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Monday, August 15, 2011

Indian Railway to opt for LNG on large scale.

The Indian Railways is one of the largest railway networks in the world. News out is that Indian railways wants to opt for LNG on large scale (I dont see how they will start using LNG?) to reduce green house gas emission and ensure major operational savings.The govt has also committed itself to Diesel Price decontrol.
(Link to article)

Here is a chart of Petroleum/Crude Oil Production in US.

American Geophysicist M.K.Hubbert predicted in 1956 that american oil production would peak in 1965-1970. 
As can be seen from the charts .. he was right.
-All the new oil production/extraction technologies (available to US) till date have resulted in decrease in production of oil.
-The largest consumers of Oil in US is "Transportation" Industry. In India ..there has been a rise in the production and use of automobiles for personal use.
- Crude Oil Refiner Acquisition cost has moved up steadily which means profit margins are under pressure. (Now we know why Reliance Industries is dropping like a Rock and will continue to do so in the future..)

Conclusions: We live in Interesting times and the next 10-20 years are going to be more interesting. 
- The people in power are aware of "Peak oil" but do not want a panic like situation and are using terms like "Carbon Foot-Print", sustainable development, Renewable Energy
- The Markets are trying to manage the volatility associated with transfer of assets from "Petroleum Dependent" to "Petroleum Independent"
- Public transport system .. govt is making every effort to build climate controlled (AC Buses, Metro Rail, Pvt Taxis) public transportation system palatable to all . 
- Piped Gas though has very high initial setup cost is being pushed to each and every household.
- The value of Gold and other precious metals are rising because of this uncertainty(asset price volatility) as Gold has traditionally been a store of Value.  One must remember that its a store of Value not a medium of economic activity. Infact Gold cannot be used even as currency as most of the gold cannot be valued (purity/weight/coinage)
- A large population of the world is engaged in economic activities which are not "necessary/basic requirements" with rising fuel prices the "economic value addition of some sectors will diminish"  while others will gain prominence.
- With rising cost of petroleum .. quality of life will definitely suffer. 
- Future has always been progressive. An Individual in today's world is enjoying the comforts which even a king could not afford in olden days. But it is important to be aware of changes in circumstances. Just as the "Baby Boomers" are set to retire in US in 2011 their main assets House and Mutual fund/Stock Investments have collapsed in Value.

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