Posted in Finance Articles, Total Reads: 1229
, Published on 03 May 2014
The world economy we know today is heavily dependent on the business of energy. The monopoly of fossil fuel being the chief bread winner for the major energy corporations is undeniable. It is definitely the black gold of our modern civilization or possibly, even a step beyond gold given the current world scenario. Every year at least two to three top five fortune 500 companies are oil and natural gas giants, led by Exxon mobil, royal dutch shell, Conoco-Phillips, Chevron etc .
The 'power of energy' is immense. These companies have earth shattering revenues which are in the leagues trillions of dollars and are projected to go higher. Now, this is where things get interesting. Almost all the major financial institutions and petrochemical industry experts predict that the revenues of these companies would go higher. But then we also have the government propagated and media accentuated fact that the pivot of their income, which is the natural gas and oil, is fast diminishing. How do these companies project such long term growth if the very source of their income is said to be fast declining? Or is it?
Let's take an example; back in 1886, only seven years after the first ever American oil well was drilled in Pennsylvania, the U.S Revenue Commission said that in the very near future U.S would have to rely on synthetic oil, as the natural sources would soon get depleted. Further back in 1885, the U.S. geological survey said that there are null possibilities of finding anymore oil in the state of California; in 1891 the survey said that there were no chances of finding oil in either Texas or Kansas. Come 1914 and U.S bureau of Mines made an official statement that total future domestic production would only be up to 5.7 billion barrels. Now, let's see the present scenario; California has become one of the major oil producers in America; Texas and Kansas have persisted as being one of the major oil and natural gas producers on the global scale during the entirety of the past century. To top it off, till today, U.S.A has produced almost seven times the amount forecasted in 1914.Where did the projections go wrong? or were they meant to be wrong?
Even to this day, there are constant reminders of these approaching shortages all over the mainstream media and at various houses of governments round the globe. There have been significant government regulations on oil and natural gas production all throughout the world. One of the prime reasons given for this is that there is an imminent future which holds extinguished supplies of the world petroleum and gas reserves. Firstly, Oil and gas production is becoming an increasingly technology driven enterprise. With immense rise in technology in the past two decades we have seen very rapid increases in the number of oil drilling site locations and also much more efficient use of those reserves. Now, on the basis of the findings from the last century, which involved for the major part a treasure hunt style of site searching, why are we constantly led to believe that we have almost extinguished all our oil sources? Secondly, even if we near the end of petroleum and natural gas supplies in the future, the technological developments would always find new and more efficient ways of creating energy, as has been proven many a times in the history. Just the way petroleum replaced whale oil in the 1800's and how natural gas, which was once supposed to be a waste product during the oil extraction process, is now one of the prime and widely accepted fuels. Does all this mean that we have not discovered any better means of energy generation than the fossil fuels till yet? And if we have, why have they not been surfaced and projected the way they should have been? Now, I'm not talking about solar or wind energy which have a negligible per head accessibility nor are they anyway cheaper than coal for an average person. What needs to be discussed here are the forms of energy which could actually outdo or replace coal, oil or natural gas in the usability they provide.
Surprisingly to many, there are several such energy forms, which far outshine petrol and can even be termed as 'free energy' by the optimists. For example, Radiant energy which operates exactly like electricity but runs on just 1% of the cost of actual electricity. The Switzerland based Mathernitha community actually owns at present 5 to 6 such fuel-less, self running full fledged devices which tap into this form of energy since the 1970's. They have successfully provided energy to an entire self sufficient community, at 90 times lesser cost than electricity , laying to rest all doubts about its usability. Astonishingly, this is just one of many 'free energy' devices spread across the planet made by geniuses which completely deserve all the mainstream media coverage and government funding but to no avail. Why? One may ask. For the world governments and the billion dollar oil cartels, the answers may be embarrassing. But, for a moment, let's assume that these inventions were invested in and were publicized well enough.
Then, what would be the economic outcome of such developments? Firstly, home energy generation would be dirt cheap. From public transport to average household energy requirements, every variable dependent on fossil fuels would get many times easier on the pocket. A true energy independence might be in store for the common man. The entire government led energy regulation systems all across the world would not be as big as they are today. With them the big oil companies too would suffer very serious setbacks. Lastly, the long maintained holy grail of international trade and economy, the American Dollar, would suffer big-time if the demand for oil falls suddenly and steeply. To save face all the major energy generation and oil firms might rampantly try to acquire the new technologies and patent them. But, they would never be able to justify the prices they have been justifying using a so called 'extinguishable' natural resource. The above mentioned events of a parallel universe might not manifest themselves in a world of labouredly and satisfied middle-class we live in, unless we think beyond what we are 'supposed' to think. Till then, happy fuel price hikes.
This article has been authored by Shivek Dhar from K.J. Somaiya instutute of Management Studies and Research
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