Peak Oil : Where do we go from here..

- Recently Mr Mukesh Ambani was in the news predicting oil at more than USD 100 per barrel.
- Another news related to the Ambani brothers was that Reliance Power will be provided GAS at 4.25USD from KG D6 but it will not be for 17 years..(infer that the KGD6 does not have enough gas reserves to last 17 years!!!)
- US Military has forcasted that surplus oil production capacity could disappear within 2 years and we could be facing serious shortages by the year 2015 (4.5 years from now!!)

I really do not need to go into what is peak oil..  if you do a google search there are 15.9 million search results. From an investment perspective and an Indian perspective where do we stand? what should we be doing?

Personally I can see that the govt is more eager to develop public transport systems
- Govt run AC buses in all major cities - trying to wean away the individual car owners to public transport.
- Emphasis on Rail and Metro Rail projects in large cities.
- Lot of digging for piped gas (for cooking mostly and maybe other use like transport/heating in the future)
- I also get a feeling that development of new major highways is not on schedule.(don't have any data right now to confirm it..this is just an inclination)

As an investor Reliance was in news for buying a 90% stake in the only licensed All India Wireless broadband company (infotel - Pvt company owned by the promoters of HFCL)
Reliance was also in the news for a possible majority stake in Largest Wireless Tower company in India GTL

I am not recommending Reliance as an investment idea (too expensive for my taste!) but we are looking for direction here.. We really need to understand that current lifestyle (As we know it) is deeply entrenched  in petroleum. We practically live and breath in petroleum.

- Food (Fertiliser, transportation, packaging, distribution)
- Clothes (Cotton - fertiliser, synthetic-petroleum)
- Medicine (Drugs -Chemistry-petroleum, manufacturing)
- Shelter (Brick making, Steel, Cement - Energy, Paint - Petroleum)
In fact the industrial revolution is based on availability of cheap hydrocarbons (Coal, Petroleum) and the ability of an individual to harness this energy to increase his capacity to do work.
The new world which we will all see unfold in front of our eyes (in the next 5-10 years is going to be completely different) because of the restriction in the availability of abundant energy to exploit.
1. Travel as we know it will be a thing of the past.(maybe tele conference, video conference)
2. Growth will be Zero or negative
3. Basic necessities will gain prominence.(food clothing and shelter)
4. Source of Energy?? - Electricity!!
5. Population Control!! - Gain popularity as growth falters!!
It has always been said that development is always progressive .. is always forward looking. So all this is very negative news .. this surely cannot be the path to the future!!

Most likely our taste will change. Like and dislike will change.
- "Bigger the better" will give way to "Small and Beautiful"
- Development Index will change from Energy used to Energy produced/saved!! (already gaining popularity in the name of Global warming)
- Energy which is the driving force of the current development model will be almost exclusively Electricity. (It is the only form of energy that has the distribution network in place to replace petroleum)
- Entertainment will go Digital (Video Games!, Virtual Reality!)

Conclusion: Investment need to be directed to core areas of the future. As can be ascertained from the aggressive steps taken by Reliance Industries.. IT & communication is going to gain prominence as it will replace travel to a major extent and become a core area. Electrical energy will also become core area of the future.. Battery Power (intermittent source of energy needs to be stored) will also gain in strength as Solar/Wind/ Hydro/Nuclear will be the future source of energy. Basic necessities such as Food, Medicine will be critical for sustenance. Stem Cell therapy and new development could really change human thought about medicine and regenerative medicine.

Japan as a country has minimum natural resources and at its peak epitomised the hydrocarbon economy. It also has been planning for the Peak Oil (from the previous oil crisis in 1973) we can look at Japan for the model of future cities and also from resource utilization perspective.