Sanjay Negi's thoughts on Current Affairs and Information Technology Directions.

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Thursday, July 13, 2006

The Hunt for Oil

The first Oil shock happened in 1973 at the time of the nth Arab Israel war when the middle east countries using their declared opposition to Israel as an excuse, seized the initiative by restricting oil supplies and that marked the beginning of formation of the oil producer's cartel OPEC which was later expanded to include countries like Venezuela, Nigeria and Iran.

Even before the 1973 war, it was known that oil would not last forever but then there was no urgency about the matter. When the prices rose dramatically, the Japanese auto makers capitalized on the crises by quickly grabbing market share with smaller fuel efficient cars. The trend since then has been rising prices, energy conciousness, environmental concerns, diminishing new finds, and search for alternative and sustainable energy which is expected to become increasingly viable with the rapidly approaching peak oil and widening of the corresponding demand supply gap.

All the fossil fuels including oil and coal were unobtrusively lying dormant in the bowels of the planet till some blokes invented the steam and internal combustion engines. Indeed the availability of abundant fuel energy triggered off the industrial revolution and subsequently the present attempts towards a post modern society.

The trend so far suggests that as civilisation progresses, continuously increasing division of labour takes place as people derive their existence and livelihood through the logic of value creation through specialisation. This necessarily means an exponential increase in the support infrastructure to put together the slices of infintesimally tiny roles and leads to per capita consumption explosion of which oil is but one ingredient.

It is just not conceivable that the civilisational thrust would get reversed just because one of the raw inputs is getting into short supply. In the immediate term market forces would make alternate energy sources far more viable and help sustain current life and work styles for some more time.

Eventually the logic of division of labour will get threatened with limits placed on value creation by humans through specialization. Most of the current specializations today fall in the area of service creation and delivery and this is where the rapidly increasing power of computing machinery is creating the prospects of an end to this form of social development. As the atomicity of services created and delivered reaches its physical limits of consumption saturation, and in parallel the need for infrastructure falls as computing and artificial intelligence manage most coordination requirements, we may well have a situation where energy consumption starts falling and we may have surplus oil which no one wants.

As of now we seem to be on the steep part of the 'S' curve for per capita consumption of the planet's raw materials. With the logic of services specialisation and Moore's law, this curve should start flattening out in the next few decades and then humans can really start enjoying this paradise that God created for them.

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