NewsFlash - No New Dead Dinosaurs

Brian Hicks

Updated September 26, 2006

It’s been the top question in every radio show I’ve been on in the past two weeks. "Why is the world suddenly awash in oil?" I writhe in my seat every time, furrowing my brow not out of confusion but frustration. The world seems all too ready to paint itself into the fossil fuel corner yet again.

Slowing home sales may have taken some of the disposable income out of the average American’s wallet. What would otherwise be spent on a weekend excursion in the family gargantuan vehicle may be holed away in savings instead. Oil products are cheaper.

That does not mean any more dinosaurs died.

The foundation of our fossil fuel economy is fossil fuel itself. And there is doubtlessly a fixed amount of that sludge in the ground.

When you hear oil company cheerleaders announcing the depth-plumbing technologies that allow them to withdraw oil from incredibly profound undersea traps, this doesn’t mean the industry is on the up and up… it means the rigsters are going further down because they can’t find any more near the surface.

It may be that a drop in consumption has led to lower fuel prices today. That, in turn, could undo the gains of hybrid automobiles, biofuel, and other clean energy technologies that have gained a foothold in the popular consciousness during the past few years of bank-busting barrels.

Consumers, and manufacturers, could go back to the gasoline glut as a way to stimulate the economy as housing starts slow.

What a terrible idea.

Digging to China

Here in the States, generations of children have grown up knowing what it means to "dig to China." It seems almost absurd to put such a naïve pastime into print, but here is essentially what happens: You dig a hole. The hole is probably only a foot deep, but some grinning parent or neighborhood kid or maybe even an imaginary elf tells you that if you plunge your spade into the ground enough, you will dig through to the other side of the world.

For much of US history, nothing could seem further away than China. So when you poked through to the other side of the Earth, that is where you would end up.

Now, with Wal-Marts and Targets full of Shenzhen-made Christmas trees and knick-knacks, China couldn’t be closer.

What’s more, the Chinese are doing their fair share of digging these days, and they’re not just picking at the ground out of boredom.

They’re digging for oil. Everywhere. The US Department of Energy predicts that China’s oil consumption will account for 38% of the total increase in world demand by year’s end.

China is already the world’s third largest net oil importer, behind the US and Japan. The latter two lands have single-digit economic growth, and China can’t seem to slow below 10%. Do the math and see where this leads us.

We dig and they dig, and our shovels clink together in a not-so-whimsical way when we both salivate for the same stuff. This is a race, and the fully-developed economies of the world are in a position to move things up above the surface instead of promising future resource wars.

The New Energy Economy

This past week, a fortune was pledged to the pursuit of environmentally-sound energy sources.

Virgin’s Richard Branson promised 3 billion bucks towards the goal. Though he may be thought of as an eccentric, Branson is a businessman, and a damn good one. He realizes the wisdom of new energy not just out of altruism or because it’s a publicity stunt.

Clean energy is the next step in expanding the sprawling Virgin business empire.

Former US President Bill Clinton, through his Clinton Global Initiative, announced last Friday that he would create a special "green fund" worth one billion, all dedicated to renewable energy goals.


Consider this money to be industrial booster shots. The world’s political and economic leadership recognize that their concerns are linked.

Ted Turner, another billionaire businessman and philanthropist, spoke Monday at a public WTO forum, saying that biofuels could provide part of the answer to flagging world trade talks.

After the Doha Round of global trade negotiations ended fruitlessly this summer, five years of work on balancing developed and developing nations’ agricultural compunctions seemed dead.

But Turner suggests that wealthier countries could use the changing energy landscape to transform how and why farmers worldwide till their soil. Cheaper crops in emerging economies have been beaten back with protective tariffs and subsidies by the US, EU, and Japan.

But if the raw harvest is not the ultimate goal – US sugar will never be as cheap as Brazil’s – then added value through energy processing could save farmers in developed countries from a freefall if subsidies are removed.

A mix of food supply and energy supply from the same agricultural fodder (e.g. corn and sugar) gives farmers options while contributing to a widening platter of energy choices on a national and international scale.

Meanwhile, companies that develop the technology to process those feedstocks will enjoy a huge windfall as billions of private and public dollars flood into this tangible emerging industry.

This is no internet startup boom built on ether. It’s the energy startup boom built on ethanol.

The Wealth Daily and Orbus Investor team will keep you up to date on all the ways to make a profit from this remarkable transition – no matter what the fossil-fuel fossils would have you believe.

For the latest on international markets and to receive your first insider report "UK Renewable Revolution," click here to sign up for your FREE Orbus Intel e-letter.


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