oil

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Colombia: An American Friend


Why Colombia as a topic. I was researching who belonged to OPEC as a start, but it produced no countries that I did not expect. But there was Venezuela. I wondered how this could be the only country, besides the United States, in the Americas to produce oil. It turns out that it is not. Along with Venezuela there are Brazil, a true surprise to me, Mexico and Colombia. Colombia made the most sense to me as it shares a long border with Venezuela to its north and east.

I remember many years ago there were advertisements on television about coffee from Colombia. As it turns out Colombia is only second to Brazil in coffee production. Then I looked at who are Colombia’s main trading partners, and it turns out that the United States import more than double of another other country.

My thoughts turned to thinking that Colombians as a whole must be much like Americans in their earning power. But that is just not the case. First, we must look at the Colombian peso. Right now, the inflation rate in Colombia is 13.3%. It is most simply about the demand for products not produced in Colombia far outpaces its exports. The Colombian Peso is in constant fluctuation and of late, its value against America, its biggest trading partner, has fallen dramatically. That means that certain necessities are very expensive. The following table lists the top 8 imports Colombia gets from America.

  1. Machinery including computers (11.6% of total imports)
  2. Electrical machinery, equipment (11.1%)
  3. Vehicles (10.7%)
  4. Mineral fuels including oil (8.3%)
  5. Plastics, plastic articles (4.8%)
  6. Pharmaceuticals (4.4%)
  7. Organic chemicals (3.8%)
  8. Cereals (3.4%)

And so, a weak Peso vs the Dollar makes importing these things to Colombia very expensive to Colombians.

Rich people, regardless of where they live, seem to have a certain immunity to things like inflation. That is because buying an automobile, regardless of price, is not at issue to them. But when you consider the average Colombian, if they must have an automobile, it must be the least expensive available.

The median household income in Colombia is $15,812. That is below our poverty line but in Colombia, many goods and services are inexpensive relative to an individual’s income. In 1991 Colombia changed its constitution to include socialized medicine. But then I came across a figure which absolutely floored me. The rate of single mothers in Colombia is 84%! Of course, then I had to look at education levels. Well, that turns out to be 59% of Colombians have completed a secondary education or GED. Compare that to America which is 88%.

What do single mothers do for a living? An article written in Forbes magazine states, “Beyond the challenges the sheer volume of these numbers bring forth to already strained resources, the issue in Colombia is further compounded by the fact that a large majority of these single-parent families are headed by women, and that women represent a disproportionate percentage of the countries poor, a phenomenon commonly labeled as the “Feminization of Poverty”.  It is well-documented that lone-mother households are at the highest risk of poverty amongst women due to lack of income. This is further exacerbated by deprivation of capabilities and the gender biases present in both Colombian society and government. The culmination of all these factors in modern day Colombia has resulted in a vicious cycle of emotional, financial and social problems and other stressful life events for both the single mothers and their children.”

Another source took me to what jobs a single mother might take and among them is “sex worker.” I am not just talking about prostitution, the most obvious, but a much less obvious option they take which at the least keeps them off the street, “Cam Girl.” What is that? That is an online industry that has been around a very long time where, mostly men, go to find women, and sometimes men, who will perform various sex acts for them. I found such a site, I will not mention its name, where I was able to chat with a number of women. With one or two exceptions, each was a single mother where the father took no part in support of his child. They had taken the job out of desperation for some sort of an income. One woman in particular, who I will call Julie, recently had to be in the hospital. While she was in the hospital her income went to zero, which brought yet another hardship on she and her son. And as it turns out, such incidents are not uncommon at all. Even worse for them, when people find out what they do, they are ostracized by their community and God forbid their family should find out. They stand the stark possibility of being thrown out of the only housing they have.

American commerce is entwined with that of Colombia, but it seems to me that American investors would do well to invest in Colombia where labor is cheap and readily available. American venture capitalists would not only find it a good investment, but in turn, the people of Colombia would have a chance of lifting themselves out of poverty and those women working in the sex business would have other options.

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What is AMTRAK’s Future?


AMTRAK was formed in the 1970s to take over the nation’s private railroad’s passenger network. For years those railroads had been unable to make a profit on most, if not all, of their passenger routes. It is worth noting that America was one of the few countries world wide that still had privately run passenger service.

Support for AMTRAK has been weak since its inception. Many senators and representatives from states that were either marginally served or not served at all wanted to end AMTRAK entirely. It has been recognized since AMTRAK’s inception that certain routes would pay for themselves and make a profit as well. One such route is referred to as the Northeast Corridor, Boston to Washington D.C. The trains on this route typically run at or near capacity. But the same could not be said of the long distance trains even though these trains frequently ran full. The problem was simple, in order to break even the fare charged would have been exorbitant. And some routes were eliminated for this reason, Chicago to Los Angeles via Denver and Las Vegas. Denver to Portland Oregon. Chicago to Miami are among those eliminated.

The first, and probably the most important issue, is how we and Washington DC view AMTRAK. Instead of viewing AMTRAK as a national necessity, as happens in Europe and Asia, it is viewed as an unnecessary luxury. Our national psyche desperately needs to change its view so that in falls in line with the rest of the world.

The second problem is the AMTRAK footprint and level of service needs to be expanded. Such an expansion would initially cost in the billions of dollars but in a budget that is in the trillions of dollars our lawmakers can surely figure out how to get it done. What they now see as a luxury will in the next 20 years become a necessity as the price of long distance travel rises to levels 4 and 5 times what it is today.

Fuel prices are the variable that sets the price for all forms of travel. Through fracking the U.S. has been able to extract oil from old fields that had been considered dry. But such extraction is very limited. This sort of oil extraction will soon be on the decline which means at the same time the U.S. will again be reliant on oil from foreign countries. We are a decade away from $5 per gallon gasoline prices. Airline fuel prices will also rise at the same rate or more. When that happens air travel will become prohibitively expensive for those people who can only fly once a year or less.

Rail travel will become the most cost effective way of moving people and goods from one point to another. But for AMTRAK to be a truly effective railroad, it must serve all large and medium size cities in the U.S. Presently it does not come even close to this but now it the time to act. The longer America waits to enact such travel, the more expensive it will become.

Simply put, AMTRAK must now become a national necessity and it is up to the public to demand service to their city that has no service or to demand a level of service that meets their travel requirement.

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Our World in 50 Years


There are three generations whose ability to impact positive change in the United States has either gone to zero or is on that track. I’m a baby boomer, born in 1949, which means the majority of my generation is either retired of contemplating it. The generation ahead of us has, for the most part, embraced their retirement and only gives thought about our country during national elections. Then there is the generation right behind me. Their age range is about 30 to 55. The youngest end still has a chance to make strong positive changes while the older end, if they are not actively engage in public policy, are not likely to join in.

 
The future of our country lies in the hand of those who are now in high school and country. We need them to be as well-educated and actively involved in government as possible. History teaches us that a large portion of discoveries, inventions, and activism happens to this age group as soon as they finish their education. But my generation, and those generations around mine, are leaving a legacy which is in desperate need of a large influx of new ideas. The ideas of those presently in power are simply not working to a large degree.

 
What will our work look like 50 years from now? First of all, recent history has shown our planets oceans have risen enough that ocean-front cities are experiencing flooding at ever increasing levels. My own city, Boston, Massachusetts, has just this last winter seen flooding of city streets with water from the ocean that has entirely overwhelmed the ability of the city’s storm drains to remove these waters. That the level of our oceans in continuing to rise in indisputable. What will our children have to do?

 
First of all, they are going to need to occupy and become a majority of every country’s leadership and embrace the fact of global warming an man’s contribution to it. Their’s will be the challenge to improve and expand upon renewable energy sources which do not contribute to global warming: wind farms, solar panels, geo-thermal, and water both from the planets rivers but also from the ocean, a well-know but entirely undeveloped source of energy.

efully, the internal combustion engine will be mostly, if not entirely, obsolete worldwide. It will have been supplanted by electric automobile. But to do that effectively three things have to happen: first, batteries capable of operating automobiles at highway speeds must be good for 450 miles. At present 200-250 it about the best. Secondly, the price of these automobiles must be brought into line with what the average consumer can afford. With an average price tag of around $40,000 at the low end, such cars are simply out of the range of the average consumer. But with such cars available, cities, towns, and villages are going to have to accommodate charging stations in their public parking lots, at a reasonable fee of course. And lastly, as the price of oil rises at first, such demand should fall with the advent of the wide-spread electric automobile. This in turn should mean lower diesel fuel prices which will keep our trucking and railroad industries viable. But even their, the Hybrid diesel engine must come into wide use and still have the ability to haul heavy loads.

 
I believe that in 50 years the most notable global crises will be a food shortage. But at the root of this will be two things: expanding deserts and extreme water shortages worldwide, even in the United States. One solute to the water problem is the desalinization process of turning ocean water into fresh water. Right now such costs are prohibitive but that does not mean with our young people and their new idea, the cost of such a process cannot be reduced to where the economics of desalinated ocean allows the flow of huge quantities of water to feed the world’s farmland. Man can develop friendly ecosystems but he has to be willing to pay for the initial costs. My generation is not so inclined but hopefully the next two generations will see this differently.
These three things, energy, food and water, are guaranteed to be at the root of future wars if we do not start acting in a positive manner now and in the immediate future.

 
If you happen to read this and are between the ages of 15 and 30, I do not envy the challenge ahead of you but I believe that when you see the enormity of our failures you will take on the challenge and succeed like we never have.

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America’s Next Recession Starts March 1


The Dow-Jones today topped the 13,000 mark for the first time since 2008.  That is a fact.   How, then, can I possibly be predicting a recession starting in a little over a week?  The stock market is one of the worst indicators of the future.  On March 9, 1929 the Dow Jones average was 381.70 but by the end of October in 1929 it had fallen to 198.69.  The market lost 48% of its total value, most of that happening in October 1929.  President Hoover looked at the economy he presided over in March 1929 and said that the warnings of upcoming trouble were worthless.

People are going to look at today’s stock closing optimistically.  But they need to look at a single indicator that directly feeds into imminent economic trouble.  Crude oil prices have risen over 30% since September 2011 and show no signs of retreating.  To the contrary, they show every sign of rising to historic levels.  The average person thinks of such a rise only with regard to what they pay for gasoline at the pump.  But all forms of transportation are equally affected.  This means the price of food, durable goods, clothing, and everything else goes up as well if only because they too have to be transported and that cost is reflected in the price of the item being sold.

But have you ever considered how much of everything in your life is petroleum-based?  Consider that everything that is made from plastic is petroleum-based.  That alone should give one pause to consider what rising crude prices mean.  Petroleum is also used in medicines, clothing, and construction.

I believe crude oil prices are going to keep going up because of the continued unrest in the middle east.  Lybia, Egypt, Syria, Iran, and Iraq are all in a more or less unstable condition.  And all are oil-producing countries.  Adding to this unrest are both Afghanistan and Pakistan, neither oil producers, but both home to radical Islamists who have every intention of continuing or raising the level of unrest in all the countries mentioned.

In today’s world economy energy drives those economies.  Whatever is happening to the price and distribution of oil affects all economies to one degree or another.  It is like throwing a rock in the middle of a calm pond.  The waves that rock creates moves outward in all directions, and the bigger the rock, the bigger the waves.  Right now we are feeling the waves of uncertainty in the market.  Consider that most countries in the world produce no oil at all, and two that do, the United States and China, both in the top 20 oil producers, export none of the oil they produce and import even more.  China will benefit from Iran’s decision to stop sending oil to England but of course England will suffer.  And so the rock Iran threw in England’s water will send its waves throughout Europe.

The unrest in the middle east is unlikely to settle down any time soon.  That means the market jitters are likely to continue as well.  That of course means oil prices will remain high with a high likelihood of their going ever higher.  I think it likely that the average price per gallon of gasoline will be at or close to $5 by summer’s end.  People will, of course, cut back on their purchases and with that the economy takes a hit, probably a big on.

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What the Year 2020 Will Look Like


Everyone likes to make predictions, and I am no different.  There was a time in my life that my job depended upon my knowing exactly where the cutting edge of technology was.  I was quite fortunate for having worked at M.I.T. in the mid-1980s on a computer development project.  We were working on networking computers, and describing what a computer work station should look like software wise.  It was a good education in the sorts of things to look for.

As far as computers are concerned the speed of the home computer will continue to increase but not at the rates that we have seen in the past ten years.  The top end of home computing speed right now is about 3.2 gigahertz.  By 2020 I expect that speed will be roughly 4.5 gigahertz.  What will hold down speed is the ability of chip makers to produce processors that have more and more transistors on them.  They have already introduced the idea of dual processors to mimic speed increase.  What is really happening is two processors doing the work that one used to but at the same relative speed.  The breakthrough will come when they develop processors that use light instead of electricity.

What will continue to move forward in leaps and bounds is the ability of computers to deal with graphical data.  The time it takes a computer to find a piece of data and display it is the heart and soul of computing.  But right now one of our great limitations is the ability of the Internet to pass data along.  There is a little thing called “bandwidth” that dictates how much data can be sent at any particular moment in time.  That bandwidth is the same as the size of a pipe dictating how much water can be pushed through it.  Therefor, the two most important parts of the Internet are the computers that hold the data and their ability to retrieve the data, and, the ability of the transmission lines to carry that data.  Both those things are going to increase dramatically.  There will be a dramatic shift from the copper wire carrying data towards fibre-optics carrying data.  That alone will increase both bandwidth and data speed.

Here is a hurtful prediction.  Expect the price of gasoline to be around $10 a gallon.  With that the death of the SUV and the American full size car will have happened.  Also, the death of Chrysler Corporation along with the possible deaths of Ford and GM.  Why?  They still have not gotten it.  That it is simply the types of cars offered by Toyota, Nissan, and Honda.  Toyota’s largest sedan is about the size of American mid-sized cars while the rest of their fleets are the size of or smaller than American small cars.  What can save GM and Ford will be their ability to supply small fuel-efficient cars, more so than they do now.  But also, they need to make more readily available their hybrid cars.  Case in point, I tried to buy a Ford Fusion hybrid this past summer.  I was told that the waiting time for such cars was 90 to 120 days.  I was not willing to wait.  I could have bought a Prius however without a wait.  That means American automobile manufacturers are not being fully competitive with the Japanese.  That will be their downfall.

There is one type of automobile, not now available anywhere, that could become popular with the fast rising prices of crude oil.  That type is the liquid natural gas car.  The only thing that need be put in place for that to be viable is a distribution system for automobiles.  There is actually a good distribution of this fuel for buses and trucks.  Furthermore, the fuel is far more ecologically friendly and is in abundance in North America.  What could push this fuel into the forefront is the stability of the middle east.  If it destabilizes greatly, which it could, that would quickly push up the price of crude quickly.

By 2020 I expect China will begrudgingly abandon the Communist Party as its population moves towards 1.5 billion.  This will be in large part due to the increased difficulty of importing oil and other resources not natural to China.  As the Chinese economy increasingly relies upon capitalism to fill its needs, and the older party leadership dies, it will find itself migrating away from Communism.

Expect by 2020 the Euro to be a memory as more and more countries abandon it in favor of its own currency.  While European economic unity continues to be a good idea, its single currency will be found to be an impediment to the economic stability of individual countries, and therefore abandoned.

One of the strange results of the coming oil shortage will be the decreased unemployment.  Americans are going to find it more economical to buy local, or buy American.  The price of transportation long distances will increase much faster than markets can bear.  That will mean imported goods will increase enough in price that Americans will look for lesser expensive domestic products.  This, of course, will in turn put a lot of American to work.  But it will also make American goods more desirable in foreign markets.

Environmentalists will be unhappy with this because there will be a huge push for production of electricity from coal.  It will also lead to the beginning of a new series of nuclear power plants.  But because of the time it takes to build a plant they will not start coming on-line until the very end of the decade or later.  Still, that will mean our becoming more independent of foreign oil.

George Clooney will get married.

So will JaLo, yet again.

The number of cable channels will more than double if not triple.  The 998 channels now available will not be enough to handle the demand.  Expect big increases in the number of religiously based networks and sports networks.  Cable television will become much more specialized in those areas along with news networks that will start offering news programs based in foreign countries.

Manned space flight will not return but there will be an increase in unmanned space activities in the world of science.  Along with that will be the increased use of satellite telephones.  Companies now offering cell phone use will soon switch to satellite cell phones simply because the need for earth based physical plants will decrease dramatically with their increase.

Satellite radio will increase dramatically and decrease the number of broadcast radio stations greatly.  Satellite radio and GPS systems will be standard equipment in cars.

Well, that is it for now.  I expect there will be a part 2 to this as I consider the subject some more.