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De-coupling of OIL from world economy July 9, 2009

Posted by Bipin Agarwal in Future of transporation, Global Economy, IT Offshoring - Future Direction, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Real Estate Development in Global Economy, Real Estate Development in India, Real Estate development in USA, Recession.
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OIL Power – OIL, the dominant source of energy has impacted the world economy and power struggle among countries for a long time.  The effect has been more visible for last twenty five years. Middle East, Russia, other Oil producing countries have enjoyed unprecedented boost to their economy and foreign reserve  because of high oil prices. We all know that it is not a pure supply and demand dynamics. This game has worked well because there was no other significant sources of energy that was easily and readily available.

Past Effort to Change – There have been lot of attempts to create new sources of energy including nuclear power, wind energy, bio-fuel, and clean coal. All of these efforts have been successful to some extent, but none of them significant enough to change the dynamic of world economy and power status. Lot of that has to be with the economics of the particular method (bio-fuel, clean coal), time it takes to set up the plan and disposal of waste (nuclear), predictability of the energy generation (wind). As a result, none of the method so far have emerged as a challenge to OIL energy.

Off-course like everything else, corporate interest and desire to maintain power status by countries has further compounded this challenge. Both OIL and defense industry (selling arms to protect the supply of OIL sources) has played a significant role in creating hurdles. Politics has played a big role as well. Keeping the OIL price high forces the poor country to spend their significant resources for buying oil, hence limits investment in other areas for productive growth. Further, the market for automobile has been too large for these corporate to let it go easily.

What Has Changed – It is fair question to ask. There is lot of new dynamic from developing countries to developed countries. Growth in the developing countries India and China have changed the market dynamics for Oil consumption. These countries cannot afford to import OIL they need to support the economic development.  Economic development is putting a lot of pressure on the politicians to find alternate source of energy. Developed countries, US and part of Europe have so much debt that they have to figure out a way to reduce OIL consumption. US is suffering the most from OIL dependence. There is lot of domestic pressure in US to end Oil dependence.

Solar, the GAME Changer – We all know that SUN is, as predictable a source of energy as far as humans are capable of visualizing. The capability to harvest this energy on a large scale in a economic way has been a major barrier to solar becoming a challenge to OIL.

Good news is that now we do have a scalable and reasonable economic solution to harvesting solar power.  Significant reason for this change is because we can cost effectively manufacture the devices capable of harvesting this energy as opposed to conventional means of either drilling (oil and gas), digging (coal), or changing the course of rivers (Hydro). Recent decision by US government to review sixty seven thousand acres of land for solar power generation is a further validation of the direction of solar based energy. Large corporation currently own large tract of land to participate in the opportunity, I call it SOLAR GOLD. Gold is not black any more.

Impact on World economy and Power – Every country will feel the impact of this change (SOLAR GOLD) differently. It is not possible to discuss every country in detail in this article, So I will talk about some regions, countries. If you would like to discuss a county of your choice, please send me a note @bagarwal.india@gmail.com

Middle East and Russia, there have been a lot of conversation that OIL at dollar eighty a barrel is what they need. It cost about couple of dollar to produce a barrel of oil. Why do you think world will come to the rescue of Middle east and Russia if Solar is available.  While Russia is better positioned then Middle east because of their defense capability, but that is not good enough.  President OBAMA is playing the card right by going to Russia, putting the arms control pact and engaging Russia for nuclear issues so that defense capability (industry) becomes a  non-issue. These are not well positioned for long term.

China & India – Both countries are heavily dependent on importing Oil and Gas currently. China has been pro-active in securing the oil supply like USA has done for decades. This does change the long term picture. Both countries will resort to using Solar in big way and this position them very well in the long term.  These two countries are currently not dependent on Oil Export for their economic prosperity and it will be huge advantage in the long term.

Other developing and emerging countries – This is a mixed bag. Some of the developing countries have OIL export in combination with other industries (Mexico – OIL and manufacturing). Other countries in this block have lot of domestic economy. It is unlikely that any of these countries will ever become a super power. There will be wide range from being no effect to significant impact for each of the country.

Europe – There is part of Europe that is well developed, West Germany, UK, France, Denmark, etc. then there is part of Europe that is still developing such as Eastern Europe. It is unlikely that any country in Europe will be a Super power in the long term, However Europe as a block (European block) has the potential to be a significant player, that is only if they can stay together which is very unlikely. It is human nature. US, China and for that matter some of the countries within Europe will do everything possible to make sure that Europe is divided and chances are that they will be successful.

USA -It is interesting. USA is a huge importer of OIL but also is superpower. How did that happen? Dollar as a world currency has helped USA more than anybody is willing to admit. Defense capability, other industries such as financial services, technology  helped USA to be the dominant world power. Immigration policy of USA to attract the brightest from all over world has played a key role. USA is also taking big steps to reduce dependence on the OIL. USA is pushing for electric car as a transport mechanism and pushing Solar to produce bulk of its electricity. Since all this is being done in the private sector with government incentives, USA is moving at a fast pace to maintain the Superpower status.

Summary

Every country will have to adjust to this reality of SOLAR GOLD over time. If you are a  country that is largely dependent on Oil export only, there is lot of work cut out for you.  Country currently importing huge amount  of Oil (USA, lot of European, developing countries), there is a significant opportunity for you to position yourself for success. It will require a focused effort, a combination of policy, investment, and incentives both in the area of energy production, education, and infrastructure.  A country with a population base (critical mass) will have an inherent advantage (USA, China, India) to play in the super power league.

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/abou

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Walk Score and Twenty Minute Lifestyle April 27, 2009

Posted by Bipin Agarwal in Global Economy, Quality of Living, Real Estate Development in Global Economy, Real Estate Development in India, Real Estate development in USA.
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April 26, 2009

Today there was a front page article in Denver Post on Walk Score, a Colorado based company. The site give you a walk score based on different facilities from your address. you can check out more at www.walkscore.com

This is a good start but only a small step based on the Twenty Minute Lifestyle (tm) concept promoted by Redhawk Investments Group.  All of the development based on Twenty Minute Lifestyle will have a top walk Score of 100.

Walk Score alone is not enough for quality living. Quality of  living for a family is based on distance, facilities, and factors such as:

  • Place of work
  • Long term viability of business and quality of job opportunities
  • Environment
  • School for kids
  • Health care facilities
  • Recreation
  • Retail
  • Affordability
  • Quality of infrastructure to support walk or bicyle
  • Quality of transportation infrastructure to City or other important
  • Quality of neighborhood (income profile and education profile)
  • Connectivity to Airport, Highway, Railway station, etc.

I want to thank Walk Score team for validating the concept we have been promoting world wide for almost three years.  True quality of living that is vibrant, sustainable, and environment friendly, will require top down approach to future of real estate. Walk score is only a bottom up approach, more useful for real estate brokers then business, families, and environment.

We all know that if you live in down town and you work there, you can walk to lot of facilities, however there are lot of reason that families will not live there or should not live there;  including affordability, quality of neighborhood, safety, lack of family interactions, etc. You may have a perfect walk score but totally unsuitable environment to live. There are lot of neighborhood, where Walk Score will be 100, but weather you should live there is a decision you need to make based on factors outside the scope of walk score.  In short, Walk Score, good as a selling point for your real estate broker, not good for family. It is these factors, that makes Walk Score a bottom up effort as opposed to Top Down approach of  Twenty Minute Lifestyle micro city.

River Walk, a development planned in Fort Collins at I-25 and Harmony, is a good example of Twenty-Minute Lifestyle.  Development is planning a suitable mix of commercial, residential, health care, recreation, retail, community supported agriculture (CSA), and other amenities.  There be a hub for connecting to public transport infrastructure. When you are living in a Twenty Minute Lifestyle, Walk Score will always be 100 plus so many others things that can not be measured using Walk Score. There are several other such micro city around the world.

Future of real estate in the world will be a cluster of Twenty-Minute Lifestyle micro cities built around the efficient public infrastructure.  President Obama announced a high speed train infrastructure for US. This is what China is doing, This is what other developing countries are also planning. To read more about US infrastructure follow the link.

https://twentyminutelifestyle.wordpress.com/2009/04/18/obama-master-stroke-high-speed-train-infrastructure/

if you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/about