The Narcissistic Somniloquist

Peak Oil has finally made it to US mainstream news. The New York Times has published an article titled “The Future of Oil” which although does not use the term “peak oil”, nevertheless calls out that oil supply is clearly overstretched. The columnist Krugman lent his weight with a broader swipe at industrial growth founded on cheap resources - “when an ever-growing world economy pushes up against the finite limits of a planet”.

Sadly, it has not yet made its impact on the political debate. Two of the three leading US presidential candidates are entertaining the thought suspending gasoline tax to provide relief for drivers - a short sighted effort which does nothing to address the root cause of the problem that oil production is now supply constrained. As all populist leaders, they must await a crisis before mustering the political will to act. The US would never have embarked on the Manhattan Project without Pearl Harbor.

On a personal level, I’ve ascended a little from the depths of despair. Declining oil production will be painful, but we are all in it together. If it’s painful for someone earning $100K/year in Silicon Valley, it must be much much worse for others in poorer places. It is no surprise that the food crisis of 2008 earned a special report in the Economist.

I spent the better part of the last four months rebalancing my investment portfolios. At least I have been forewarned (not by much). There are several resources out there that are useful for those who seek options and these are a few that I visit regularly:

• The Oil Drum. Unlike other peak oil websites, it does not focus purely on apocalyptic prophecies. It has a number of contributors who make some interesting observations about peak oil.
• Alternative Energy Stocks. Interesting ideas about possible suppliers of alternative energy.
• Energy Investment Strategies. A direct take on how to profit from the trends in energy production.

I have now placed a third of my portfolio in energy related stocks, with an emphasis to suppliers with sufficient reserves of oil, transportation alternatives and other energy suppliers.

Surprisingly, I expect a bubble around the oil prices driven by speculative interest. Broad admission of limited supplies will drive a gold rush to energy producers and costs of oil even higher. Already, there are calls on US government intervention, which will become a reality when gasoline prices reach $10/gallon.

My take is that $200/barrel is very likely by end of 2009, and even by end of 2008 if investors crowd into the market. What price would it force US consumers (and others elsewhere) to realize that behaviours need to be modified if we are to survive the next two decades?

R had her appointment with the ultrasound machine today at KP. The technician spent 30 minutes measuring all aspects of the baby from head to toe. We were very thankful to hear that everything was in working order - heart, fingers, cranium and all the major bones.

We asked not to be informed of the gender. We believe in accepting God’s gift as they are - having a boy or girl will not change the way we will love our child.

I haven’t written a lot about Peak Oil. For one thing, it’s full of apocalyptic visions of a future where unaffordable oil (you think $100/barrel is high?) brings about a catastrophic collapse of civilization. 2007 may be remembered as the year when climate change took center stage in the world media, but few realize that there are more imminent dangers - our assumptions of continuing access to cheap fossil fuels are about to be challenged.

Shai Aggasi’s Project Better Place is one of many startups that have tried to tackle this head-on. What I like about this:

• They understand the problem - although some of their message contains elements of climate change, the key is that cheap oil is running out.
• Agassi has persuaded a national leader (Israel) and an automobile manufacturer (Renault/Nissan) to back his plans - that’s an amazing feat accomplished in a short space of a year.
• The idea brings electric vehicles one step closer to the mainsteam.

Check them out:

• Project Better Place
• Video - message made simple for 5th graders

Two weeks into the new year and I’ve decided to add a few more items to my annual objectives:

• Exercise more regularly. Winter is a dismal time to exercise, but I’ve not been regular at other times either. My 15 min bicycle ride to work hardly counts. I’m thinking of fitting a lunchtime ride into my routine - at least once a week. Would also like to learn to be more hands-on with the bike.
• Read more. I’m spending far too much time on the Internet. I plan to close each day with a chapter and to work on a book summary as a means of active reading.

And a list of other goals:

• More outdoor activities - hiking, camping.
• Work on my photography skills. It’s been a long while since I took creative photos - it’s been mostly of G.
• Organize my photos and videos.
• Pick up some container gardening.

2007 has come and gone. It was a quiet transition - we are still recovering from our Christmas vacation in Sonoma. If anyone wants a peek at the photos, they are available at Picasa

Here are some key highlights of 2007:

• Watching Gabriel grow. He started saying “Please” during our vacation in Singapore, and he now runs and walks everywhere.
• ST’s continued restructuring. Uncertainty rules the day and I’m not the only one with lots of questions.
• Exploring California. We had great trips to Sequoia, Yosemite, Los Angeles, Angel Island, Sonoma
• Visit to Singapore - not long since we left, but still missed everyone

What’s coming in 2008? Here are two major goals:

• Preparing for No. 2 - we’re cautiously optimistic but realizing this will be another big change.
• Getting a GC processed.
• Invest cautiously - expecting energy prices to continue rising and economic fundamentals to change.

Over the past couple of months, I have been following the relentless rise in energy prices (petrol is now $3.50/gallon). Seeking the cause of this, I unearthed some troubling news which is an epiphany of sorts.

“Peak oil” - a term used by some geologist who foresee the imminent peaking of world oil production. A good reference is the Hirsch Report. The report forecasts that geological constraints will result in falling oil production as most of the major oil fields are past their peak production lives.

Given that the past three generations have grown up in a world of increasing mechanization driven by the availability of cheap fuel, the peak oil seems like the end of a golden era. Oil is probably the most convenient form of energy that makes possible modern transportation - especially automobiles and air travel. It also drives the wheels of industry allowing for mining of minerals and agriculture on a scale unprecedented before in human history. But the earth’s largesse is now reached its limits - what will this mean for the future?

While noone can predict how fast the supply of oil will be reduced, or what it’s exact effects will be, any rational analysis will conclude that the effects cannot be rosy. The worst case scenarios include a total breakdown of civilization and a return to pre-Industrial society. Optimists might hope for technological advances that will yield efficiencies and allow us to retain a semblance of modern life.

In the past year, since Al Gore’s “An Inconvenient Truth”, the attention of the media has been fixated on Global Warming. What is likely is the reality of reduced oil production will likely force a reduction in carbon emissions anyway, and that the impact of that happening will hit us far sooner than rising ocean levels or climate changes. I am fearful that in the next ten years, oil prices will increase ten-fold. Air travel will be hard hit and other fuel-intensive sectors of the economy slow down.

What can I do? Well, some events are likely to happen. Higher inflation, as the cost of goods are pushed up by rising fuel prices. Commodity and energy prices will rise driven by shorter supplies and inelastic demand. Renewables can only meet a fraction of our current needs, and even then the generation of wind turbines and solar panels require a technological infrastructure that itself will be heavily strained.

This is a life-changing realization that I must act now to protect my family and our future. Nothing like this has ever happened before and I can’t believe how few people are aware of this impact.

Last week, R and I had our doctor confirm that she was expecting No. 2! Due in Jul ‘08, we’re really excited about the news. Being parents to G has been a great experience filled with joy and laughter for us. Despites anxiety about costs of living and being able to cope with two young ones, I wouldn’t trade the our time for the rest of the world.

Christmas is almost upon us. This year, we are headed to Guerneville, in the Sonoma county north of San Francisco. R’s family will be spending Christmas with us and we’re glad to share the holidays with loved ones.

As most Americans make their way to a family gathering this weekend to celebrate Thanksgiving, we decided to take our first road-trip. Long weekends are rare in the American work calendar, and a four-day weekend is exceptional.

L.A. was a natural choice. We spent last Christmas at Hearst Castle and G was well behaved. We felt it was time to be a little more adventurous, so we drove the 350 miles or so south to Los Angeles - the largest metropolis in the US. To avoid other travellers, we took a longer route via Highway 101 that brought us through several of California’s quiet towns on the Central Coast - San Luis Obispo, Solvang and Santa Barbara.

Solvang was probably the most interesting. Founded by Danish academics at the start of the 20th century, they built a town that looked almost like a village transplanted from Denmark. The town was lined with quiant shops and windmills with bakeries serving Danish pastries - except that they were mostly shut on Thanksgiving itself. The streets were lined with tourists and there was no shortage of picture-taking opportunities.

In L.A. proper, there was no shortage of things to do. This was one of the cities that you felt you almost knew. The scenes from movies and TV shows have left a subconcious imprint that spelt “Santa Monica pier”, “Beverly Hills” and other countless familiar names.

On Friday, we visited Santa Monica’s Pacific Park, which was built on a pier leading out over the wide beaches where California met the ocean. If it was anything the Bay Area lacked that Southern California had in abundance was the beaches - miles and miles of prime ocean front lined with palm trees.

Next to Santa Monica was the affluent city of Beverly Hills. Huge, expansive mansions lie next to the designer boutiques of Rodeo Drive. The most expensive homes were higher on the hill, where they overlooked the Los Angeles cityscape and the Pacific ocean. One of those was Greystone Mansion which was now a public park with ornate gardens and Roman columns and fountains.

The last location on Friday was Griffith Observatory, perched on a hill with spectacular views of the valley. There, we watched the full moon rise above the San Gabriel mountains and watched the sun set slowly over the Pacific. Our visit could not have been more perfectly timed.

Today, we visited the Getty Centre a museum set on 750 acres of land on the Santa Monica hills. Funded by the Getty Trust, this private institution was opened only ten years ago, and now draws quite a crowd of visitors. It had seven levels of underground parking which are filled by the afternoon, and electric trams ferry visitors from the gatehouse up to the museum. The museum building itself presented a strong contrast of stone and steel, squares and circles with breathtaking views of the city as the backdrop. The museum boasts a wide collection of artwork - one of the finest in the West Coast.

Tomorrow is the last day of the weekend, and we plan to attend Mass at one of the California Missions (either San Gabriel or San Fernando) and head home, hopefully avoiding the Thanksgiving traffic.

Of all the annual events held in San Francisco, Fleet Week is possibly the most exciting. The US Navy and Marines visit the city every year during the Columbus Day weekend with a flotilla of ships and they host a superb air show over the waterfront.

The main attraction of the airshow are the Blue Angels, the US Navy’s aerobatics team. The tightly choreographed maneuvers with a team of six F/A-18 Hornets are the main reason why the entire San Francisco waterfront was packed with viewers. The jets announced themselves with a sonic boom and presented one of the finest aerobatic displays. The Blue Angels were also accompanied by several other performers - the Air Force ViperWest, and several civil aerobatics teams - TeamOracle, Patriots, and a bevy of military aircraft including a C-130 and helicopters.

My last visit to Fleet Week was in 2005, where I watched part of the display stuck in a traffic jam in North Beach for over an hour. Today, we parked in the Financial district and walked up the Embarcadero to Fisherman’s Wharf. It was a 40 min walk, but with clear skies and mild weather, we had no reason to complain.

R and G returned from Singapore at the beginning of this month, together with my brother, D.

The first weekend was the Labor Day holiday, so I persuaded the jet-lagged travellers to go to Yosemite. We found a semi-campsite by the Merced River in the heart of Yosemite Valley called “Housekeeping”. They provided bunk beds, three walls and electricity, so it was R’s gentle initiation to the great outdoors. The place was perfect - the river was a stone’s throw away and we caught sunset amidst the granite cliffs that tower over the campsite. The pitch darkness also afforded us a grand view of the stars and the Milky Way - absolutely fabulous. To complete the trip, we had a couple of bears visit the camp that night. In the middle of the night, we awoke to a loud commotion - car horns blaring, pots clashing, whistles blowing. Our neighbours were doing their best to scare off a bear that was sighted. D and I tried but did not sight the creature.

Today was our first free weekend after D left. We took a day trip to Berkeley, one of the few Bay Area destinations we had not yet explored. We walked around downtown Berkeley (mostly commercial, with arts / jazz clubs that were quiet on a Sunday afternoon), and Telegraph St (Rastafarians and hippies comingled with University freshmen). The area wasn’t as affluent as the Stanford / Palo Alto scene - definitely more colourful.