19 January 2010

MM Lee Kuan Yew first mentioned the phrase "Golden Period"of economic growth in 2007, but he qualified that with this sentence:

If there are no wars or oil crises, this golden period can stretch out over many years. Speech LINK
Well, MM Lee was right about the oil crises part. The "Golden Period" of economic growth that he foresaw was derailed in the 2008 oil shock when prices hit $147/barrel. Today, we have Dr. Tony Tan, executive director of Singapore's GIC, speaking of a "Golden Age" again for Asian economies.
But my belief is that the next decade could be a "Golden Age" for Asia. (See p. A18 of The Straits Times, 19 Jan 2009, or GIC Link).
Unfortunately, Dr. Tony Tan is going to be proven very wrong in his prognosis. I have no doubt in my mind that another oil shock is under way as our economies recover and oil companies struggle to maintain oil flows from mature, depleted fields. Nature's geology is not on our side. Peak oil will prove to be the undoing of the current economic paradigm and globalization.

Related Link: Singapore Needs to Wake Up to the End of Economic Growth

Watch this captivating video where Jeff Rubin gives a talk about oil and the global economy.
We don't have 15 years to wait for the development of alternative technologies. The solution right now is not to figure out how to turn cow dung into rocket fuel. The solution right now is on the demand side because we don't have the luxury of time for supply-change innovation, and the single most important way that we can make that adjustment on the demand side is to go from a global economy to a local economy because a global economy is an extraordinarily energy intensive - and in particular, oil intensive way of doing business. (Youtube: 19min 20 sec)
Full Speech

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