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Bill James
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Bill received a BS in 1972 from West Point with concentrations in math, physics, chemistry, and engineering. He was an NCAA All American Wrestler and captain of the wrestling team. He is an eight-year infantry veteran, Airborne, Ranger, Arctic Light and Mechanized Infantry in the United States... More
My company:
JPods, Inc.
My blog:
jpods.com
  • Debt is an Oil Problem 0 comments
    Jul 17, 2011 9:45 AM
    Debt is really an oil problem that will dominate investment and survival for the next 20 years.

    Life requires energy. Less affordable Oil Net Energyenergy, less life.

    Oil is finite. Therefore, life based on oil is finite.  Depleting oil puts Americans, and others dependent on oil, in a struggle for our lives. Net energy from oil will decrease about 90% over the next 20 years. Peak Oil occured at 74 million barrels per day in 2005. Links to 3 background sources:
    Debt

    Over the past century government monopoly control of power and transport infrastructures made oil the lifeblood of our economy and coal essential to power. Unfunded costs of using oil Oil and National Debtwere socialized instead of capitalized into the price of gasoline, creating debt. As noted in the graph to the right oil imports and national debt are highly correlated.

    Debt is a tax on future labor. Politicians  convinced voters they should accept debt that indentures the liberty of their children to pay for benefits today in a Ponzi scheme. 

    Debt is a transfer of wealth from young to old.
    At birth, the liberty and future labor of a child born in 2011 has debts of $46,000 and $1.2 million in unfunded liabilities (hidden debt). Depleting oil will reduce the energy children have to support the Ponzi scheme. Social unrest seems likely as they are forced to pay for debts they did not vote for.

    More dangerous than borrowing money against the labor of our children, borrowing chemisty sequested over millions of years may be shifting the balance of nature that created a climate tailored to human survival. Weather evens are decreasing food inventories. Less oil energy, less food energy, less life.

    Investment Strategy
    Invest in sectors that profit from increasing self-reliance.

    Peak Oil is forcing scale slow and titanic changes. Example, since oil peaked in 2005, US home owner have lost $13 trillion in property values. I expect energy costs (food and gasoline) to continue to inflate while assets (homes) are deflating.

    The entire market will not be evenly affected. There will be economic lifeboats, states or economic regions where there is a high degree of self-reliance, low taxes, well armed population (there will be civil unrest). Government monopolies over power and transport will break. Two long dormant technologies will boom much like cell phones and personal computers did after communications was de-monopolized in 1984.
    • Personal Energy Servers (NYSE:PES) are integrated systems of solar/wind/grid energy imputs that locally store the energy using hydrogen, methane or other chemistry that does not require mining.
    • Personal Rapid Transit (PRT or PodCars) are ultra-light computer controlled robotic railroads that move people, cargo and trash using about 1/10th the energy of the highway network.
    Metrics: Existing measures may fail. Inflation is reported as under control while the reality is a storm of opposing trends averaging to zero.

    Market timing: A tipping point towards cascade seems likely in 4 to 24 months. Joint Forces Command's warning to all US military commands, "By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day."  What happens in Mexico in seems likely to trigger cascades:

    Here are my investment recommendations and where I am putting my money and efforts:
    1. Personal Rapid Transit manufacturers of ultra-light urban railroads (disclosure, author is founder of JPods, Inc.).
    2. Solar and wind power collection equipment. Manufacturers will sell everything they can make as Personal Energy Servers (PES) come on the market.
    3. Soleil Micro, Inc. (PES) solar power chargers for personal lights and cell phones (author is a co-founder).
    4. King Power Corp and Millennium Reign Energy. (PES) Manufacturers of devices that convert electricity (grid, solar or wind) into hydrogen, methane and other chemistry.
    5. Distributed Grid, Inc. (PES) Converts of solar collected energy for storage and distribution in chemistry. Nature's low work solution for storing and distributing solar energy is chemistry; food, wood, coal, oil, natural gas. Gas distribution networks are more durable to civil unrest (disclosure, author is the founder).
    6. Food, gardening supplies, gardening supply manufacturers. Oil supply shocks will be immediately followed by food supply shocks.
    7. Agricultural land. This can be the replacement of lawns with Victory Gardens.
    8. Railroads. Efficiency will dominate logistics. In an energy constrained world, railroads will be the logistical arteries and JPods will be the capilaries.
    9. Metal coins of all types. These will hold some value as paper money is inflated.
    10. Gold and siliver (actual metals). Mining stocks will likely tank for a number of years as fuel supplies needed for mining will become erratically available.
    11. Guns and ammunition.
    12. Local machine shops, food processors and other businesses that will benefit from localization.
    13. Cell phone companies. Especially those that rig their towers with solar collection systems so they are durable against blackouts. Unlike the electrical grid, cell networks operate on a distribute, collaborative basis and are more durable to civil unrest.
    Note, we do not have an energy problem. As Thomas Edison noted in 1910 (full quote):
    "Sunshine is spread out thin and so is electricity. Perhaps they are the same, Sunshine is a form of energy, and the winds and the tides are manifestations of energy.”

    “Do we use them? Oh, no! We burn up wood and coal, as renters burn up the front fence for fuel. We live like squatters, not as if we owned the property."

    “There must surely come a time when heat and power will be stored in unlimited quantities in every community, all gathered by natural forces. Electricity ought to be as cheap as oxygen...."

    What looks and will act like an energy crisis is really a problem of central planning and government control over the means of production. As there was an economic boom after communications was returned to free markets in 1984. There can be an dramatic economic boom if power and transport are returned to free markets in time to ramp manufacturing.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Author is invested the Personal Rapid Transit and Personal Energy Server technologies and companies.
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  • Oil less than $90 a barrel will destabilize Mexico faster. Oil is a great buy at this price.
    Aug 8, 2011
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