The Futurist

Oil Prices May Drop Soon, But This May Postpone Energy Innovation

There is an article from Larry Kudlow today predicting a drop in oil prices in the near future.  Kudlow's prediction is derived from economic data indicating higher oil supplies in the near future, an increase in exploration and drilling by oil companies, and new legislation favoring drilling.  Given that Kudlow is usually right about most of his near-term economic predictions and points to several factors contributing to the possible drop, rather than just one, this could very well turn out to be accurate. 

However, if prices were to return to lower levels, it is actually not very good for the United States in the long term.  I believe that $70/barrel for oil is the optimal price at which energy innovation can accelerate without tipping the US economy into recession.  Technologies such as ethanol and tar-sand refineries become cost-effective when oil is above $70, but if oil returns to lower prices, this innovation will stagnate once again.

A chart of oil prices (wikipedia) indicates that in the last 120 years, only for a 4-year period from 1977 to 1981 was the real price of oil higher than it is today.  Today's price is higher than it has been for 116 of the last 120 years.  While the 1977-81 price spike caused a painful recession, it fostered significant innovation in engine efficiency and alternative energy.  As oil prices dropped and remained low during the 1980s and 90s, innovation slowed.   Click on the chart to make it bigger. 

   

The US economy will not be able to reduce our dependence on foreign oil, and significanly reduce the pollution of oil consumption, without a multi-year period of oil above $70/barrel.  This will be painful, but is the only way to enable the free market to achieve this necessary goal. 

Related :

$70+/barrel oil, the non-crisis.

The coming jump in energy technology.

The World Wealth Report, 2005

The annual World Wealth Report from Capgemini, which is a worldwide census of millionaires, was released this week.  The report does not take inflation into account, using the threshold of $1 Million each year.  It also calculates net worth excluding primary residence, which can be misleading, as an American who withdraws $300,000 in home equity from his primary residence would be recorded as immediately seeing a $300,000 jump in net worth by merely this transferral of funds.  However, the report still has many useful data points that present interesting trends. 

Those with a net worth greater than $1 million increased 6.5% in 2005 to reach 8.7 million in number.  Among these, those with a net worth of $30 million or greater increased at an even faster rate - 10% - to reach 85,600. 

The variations in regional growth rates of millionaires match the performances of those particular economies closely.  Within the global average millionaire growth rate of 6.5%, the United States was very close to the mean at 6.7%.  Europe lagged by growing at only 4.5% and is rapidly shrinking its share of the world's millionaires, just as its share of world GDP simultaneously shrinks.  At the other end of the scale, the surge in India is remarkable.  The 19.3% growth of Indian millionaires in 2005 follows a 14% increase in 2004, for a two-year increase of 36%.  South Korea, already as prosperous many European nations, saw a 21.3% increase in millionaires. 

The aggregate wealth of millionaires reached $33.3 trillion in 2005, an 8.5% increase from 2004, which itself was an 8.1% increase over 2003.  That the trendline of annual asset growth appears to be above 8% shows us how economic growth is exponential and accelerating, as such rapid annual increases in wealth would have been unheard of just 50 years ago, let alone 200 years ago. 

Making some modest assumptions for continued acceleration of exponential growth, we can expect the world to contain 18 million millionaires by 2015 and perhaps over 40 million by 2025.  It is true that inflation should be considered as a factor, but the continuance of technology diffusion to the mass market should also be considered.  In other words, many items available to even lower income people today, such as email, cellular phones, realistic video games, Yahoo! Maps, iPods, and Wikipedia, were not available to even the wealthiest person just 30 years ago.  Similarly, even the wealthiest people today do not have many luxuries that the average person will have in 2015 and 2025. 

As millionaire status becomes something achieved by an increasingly larger share of the population, the psychology of wealth will continue to transform the culture of broader society as well.  More people moving up Maslow's hierarchy of needs will make a big difference on crime rates, the variety of recreational activities available, and even the frequency of warfare. 

There is much to look forward to.

Related :

These are the Best of Times.

World GGP Grew by 4.3% in 2005.

The Psychology of Economic Progress.

Economic Growth is Exponential and Accelerating.

Senate Votes 93-6 to Keep Troops in Iraq. People Who Want America to Win Are Not Surprised

A few months ago, I wrote an article about how the Patriot Act was renewed in the Senate by an overwhelming 89-11 vote.  This lopsided margin makes one wonder what all the fuss is about, as legislation passing by such a margin, with even 33 out of 44 Democrats voting in favor, is simply not controversial by any meaningful degree. 

In the same way, a Senate vote on withdrawing US troops from Iraq by the end of 2006 was defeated by an even wider 93-6 margin.  This time, 37 of 44 Democrats voted in favor of and only 6 voted against keeping US troops in Iraq beyond 2006.  This effectively means that most Democrats are willing to incur several hundred more US troop fatalities in the hope of helping Iraq achieve a stable Democratic society, and that they too believe that victory is on track (by 2008, in my estimation).  Furthermore, along with the vote on the Patriot Act, this is ample proof that despite their rhetoric in order to appease fringe anti-American voters, most Democrats fully agree with the most basic principles of the War on Terror. 

This is also an indicator of how far from the mainstream the media has drifted.  When the media pours so much energy into positions that 89-93 Senators do not favor, and manages to persuade fashion sheep (those who form political opinions based on watching under 20 minutes of television news per day), it does extreme damage to our national security.  It also hastens the demise of the traditional media at the hands of the blogosphere, where the decentralized model and huge number of participants ensures that issues are inevitably given an amount of coverage in exact proportion to their importance and gthe political leanings of the general population. 

The 6 Senators who voted for troop removal contain, predictably, Kerry, Boxer, Kennedy, and Feingold, who depend on a substantial number of fringe leftist, fashion activist, and even fifth column voters to stay in office.  For the remaining 37 Democrats, I have sympathy, as they are caught in the absurd situation of having to say one thing on television, but quitely voting the opposite way on the floor, hoping that the media does not publicize their actual voting patterns.  Hillary Clinton was recently heckled when addressing an audience of extreme leftists, and will have difficulty finding issues to unite her prospective voters around during her Presidential campaign. 

Some fanatics believe that any supporter of the Patriot Act or Iraq occupation is 'dumb', 'evil', or both.  If that amounts to 89-93% of all Senators, that is also the approximate percentage of the population that would reject the traitorious views of the fifth column in the absence of media sympathy for these extremists.  Only 8-10% of the US population is a fifth column that sides with terrorists, but the majority of normal Americans have still not quite figured this out yet, even if the Senate has. 

As usual, Cox and Forkum always puts a thousand words in a picture :

Nanotechnology to Create Plentiful Clean Water by 2015

An article from the MIT Technology Review describes a development by researchers at Lawrence Livermore National Laboratory that could bring clean drinking water to 2 billion people who currently don't have access to this necessity. 

By using carbon nanotubes, membranes were created with pores so fine that only the width of seven water molecules could pass through.  This removes many impurities, including salt molecules.  These filters may reduce the cost of desalinification by up to 75%, and could come to market in the next decade.  The real secret is the price of carbon nanotubes, which is expected to decline by half every 18 months.  In 10 years, the price of nanotubes will be merely 1/100th of what it is today.  This filter could become inexpensive enough for even small villages to operate their own desalinification facilities.  This, in turn, could greatly reduce poverty, increase life expectancy, and foster economic growth. 

Water is a critical component of economic growth on every level, even more so than oil.  Numerous wars have been fought over water in the Middle East and North Africa, and this innovation could be yet another contributor towards the reduction of warfare through economic prosperity. 

Needless to say, a massive reduction in the cost of creating highly purified water also benefits the top of the economic pyramid.  Industries that use large amounts of purified water and could benefit from cost reductions are semiconductors, pharmaceuticals, healthcare, food processing, etc.

Related : The Nanotech Report 2006 - Key Findings

Zarqawi and the Anti-American Fifth Column

The successful elimination of Abu Musab al-Zarqawi is not only one of the biggest victories that we have seen in the five years since the War on Terror began, but the ripple effects of this will yield dividends for months to come. 

Zarqawi was a terrorist target of just as much importance as Osama bin Laden.  This is attributed to the fact that the reward placed on his head ($25 million) matches that of Bin Laden, yet avoided capture in a country that the US already occupies, for 3 years.  Zarqawi is directly or indirectly responsible for the deaths of nearly 1000 US troops in the last 3 years, while Bin Laden has not managed to kill any Americans during that period (except for being an inspirational figurehead to terrorists in Iraq).  Furthermore, Zarqawi beheaded multiple hostages personally, indicating a greater personal bloodthirstiness than Osama bin Laden has demonstrated a capacity for. 

At the very least :

1) The Expertise Vaccum : More than half of Zarqawi's lieutenants were already captured and killed before, and with the top leader gone, Zarqawi's successor is bound to be less experienced and capable.  A terrorist who can evade both the US military in addition to civilians seeking the $25 million bounty on his head, for 3 years, is not easily replaced. 

2) The Domino Effect : The recovery of Zarqawi's laptop provided a rich bounty of intelligence, and the US promptly conducted another 40 raids throughout Iraq in less than 24 hours since recovering the laptop.  Dozens of low-level terrorists have been captured and killed, yielding further intelligence.

3) The Psychological Effect : Terrorist leaders will continue to have the perpertual fear that a missile or laser-guided bomb can descend from the sky upon them at any time.  The strike that killed Zarqawi (just like the one that Ayman al-Zawahiri narrowly missed in Pakistan a few months ago) was from a precision guided weapon deployed from planes that were miles away less than a minute earlier. 

4) Iraqi Morale : The removal of a terrorist that has directly or indirectly killed over 20,000 Iraqi civilians in the same week that Iraq has formed their cabinet is a double-boost to morale.  Local tips were instrumental in locating Zarqawi, and that the net closed on him after two years of evasion is symbolic of how the Iraqi people are increasingly rejecting his ideology in favor of one of freedom and aspiration. 

Indeed, my earlier prediction of why we will be able to demonstrate full success in our mission in Iraq by 2008 is even more ascertained now.

Predictably, the 8-10% of the US adult population that constitutes an anti-American fifth column went to great lengths to downplay the news, discredit claims of Zarqawi's importance, or spin it in a way that attempts to make America appear as the villain.  Here are some selections of their words. 

The father of a man beheaded by Zarqawi (after voluntarily going to Iraq as a contractor), defends Zarqawi and makes Bush out to be far worse.  Also here.  Still more on the moral idiocy of this from Dennis Prager.

A blogger on DailyKos speaks semi-admirably about Al-Qaeda and Zarqawi. 

A sampling of quotes from other socialist blogs.  Interestingly, some criticize Bush for not killing Zarqawi when he had the chance in 2002 and 2003.  But that conflicts with their claim that the invasion of Iraq was unjustifiable and Saddam had no ties to Zarqawi-type terrorists.  The only common theme is a the end-goal of fanatical Bush-hate (also known as Bush Derangement Syndrome). 

Yet more mourning the loss of Zarqawi, as well as clumsy attempts to spin the news.

Bill O'Reilly calls out prominent anti-Americans.

Further explanation at Protein Wisdom about why Zarqawi's death is a blow to anti-Americans. 

There was a time when openly rooting for an enemy that deliberately targets civilians, and uses gruesome shock tactics such as televised beheadings, would have been considered shocking sedition.  There was a time when it would have been considered treason to claim that the elected President is more evil than such an enemy.  There was a time when it would have been considered strange for some people to openly oppose measures that may prevent themselves from getting killed by terrorists. 

As a wise man once said, a society is decadent when apathy is dominant, and the absurd seems normal.  A decadent society has to make a conscious effort to improve, or otherwise decline. 

I have been giving some thought as to why 8-10% of the human population is so bent on self-destruction, and perhaps the answer is Darwinian.  In nature, many species have natural predators to weed out the weak or defective members.  Since humans have no natural predators, nature had to adapt in order to continue the filtering process.  Nature responded by programming some members of the human species to weed themselves out voluntarily, by taking active action.  This manifests itself in the behavior described above, as well as in suicide bombings, etc.  Perhaps Darwinian natural selection has become natural self-selection. 

Perhaps this is the true key to understanding the threats we face. 

Deconstructing the 'Leftist' Mind

A very interesting take on the mind of 'leftists' from Ace of Spades.  A few choice sentences are :

Now, the things the left wants you to believe are not easy to believe. It's hard to believe that, for example, taxing work and investment will not reduce work and investment (especially when one simultaneously believes that taxing the use of gasoline or other energy will reduce the use of gasoline or other energy).

Why is humor and irony so common on the right and so hard to find on the left? Humor and irony require emotional distance from a subject-- something I would contend the left is in of rather short supply.

The philosophy behind the article likens leftism to a fanatical religion.  However the author slightly falls into the trap that 'leftists' set for him, by referring to them as 'progressives'.  That term, along with 'elite' and 'liberal' are tools that the leftists in question use to automatically elevate themselves to some perceived level of moral and intellectual superiority over those who don't share their views.  To cede these words to them is itself to grant them unearned credibility. 

Another thing that is funny, that the author points out, is how 'leftists' are utterly convinced that those who disagree with them are stupid (and also evil). Yet, the 2004 Presidential Election Statistics show a rather straightforward corelation between income and a tendency to vote for Bush.  Those earning over $200,000 a year voted 63% for Bush.  The middle class slice earning between $50,000 and $75,000 voted 56% for Bush.  Only those who earned under $30,000 voted strongly against Bush as a group (from cnn.com).

Income certainly does not corelate exactly to intelligence, work ethic, and determination, as someone in college may have all of these things but still not yet be earning a high income.  But to believe the 'leftist' view that Bush supporters are stupid is to believe that intelligence is inversely corelated to an ability to earn a high income.  This is vastly more difficult to logically accept. 

A belief that disproportionate financial rewards are earned by people who are stupid enough to support Bush could lead to a dislike for the American system in general, and sympathy for socialism and communism, no matter how many countries those systems have failed in.  It thus would appear that socialists are not interested in equality at all, but merely punishing the dumb people who would otherwise be earning more money than the anti-meritocracy socialists. 

Related : The Biggest Story of the Last 15 Years - The Stunning Defeat of Socialism.