Fuel For Growth
The biggest boost and potentially biggest threat for economy is the price of fuels - for now petrolium products. There is no need to vindicate this statement, as we all know by first hand experience what sent the global liquidity and equity markets spiraling downwards. Of course it was fuel price. It all started with great reduction in interest rates of the banks worldover. That released the liquidity which started looking for better returns. This liquidity got invested in the Emerging Markets (EMs). This inturn gave huge boost for global GDP growth. To sustain this growth world started demanding more fuel.
Here is the cue. The demand for fuel increased with out significant increase in supply. And the biggest cartel in the world - OPEC - did not help resolve matters. End result is that we saw prices of crude oil rising from $30 a barrel odd to current $75 a barrel in 3 years. Astonishingly not even the best of the equity marketsproduced such results. Added to that we had geopolitical tensions in the aftermath of 9/11. All the major oil producing nations were under some sort of pressure - Iraq, Iran, Venezuela, North Korea to name a few. The names themselves tell the whole story. These tensions are nowhere near getting resolved. So the global Economy experts along with yours truly believe that we soon be approaching $100 a barrel.
Why am I mentioning all this? Well this effect is going to matter to each and every one of us, isn't it? how much are you going to pay for fuel for your vehicle? In US they pay $3 a gallon. In India it is Rs.57 a litre in cities like Mumbai. how much more pain can we take? Well fasten your seat belts, we are going on a ride. We are set for secong biggest change in the economy of the world. (Well, for FYI, the first was when Otto invented the I.C. Engines) It is time that we leave this invention to history. We are going to need an alternate fuel sooner that we thought. There are many companies investing lot of money for new technology that will drive our future. Of course Japanese are ahead in this field too. We are getting more Hybrid vehicles, Fuell Cell vehicles (Google these terms if youdon't know). But these are comparatively expensive as of now. But soon they will enter in to mass production mode to help reducing the market price.
Another factor that is going to deliberate this change is that many Auto makers are making loss in business. The giants GM is under pressure and Ford just posted $900mn loss in second quarter of 2006. And the conditions are not getting any better. So what is the solution? Well, if you are planning to buy a Car, now is the last time for conventional vehicles, to produce fair Return on Investment as within 5 years from now, we will be scrapping our good old petrol, gasolene and diesel vehicles.
Here is the cue. The demand for fuel increased with out significant increase in supply. And the biggest cartel in the world - OPEC - did not help resolve matters. End result is that we saw prices of crude oil rising from $30 a barrel odd to current $75 a barrel in 3 years. Astonishingly not even the best of the equity marketsproduced such results. Added to that we had geopolitical tensions in the aftermath of 9/11. All the major oil producing nations were under some sort of pressure - Iraq, Iran, Venezuela, North Korea to name a few. The names themselves tell the whole story. These tensions are nowhere near getting resolved. So the global Economy experts along with yours truly believe that we soon be approaching $100 a barrel.
Why am I mentioning all this? Well this effect is going to matter to each and every one of us, isn't it? how much are you going to pay for fuel for your vehicle? In US they pay $3 a gallon. In India it is Rs.57 a litre in cities like Mumbai. how much more pain can we take? Well fasten your seat belts, we are going on a ride. We are set for secong biggest change in the economy of the world. (Well, for FYI, the first was when Otto invented the I.C. Engines) It is time that we leave this invention to history. We are going to need an alternate fuel sooner that we thought. There are many companies investing lot of money for new technology that will drive our future. Of course Japanese are ahead in this field too. We are getting more Hybrid vehicles, Fuell Cell vehicles (Google these terms if youdon't know). But these are comparatively expensive as of now. But soon they will enter in to mass production mode to help reducing the market price.
Another factor that is going to deliberate this change is that many Auto makers are making loss in business. The giants GM is under pressure and Ford just posted $900mn loss in second quarter of 2006. And the conditions are not getting any better. So what is the solution? Well, if you are planning to buy a Car, now is the last time for conventional vehicles, to produce fair Return on Investment as within 5 years from now, we will be scrapping our good old petrol, gasolene and diesel vehicles.
posted by umeshsant at 4:45 am
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