Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Tuesday, March 20, 2007: We
squander energy. We finance our own insecurity. But there is good news. Silicon
Valley is investing massive monies in new non-oil, energy sources. And the upcoming
energy crisis will finally force us to do something.
This is the last
slide of 40 in a presentation that Matthew Simmons, a world energy expert, gave
in early March:
In the talk he
talks about America's long oil history:
But our oil is
running out, so...
But there were
problems with this thesis...
So, what now?
For the entire
Simmons presentation, click here.
I asked my own
energy expert, Jim Kingsdale, for his interpretation:
I think Simmons
speaks the truth regarding declines in oil production from old fields, which
will cause global oil flows to peak very soon. But there are also a growing
number of mitigations in development, including especially new technologies
for producing renewable energy (solar, wind, geothermal, ocean wave, biodiesel,
ethanol, coal-to-liquid, and coal-to-gas). Also, there are huge savings in
fleet mileage possible with emerging developments in hybrid, hybrid/diesel,
and plug-in hybrids, all of which will be accelerated by new developments
in battery technologies and some nanotechnologies.
My sense is that the "energy crisis" will develop as a series of
step functions. Oil will go to $100 - $125 when we recognize that production
has peaked and cannot be expanded, which I expect within the next 18 months.
That will temporarily reduce demand and a temporary glut will appear, bringing
the price back down below $100 for a while. Then, as the global production
plateau begins to go into recognizable decline, maybe in 4 years, the price
will spike again - maybe to $250. Then another decline in demand will
cause a temporary pullback.
Each new plateau will give added impetus for the implementation of more energy
saving behavior changes, particularly added fleet efficiency through the availability
and, more importantly, the public's purchase of more fuel efficient cars and
trucks. Also, the price spikes will spur more production of ethanol, bio-diesel,
and coal liquids and more transfer of work from cars/trucks to trains and
boats, and more intercity and intracity light rail. And they will also spur
the growth of alternative electricity generating capacity from nuclear, wind,
solar, etc. and the migration of transportation from petroleum dependency
to electricity dependency.
So ultimately society will adjust to the reduction of oil availability of
maybe 87 million barrels a day in a year or two down to, say, 75 in ten years
and 65 in 20 years. We'll be able to grow the economy despite these declines
because we'll be using more electricity generated by non-petroleum means and
by investing in more efficient transportation alternatives (the car and truck
fleet and light rail)
But I suspect that these substantial increases in the price of oil, when they
come, will be sufficiently shocking to the economy and the psychology of the
market, that when they occur it will not be very pleasant to be invested
in common stocks. Oil and oil service stocks should fare better, but when
things go down hard everything gets impacted. So there may be very few
places to hide.
In sum, it's not the end of the world. But it is the end of the era of cheap
oil that has allowed us all to squander it. And it may be the beginning of
the end of a number of personal and geopolitical habits, like flying anywhere
at the drop of a hat, living 50 miles from work, or thinking that the U.S.
can afford a global military presence. As always, the rich will find a way
to have fun throughout and the poor will pay the biggest price -- and that
will hold true both for individuals and societies.
a piece of dubious history: Ken Lay's jinxed desk. The
first bid is $25,000. But you can still bid on Ken Lay's desk. Click
Texas, March 16 -- Saving Animals announced today its receipt of the executive
desk used exclusively by Mr. Ken Lay, Founder, Chairman and CEO of Enron, from
1987 through 2002 and the executive desk used by Mr. Richard Kinder and Mr.
Jeffrey Skilling while Presidents of Enron. The custom furnishings were donated
to Saving Animals, a non-profit animal protection organization. The charity
will auction the items exclusively through e-Bay beginning March 16, 2007 and
ending March 26, 2007 with proceeds to benefit the groups programs to
help animals and community improvement.
kind desks were designed by Gensler Architects and fabricated by Brochsteins,
one of the nations premiere manufacturers of custom architectural furniture.
According to Brochsteins, the desks, with an elegant Makore Pommelle
veneer, would cost well into five-figures to replicate today, in addition
to the iconic value and the historical significance of the pieces. Provenance,
the documented ownership histories that confirm the authenticity of the furniture,
available for review and provided to successful bidders.
was selected as the recipient of the unique gift because of its commitment
to the City of Houston and its citizens to address the tragedy of pet-overpopulation
by providing sterilization surgeries for dogs and cats, preventing homeless
animals, and promoting adoptions.
Founder and President of Saving Animals reminds, It is fitting that
something positive will come from the sale of the Enron Building to help the
community. By spaying or neutering pets, and promoting adoption of homeless
animals, were keeping strays off the streets and creating a healthy
community for animals and people, said Hawkins.
don't make this stuff up.
Irishmen, Patrick Murphy and Shawn O'Brian grew up together and were lifelong
friends. But alas, Patrick developed cancer, and was dying. While on his deathbed,
Patrick called to his buddy, Shawn, "O'Brian, come 'ere. I 'ave a request
for ye." Shawn walked to his friend's bedside and kneels.
boy, we've been friends all our lives, and now I'm leaving 'ere. I 'ave one
last request fir ye to do."
into tears, "Anything Patrick, anything ye wish. It's done."
me bed is a box containing a bottle of the finest whiskey in all of Ireland.
Bottled the year I was born it was. After I die, and they plant me in the ground,
I want you to pour that fine whiskey over me grave so it might soak into me
bones and I'll be able to enjoy it for all eternity."
O'Brian was overcome
by the beauty and in the true Irish spirit of his friend's request, he asked,
"Aye, tis a fine thing you ask of me, and I will pour the whiskey. But,
might I strain it through me kidneys first?"
A sweet grandmother telephoned St. Joseph's Hospital. She timidly
"Is it possible
to speak to someone who can tell me how a patient is doing?"
The operator said
"I'll be glad to help, dear. What's the name and room number?"
in her weak tremulous voice said, "Norma Findlay, Room 302."
The operator replied,
"Let me place you on hold while I check with her nurse." After a few
minutes the operator returned to the phone, "Oh, good news. Her nurse has
told me that Norma is doing very well. Her blood pressure is fine; her blood
work just came back as normal and her physician, Dr. Cohen, has scheduled her
to be discharged Tuesday."
said, "Thank you. That's wonderful! I was so worried! God bless you for
the good news."
The operator replied,
"You're more than welcome. Is Norma your daughter?"
said, "No, I'm Norma Findlay in 302. No one tells me crap."
This column is about my personal search
for the perfect investment. I don't give investment advice. For that you have
to be registered with regulatory authorities, which I am not. I am a reporter
and an investor. I make my daily column -- Monday through Friday -- freely available
for three reasons: Writing is good for sorting things out in my brain. Second,
the column is research for a book I'm writing called "In Search of the
Perfect Investment." Third, I encourage my readers to send me their
ideas, concerns and experiences. That way we can all learn together. My email
address is .
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