Economic Summit. You cannot help people without their input, and you won’t help them if you exclude them.

This is why I’ve been writing my articles about Emerging Nations forming an Economic Union. 


Emerging NationsEconomic Union—an article that proposes the forming of an Economic Union for Emerging Nations and those Unions forming a Union of Emerging Economic Unions. 

Solving theEmerging Crisis—This is the proposal that would help leverage the power of Emerging Nations. 

Forming anE-20—This proposes leveling the playing field by establishing what the Emerging Nations of the World need to gain parity in Global Economic Affairs.  For example: if there is to be a G 20 Summit, the E 20 should be included. 

The Futureof the G20 in Good Times and Bad—This is a look into the future if we do not recognise the fact that 


1.  The military option is no longer viable.

2.  The Economic Zero Sum Game doesn’t’ work anymore.



Warmest regards, 

Slim.

slimfairview@yahoo.com  

Copyright © 2014  Bob Asken writing as Slim Fairview

All rights reserved.

One Billion Chickens

The challenges facing the future of survival.

• China has a massive economic engine and much fuel.

• The haves are increasing arithmetically, the have-nots are increasing geometrically.

• China elevated 500 million people from poverty to the middle class.

• China can elevate one billion people from poverty to the middle class globally.

If four people share one chicken a week, that is one billion chickens a month. That is twelve billion chickens a year.  Plus corn.

When 1 billion haves and 6 billion have-nots become 2 billion haves and 4 billion have-nots, global demand will double.

The first 1 billion haves will have to make due with less. And the 4 billion have-nots will also have to make due with less.  This, to accommodate the 1 billion newly minted haves.

If one billion newly minted middle-classers bread down into 250 million families of four and have only one automobile each, that will be 250, million cars on the few roads that exist in already over-crowded and, by-and-large, impoverished countries.  And that does not count corn—whether to eat, feed the chickens, or fuel the cars.

Now, these are of course metaphors.  While chickens, cars, and corn will be involved in the economics of people rising to the ranks of the middle class, the issue is rising consumption, which means increasing supply and greater employment.

However, as with all things, there are two factors to be considered.

The leading and the lagging will, as supply and demand fluctuate, create a discordance.

The tipping point.

The tipping point is the point at which those rising from poverty to the middle class begin pushing those in the middle class back into poverty.  Also, there is the point at which those in poverty rebel.

“The multitude may oppress the few, but the few may not oppress the multitude. Not for very long, anyway.” ~ Slim Fairview. From, The Quotations of Slim Fairview © 2014.

A soupçon of history.

• In American Colonial Lore—The shot heard round the world.

• Russia’s Decembrist Revolution

• Rosa Parks and the Montgomery Bus Boycott.

• The Watts “kitchen table” riots.

• The tearing down of The Berlin Wall.

• The Arab Spring/Facebook Revolution.

Recently, the technology in the information age has done for emerging nations what television did for America’s Civil Rights Movement.   

Television brought the visual images of injustice to both the oppressors and to the oppressed.

Television made two things possible.

It showed the nation the injustices inflicted on African Americans

It showed African Americans the abundance available White people.

Now, Internet Technology is

Showing the suffering of those in Emerging Nations to those living in Industrialized Nations.

Showing people in Emerging Nations the abundance available in Industrialized Nations.

My Dad always suggested that I think about what I am going to say before I say it.  Now, I say, think about what other people are doing to hear before you say it.

When we say, Childhood obesity in America is caused by poverty, they hear, “In America, even the poor children are fat.”

When we say, One in three children in America goes hungry, they say, “If America does not feed her own starving children, they will not help to feed our starving children.”

It is very hard to argue with that when:

We are the ones saying one in three children in America goes to bed hungry.

&

They can plainly see and are surrounded by their own starving children.

Regards,

Slim

Additional reading below.

Slimfairview@yahoo.com

Additional reading:

Emerging Nations Economic Union 

Solving the Emerging Crisis

Forming an E-20

Copyright © 2014 Bob Asken as Slim Fairview.

All rights reserved.