“Fossil fuel is dead,” declared CJ.
CJ likes to make those kinds of superficially profound statements. We were meeting after a long time. I was in Delhi for a conference and caught up with CJ at the Taj Mansingh Hotel coffee shop. We were discussing the spike in the gas prices.
“Dead or not, seventy dollars a barrel for crude was bad news for India considering that India imports about half of its energy needs. Will slow down the economy a bit, won’t it?” I said.
CJ is a contrarian. Never seen him see an issue the same way that prevailing wisdom indicates. You can count on him to prepare to make hay when the clouds come rolling in.
“I think it is a great deal of luck that oil is peaking,” he said. “That is one of the best things that has happened lately. It is good for the world, and it is going to be excellent for India. The only guys who stand to lose are the bad guys.”
“O yeah? The bad guys are making money hand over fist, aren’t they?” I said.
“That’s alright. It won’t last. In fact, it is a pity that the shock to the system came so late. Shocks are good. Makes things interesting. Every shock to a system makes it stronger. Neitzsche, you know. Everything that does not kill me, only makes me stronger.”
“You mean, that the oil industry will become stronger?” I said.
“No, the shock to the global economy will make the global economy more secure. More and better things will follow. The oil companies will morph into something else as they follow the dinosaurs. Fossil fuel is called so not without a reason.”
“Fossil fuels are not made up of dinosaur bones, you know. It was the carboniferous period that petroleum began its life-cycle,” I said.
“Doesn’t matter. It is the shock to the system that we need to focus on. Shocks make the world go round. The evolution and diversity of life is connected intimately with shocks. Shocks are what I call the Shiva Hypothesis,” said CJ.
“Shiva hypothesis? Isn’t that already taken? Shiva as the Creator and the Destroyer?”
“Let me explain this. At the end of the cretaceous period about 65 million years ago, a pretty big chunk of rock slammed into the earth. That shock killed off the dominant life-forms and cleared the stage for the little rodent-sized mammals to gain a foothold. Dinosaurs exit stage left, mammals enter stage right.”
“I know that. That is like a soft-reboot of a system. Lots of stupid processes running wild and hogging resources. So just kill off those and clean up the system,” I offered.
“Silly analogy,” CJ replied. “What you really need to consider is the economics of the situation. I suppose you have not forgotten Econ 101 now that you have been out of Berkeley for two years.”
“Shall we walk around the shops here?” I asked.
The Mont Blanc shop was right around the corner from the coffee shop. It was brightly lit and tastefully appointed and devoid of any shoppers. The sales lady brightly greeted us and came over to chat.
Here was a nice piece of luggage, a black carry-on. How much I asked. I suppose it was one of those shops where if you have to ask the price, you have no business being there. She said it was a new arrival and was modestly priced around $1000. Pretty good, pretty good, said I as if the idea of a carry-on costing about two years of the average Indian’s annual income was so ho-hum. I am as sophisticated as the next guy. The coin purse under the glass case with a magnifying glass mounted on rails was next on my list of price inquiries. It was an affordable $300. You would have to carry gold coins in it for the coins to match the cost of the coin purse, of course.
The case displaying pens and watches held a watch that I thought I fancied. Only $3,000. I had a thought. I realized that I could spend about $5000 in the shop and walk out without having to haul stuff away in a truck. Here was a place that was alien to me and to about 99 percent of the world’s population.
The economics, as CJ had said a little while ago, is what matters. But I wanted to get back to the oil shock discussion.
“So, CJ, how do you see the economics of the peak-oil business?”
“Simple really. Markets respond by increasing the supply of substitutes when the price of a good goes up. Suddenly the market for alternative energy forms will look pretty good and you will have a substitute for the polluting carbon-based fuels.”
“Yes of course. Solar energy will make a lot more sense if the price of oil is not the ridiculous $20 a barrel,” I said.
“OK, let’s get this thing straight. It is all solar energy. Carbon is just the working medium. Fossil fuel? Came from the sun through photosynthesis. Your own energy? Ultimately you are powered by photosynthesis. Wind energy? Powered by the sun. Tidal? Sun powered.”
“Ah but nuclear energy is not solar in origin. That is perhaps the energy source that originates outside the solar system.” I said.
“You are right, I think. The heavy elements which power nuclear fission reactors originated outside the solar system. But the rest are solar. In fact, fusion could be considered extra-solar as well. Anyway, perhaps now we will move beyond fossil energy. I think that the age of what I call the ‘Direct solar energy’ age is here.
“Instead of photosynthesis, a process which involves carbon dioxide and has its attendant problems of global warming and such, you have to go directly to solar energy. Photovoltaics is going to get a boost. I think the slogan I would promote will be ‘Photovoltaics, not photosynthesis.’ Get some t-shirts printed with that logo, will you?”
“I agree that cutting out the carbon from the middle and going directly to tapping solar energy is a good idea, CJ. But it will take too long. What happens in the meanwhile is what bothers me.”
“The meanwhile will not be a such a long time. The pace of technological change is accelerating at an accelerating pace. Second order acceleration, if you can get your mind around it. It boggles the mind. The smart money will be on developing direct solar energy solutions such as photovoltaics and a few somewhat indirect solar energy solutions such as wind energy. I would say that in the next few years, you will see a gradual shift to alternate technologies available commercially.”
“And that would be good for India?” I asked.
“Actually this is great for all economies that currently depend on imported fossil fuels. Indian movers and shakers don’t have the foresight to actually develop alternative energy solutions. India should have done so years ago. After all, India is a large economy with the energy bill annually running into several tens of billions of dollars. Imagine that India had invested massively in direct solar energy (DSE) research and development. Just a few billion dollars well spent on energy research would have paid enormous returns. A huge domestic market is a given, of course. And the conditions are such in India—280 sunny days a year on average—that direct solar energy makes a heck of a lot of sense.”
“I know what you mean. Investing in DSE research would make a lot more sense than ‘let’s send an Indian to the moon by 2010’. But I suppose Indians lack imagination, primarily. The US has cars and the US has highways and the US has sent people to the moon. So we in India have to have cars, and we have to have expressways, and we have to send a man to the moon. That we should have a good public transportation system instead of cars, a great rail system instead of expressways, a national goal of developing alternate energy source by 2010 instead of sending a man to the moon—that is not part of our thinking. Of course, if I say that I think Indians are collectively stupid, I get called names.”
“You call them names, and it is not surprising that you will get called names. But I wouldn’t worry about being called names. Just words, not sticks and stones, etc. Anyway, here is what I think. Because Indians are too stupid to imagine a different scenario and are fated to ape the westerners, now there is some hope for India.
“Basically, given the pressures of high oil prices, the US and other developed countries will develop the direct solar energy solutions. That is why they are called developed economies, by the way. They develop solutions. The developing economies merely copy the solutions that the others develop. They should be called the ‘me too‘ economies instead of developing economies.
“Then the developed economies will license the DSE to economies like India. Basically, India will import the technology, instead of importing the oil. And that I believe will be cheaper than importing oil and thus supporting jihad around the world. The world wins and except in the short run, even the developing countries win.
“So as I was telling you, fossil fuel is dead. It is direct solar energy that will rule from now on.”
We walked out of the airconditioned comfort of Hotel Taj Mansingh into the steam bath conditions of the midday Delhi sun. I look forward to the day that the smart people in the western world develop the direct solar energy solutions. Until then, we just have to sweat it out in the sun.
Bye, CJ, and have a good trip back home.
Postscript: For another conversation with CJ, see Choosing between WCs and PCs.