Exponential Curves, Compounding Interest and Finite Resources.

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” Albert Einstein

Albert Einstein

Has anyone wondered why the roads have become so congested so suddenly? Almost everywhere. Moscow, London, New York, Sydney. A dramatic increase in congestion and traffic in the past few years.

Here’s a little thought experiment derived by Professor Albert Bartlet of the University of Colorado about what might be happening. He uses bacteria and a bottle to show the dramatic effects of compounding rates of growth on a finite resource system – much like we have here on planet earth and on vehicles on the roads.

Bacteria grow by division so that 1 bacterium becomes 2, the 2 divide to give 4, the 4 divide to give 8, etc. Consider a hypothetical strain of bacteria for which this division time is 1 minute. The number of bacteria thus grows exponentially with a doubling time of 1 minute. One bacterium is put in a bottle at 11:00 a.m. and it is observed that the bottle is full of bacteria at 12:00 noon. Here is a simple example of exponential growth in a finite environment. This is mathematically identical to the case of the exponentially growing consumption of our finite resources of fossil fuels. Professor Albert Bartlet

So, when will the bottle be half full? At what time between 11 AM and 12 Noon?

Here’s the surprising answer:

At 11.59 am!

Here’s a table of the last 5 minutes in the bottle:

The last minutes in the bottle.
11:55 a.m. 1/32 full (3%) 31/32 empty
11:56 a.m. 1/16 full (6%) 15/16 empty
11:57 a.m. 1/8 full (12%) 7/8 empty
11:58 a.m. 1/4 full (25%) 3/4 empty
11:59 a.m. 1/2 full (50%) 1/2 empty
12:00 noon full (100%) 0% empty

For most of the time in the bottle between 11 am and 12 Noon the bacteria consumed no more than 3% of available space. Then in the last 5 minutes, the bottle became full!

One of the special rules from compound exponential relationships is the “Rule of 7”: which says that a growth rate of 7% per year will double in 10 years. Conversely, when you take the growth of an expanding system and divide it into 7 and you’ll know the time it will take for the population of that system to double.

So let’s take the roads of Kuwait and her vehicles as an example: the cars are as the bacteria and the roads are as the bottle, the fixed resource.

In 2005 the number of vehicles in Kuwait was 1,134,000 and in 2013 the number was 1,743,000. That’s a yearly compounding increase of 5.5%.

Using the “Rule of 7”, therefore the doubling time is 12 years. Simply put, that means 1.743 million cars in 2013 will become 3,486,000 in 2025!

Can the Kuwait infrastructure handle it? Obviously not. The General Traffic Department of the Interior Ministry is adamant that the capacity of Kuwait Roads is only 800,000 vehicles. Already this number is exceeded by 120%.

Let’s go back to the example of the bacteria in the bottle.

Suppose that at 11:59am some smart bacteria realise that they only had one minute of available space left in their bottle. They decided to locate new bottles for their expanding population.

They found 3 more.

How long would these new bottles last?

Only 2 more minutes!

12:00 Noon – Bottle 1 is full.

12:01 PM – Bottle 2 is full.

12:02 PM – Bottles 3 and 4 are full.

So what should Kuwait do about vehicles? The roads are full and will only get more so. Should the road infrastructure be increased? If yes, then by how much? Double the present capacity? That simply won’t be enough as illustrated by the example with the bacteria in the bottle.

Applying the same to the population of Kuwait, the average population growth rate since 1997 is 4.5%. Using the Rule of 7, the doubling rate is 15 years. Presently 3.369m, by 2030, there will be 6.738 million people in Kuwait, if nothing changes. Therefore there will be 3.486 million cars.

With present capacity of the road system designed for 800,000 cars, that means a road system designed 4.5 times the capacity of the present system will be required in 2030. That’s a lot of road building. Also consider that by this will only satisfy the demand at that time with no further allowance for expansion. Which require a further 4.5 times capacity in another 15 years thereafter. Impractical? Yes. Something has to give. And that is natural resources – land, air quality, time.

Obviously allowing the number of vehicles to increase exponentially along with the population is not a viable solution for resource constrained Kuwait.

Other solutions will be put in place before then, and many of them must be implemented before their need is apparent, something we find difficult to do, planning ahead. It will take courage and foresight to do this.

This is the power of compounding growth. It highlights a fundamental problem with ever-expanding populations and production rates. When they occur in environments with finite resources (like ours) you see that it is only until the every last moments that it is apparent that anything needs to be done. By then it is too late. If prior adequate planning and investment has not been done, the systems will collapse. Things will break. The equilibrium will be out of balance. And this, as we have seen with the 30 year recession in Japan and the collapse of Greece, can take years to repair.

Let’s look briefly at two other exponentially growing systems that are undergoing regular, yearly expansion of only a few percentage points per year.

World Population: Presently 7.3 billion. Rate of growth: 1.14%. Doubling time 60 years.


The US M2 Money Supply. Presently 11.7 trillion. Annual growth 7%. Doubling rate: 10 years.

Money Supply

Both of these systems have not reached their natural resource limits. There is no correction apparent in their trends. Is that because of good planning or is the bottle simply not full yet.

I wonder what time it is?


The Economics of Good Team Work – The Easy Way to Improve Business Profits for the Long Term

I wrote this article for the Al Jarida newspaper and it was published on Saturday 21 February 2015.

Jeremiah Josey

This article took a full page to discuss the economics of good team work for a business.

It is published here:

Al Jarida Article 21 Feb 2015 (Go to page 12)

Al Jardia Page 12 - 21 Feb 2015

The Economics of Good Team Work – The Easy Way to Improve Business Profits for the Long Term

How do you improve human group dynamics and allow people be more productive, your business to be more profitable, groups to be self reliant, whilst at the same time have it be more satisfying, more rewarding and straight out more enjoyable for the individuals involved?

The solution: Develop a self organising, collaborative workplace (also known as in the industry as “Sociocracy“.

Many big companies have worked out how to do it, for exBMW at the Globalistample GE, BMW & Semco (a Brazilian manufacturing company). Many more practising the process have registered themselves at WorldBlu.com. While Worldblu calls it “democratic workplace”, it’s really more likely to be collaborative one, since when you have a flexible organisation, it is more likely that 100% consent is necessary to achieve anything, and not merely majority rules – what a democracy is. The key word here is “consent”.worldbluHow to achieve great success, with great results, rewards and satisfaction in a manner which is harmonious to the group, to other participants, and to the world in general? It is not through competition. It is through collaboration.

Much of the presently accepted models in many organisations are military style and competition based. Competition is a poor use of human potential. The autocratic leadership methods necessary lead to almost total staff disconnection. Poor performance, and whip-like management mentality becomes necessary to maintain performance. Such a culture is easy to start, and success may be evident and easy to measure, but it soon grows into a dismal forgotten failure as any long term success measures are applied – staff retention rates fall, production efficiency, product quality, and eventual profits follow soon after. It’s simply a dismal failure at humanity, at being human even. Even for those directly measured to have “succeeded” they experience high stress, poor health and eventual a short, and ultimately an unsatisfying life.

One of the most successful examples of collaboration has been documented by Ricardo Semler with his company Semco, today a billion dollar operation. He wrote two books about it: “Maverick” and “7 Day Weekend” where he explains everything in succinct terms. He took his small family run company and grew it into an international corporation whilst he progressively ceased his day to day operational involvement.


Semco has no official structure. It has no organizational chart. There’s no business plan or company strategy, no two-year or five-year plan, no goal or mission statement, no long-term budget. The company often does not have a fixed CEO. There are no vice presidents or chief officers for information technology or operations. There are no standards or

Ricardo Semler

practices. There’s no human resources department. There are no career plans, no job descriptions or employee contracts. No one approves reports or expense accounts. Supervision or monitoring of workers is rare indeed. Most important, success is not measured only in profit and growth.” Ricardo Semler, Founder of Semco

I personally have applied Semler’s processes to great success in my own endeavors. For example I’ve taken totally disconnected and non-performing employees, and turned them into stars, “fought” over within the office for new assignments. One of the very useful Semler tools I like to use often is the upward feedback tool. This provided management with very directly, and some times very revealing feedback on their own performance from their staff and employees.

I’ve been searching for a methodical system to describe Semler’s approach, and for a long time I called it “democratic” as he and many others have done. But I’ve never liked that, that word “democracy”. It is essentially a competitive system.

Dubbed “the worst form of government” by Winston Churchill, democratic environments automatically and immediately lead to the oppression of the minority and any group that contains oppression of any kind is never a good thing in the long term.

“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one Winston Churchillpretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” Sir Winston Churchill, Hansard, November 11, 1947

Democracy, by it’s very design, is an oppression regime: the oppression of a few by the many. “This is fair. It’s only natural”, I hear you say, but do you really think so? Is any oppression fair? Of anyone? It is quite plain to see that any minority oppression in a social group no matter how large or small, has an ultimately negative consequence. Suppressed negative thoughts, feelings, and emotions harbored by the minority can only grow and manifest in other forms. The costs – both social and financial, short term and long term – to control, pacify, down-right-openly-oppress increases for the majority. Then something curious happens: the majority find themselves the minority, the minority becomes the majority and the cycle is repeated. Back and forth, back and forth. Those once-were-majority of course hang onto their once-granted-power with great enthusiasm and vigor, as long as they are able. The majority learnt what to do while in power. They learnt the rules of the game. The Occupy Wall Street or “99% protests” were examples that highlighted how a majority can be controlled by a minority. The minority has a much better understanding of the rules.

An another example was the 2008 US election with Obama and McCain running against each other: it was 53% versus 46%. Is that a “democracy” when almost half of the people have to yield their desires for the other half? This is more like a society close to reorganization as the majority may soon become the minority. Such a shifting of power will occur either violently (like has been seen in many Arabic countries with the so called Arab Springs) or passively, as with not-even-newsworthy Iceland. In Iceland the people rejected the debt burden of the banks their brethren in government attempted to impose upon them from the financial meltdown of 2008. They arrested a number of bankers and changed their laws so it cannot happen again!

So, what is it? What is the magic that means a group of people will be inspired to performance, all by themselves, with little external influence, other than maybe “Go!”.

Studies have shown that for complex, creative projects, monetary incentives actually inhibits performance! It’s not carrot and stick that works best where creative thinking is required.

Much has been done on the subject and reading Semler’s “Maverick” and “7 Day Weekend” you’ll understand that it is an evolutionary process, and it occurs by consent of the individuals of the group.

“Consent” a better option.

This is the important word: consent.

Work that recent came to me by the Dutch thinker Gerard Endenburg offers very substantial physical elements to this evolutionary process. A good short summary of this thinking is in “Sociocracy: The Creative Forces of Self-Organization”, by Gerard Endenburg and John A Buck.

gerard Endenburg

These two resources: Semler’s books and Edenburg’s work combined results in a very harmonious outcome: the flexibility of the benefits, and the basic parameters on how to get there.

Endenburg defines four basic concepts for a self-organising group:

Four Principles of Sociocracy

  1. Consent: The principle of consent governs decision-making. Consent means no argued and paramount objection. In other words, a policy decision can only be made if nobody has a reasoned and paramount objection to it. Day-to-day decisions don’t require consent, but there must be consent about the use of other forms of decision-making, for example, for day-to-day operations.
  2. Election of Persons: Election of persons for functions and/or tasks takes place in accordance with the principle of consent and after open argumentation.
  3. Circle: The organisation maintains a structure for decision making, consisting of semi-autonomous circles (i.e. groups of individuals). Each circle has it’s own aim and organises the three functions of leading, doing, and measuring/feedback. A circle makes its own policy decisions by consent, maintains it’s own memory system, and develops itself through integral research, teaching and learning. A circle makes consent decisions only in special circle meetings (also called round table meetings).
  4. Double-linking: A circle is connection to the next higher circle in the organisation with a double link. This means that at least two persons, one being the functional leader of the circle and at least one delegate from the circle, are full members of the next higher circle.

With these four principles in place, more specific actions can occur. Here’s an example of a Sociocratic Circle Meeting, a meeting of consent:

Sociocratic Circle Meeting

  1. Opening round: a time to tune into the members. Like an orchestra just before a concert.
  2. Administrative concerns: such as announcements, time available for the meeting, consent to minutes of last meeting, date of next meeting, acceptance of the agenda.
  3. Content: First agenda item, second agenda item, etc
  4. Closing Round: a time to measure the meeting process. E.g. use of time, did the facilitator maintain equivalence, how could the decision-making have been more efficient, did everyone arrive prepared. Also this is a time to mention agenda items that should be on the agenda for the next meeting.

During the Circle Meeting there will be times to appoint a leader or a task or role or job to an individual. Here’s how it’s done:

Template for Sociocratic Elections

  1. Task: establish the job description and the period of time the person will perform the job.
  2. Ballots: Fill our ballots and hand to the election leader
  3. “Public Gossip”: each person says why they made their nomination
  4. Changes: Election leader asks each person if they want to change their votes based on the arguments they heard.
  5. Discussion: Election leader usually proposes a name after step 4. However they may ask for discussion if the arguments are very unclear – i.e. informal consent has not been reached.
  6. Consent round: Election leader asks each person if he of she consents to the proposed person, asking the person proposed last. If there is an objection, the election leader takes everyone back to step five before trying another consent round.

For making decisions by consent, a sociocratic organisation will operate in the following manner:

Template for making policy decisions by consent

  1. Consent to the issue(s) to be decided. “What’s the concern, problem or challenge?”
  2. Generate a proposal. “What’s our opinion?” Often a person or persons may be asked to prepare a proposal and bring it to the next meeting.
  3. Consent to the proposal. “What is our decision?”
    1. Present proposal – questions and discussion is for clarification only
    2. Quick reactions round – quick feedback about the proposal (intended to illicit the “feeling response”, and not the “thinking response”)
    3. Amendments – proposer amends proposal, if needed, based on the questions, discussions and quick reactions
    4. Consent round – collect and record any objections on a flip chart. No discussion at this time
    5. Discussion – improve proposal to deal with the objections if any
    6. Consent round – Each person indicates their consent to the proposal, with the proposer speaking last. If there are remaining objections, they are recorded (no discussion), everyone goes back to “Discussion”, before trying another consent round.

Implementing a self-organising group requires consent from the people who exert power over the group. Simply stated this means that senior management and/or organisation owners must support Sociocracy. Full stop. No “ifs”, “buts” or “maybes” or even “veto rights”. Otherwise internal fractures will be created when the a circle’s “assumed power” confronts the more senior “declared power”. If that happens, growth is stymied and a slide back to pseudo-autocratic or totalitarianism, or even democratic systems will follow.

The great thing about this Sociocratic process as described by Endenburg, is that it’s an excellent way to get self-organisation into an existing organisation without changing or upsetting the existing power structure. The magic then begins to happen and once the system is running well, initiatives and improvements emerge organically and naturally. There is no revolution, only evolution.

All companies and groups that utilise such or similar systems experience better performance, better products, innovation, higher moral, lower turnover, lower loss, lower costs.

Semler advocates this because, after all, he created the 7 day weekend!


It is simply the human way to operate.

What could be better?

About the author

Mr. Jeremiah Emanuel Josey is an Australian who has been living in the Middle East for 7 years. Expert in the finance and energy markets, he is the Chairman of Swiss based Meci Group, a business and investment consultancy that operates across the Middle East, Central Asia and Russia.

See www.JeremiahJosey.com and www.Meci-Group.com for more.

meci group

After Oil: Money, Food and Polymers – New Business Activities for the Middle East

I wrote this article for the Al Jarida newspaper and it was published on Saturday 7 February 2015.

This article took a full page as I was developing an argument for Kuwait and other oil rich countries after demand for crude oil declines. It is published here: Al Jarida Article 7 Feb 2015 (Go to page 12)

Al Jarida Page 12, 7 Feb 2015

After Oil: Money, Food and Polymers – New Business Activities for the Middle East

Fourteen years ago the former Minister of Oil for Saudi Arabia, Sheikh Ahmed Zaki Yamani said that by 2030 oil would remain in the ground because people would not want it. One oil rich country, Iran, is discussing their future budgets without oil. I have written previously about how dramatic falls in energy creation from solar radiation is now a direct competitor to burning fossil fuel. So what can economies that are heavily reliant on oil revenues such as Kuwait do in a post oil world? This is what I will discuss in today’s article.

Based on experience, for a change to take place in any market there must be three major forces that come together at the same time. These three forces are: Economic, Social and Technical. If a market or industry sector has these forces in play, then it will change. Let us look at the oil market and see if these forces are present.

Economically? Yes. Falling prices have made many oil reserves uneconomic. Falling prices of other energy sources drives consumers towards them.

Socially? Yes. Climate change issues are affecting the entire world and reducing carbon dioxide production is now a topic of common discussion. The United Nations Framework Convention on Climate Change (UNFCCC) and the Intergovernmental Panel on Climate Change (IPCC) are both very vocal in the need to curb carbon dioxide emissions immediately. Not next year, but now. Today. Yesterday if they could do it.

Technically? Also yes. Energy can be produced as efficiently from the sun and the wind as it can from fossil fuels (coal, oil and gas).

So it seems the forces are aligned. Hence the market will move. Then the question remains, what does this mean for countries that are heavily reliant upon fossil fuels, especially crude oil, for their state revenues? Something needs to change. Business will have to divest and reinvest in order to create new revenue streams.

There is a catch however, a complex economic catch. In countries where oil revenues provide a lot of state revenues, oil production is also very cheap. For example in Russia, oil production cost is around $15 per barrel. It’s about $10 per barrel in Iran and less than $5 per barrel in Saudi Arabia, Iraq and Kuwait. New revenue streams however will come with higher operating costs, high retooling costs (more capital investment) and high human capital retraining costs. Margins will be less. Hence there must be significant increases in revenue by these lower margin activities to cover the revenues lost by a fall in oil demand. It will be difficult.

So with that groundwork laid, I boldly predict that for oil rich states such as Kuwait that once oil demand declines there are three areas that can replace oil revenues. These are:

1. Finance, equity and debt investments, investment yields 2. High value polymer production, taking it beyond low value petrochemicals 3. Aquaculture for high efficiency protein production

These income streams can either occur through private ownership, in which case taxation regimes would be required to provide state revenues. Or the ventures would be state owned and continue to operate much like the oil and gas sector operates now. The later would be a tall order. The economic efficiencies necessary in these new industries will not allow traditional work ethics common with the high margin, easy to produce revenues from crude oil. Therefore state governments will get smaller. The private sector will grow, if it can. Private sector needs three factors in it’s favour to thrive: 1) great infrastructure – transport, communications, access to liquidity; 2) excellent legal systems; 3) low taxes. This is something Dubai has been developing and they appear to be doing well.

Let’s go through each one of these three new revenue options in turn, using Kuwait as an example and the benchmark of $50b – Kuwait’s gross income with crude oil price at $45 per barrel.

1) Finance, Equity and Debt Investments, Investment Yields

Sovereign wealth funds of the Middle East are in an ideal position to expand their operations to replace falling oil revenues. Since 1953, the Kuwait sovereign investment fund has accumulated an estimated $550b in assets. Therefore, quite simply, a 10% yield on investment would replace all present revenues from crude oil.

But can you get such a high yield on so much capital? You can. You can even get more.

Berkshire Hathaway, the very well known investment group established by Warren Buffet in the 1960’s, holds net assets of $484b. Their net revenues have averaged 20% per year for the past 50 years.

This demonstrates that high yields are achievable.

Employing 330,000 people, Berkshire Hathaway presents a viable model for Kuwait moving forward after oil. Raising the level of investment knowledge therefore is an important skill to develop amongst Kuwaitis. The management of such investment could be achieved by creating 100 investment groups each allocated $5b. Each group would be set the target to achieve 20% or more net annual revenues. It would be survival of the fittest. Consolidation, knowledge transfer and then further expansion would increase the performance of the funds and the skills of the investment management teams.

From first hand experience, investment yields greater than 50% are possible when carefully selected and expertly executed.

So the management of money is a viable solution to entirely replace revenues from falling oil demand.

2) High Value Polymer Production, Taking It Beyond Low Value Petrochemicals

Here is a perspective of the use of crude oil in today’s world:

Oil Consumption Breakdown

From Renewable Energy World

The chart shows that 44% of crude oil is consumed as gasoline, 21% as diesel, and 9% as jet fuel. That means that 74% of crude oil is burnt every day, never to return, non-renewable.

Notice that only 2.7% of all production is consumed in the polymer industry – petrochemicals. This is an industry that takes a product with a market value of $0.30 per kg (crude oil), and then, with complex chemical and mechanical processes, produces products that sell for $1, 5, even $17 per kg. This industry is is the petrochemical industry, producing plastics and polymers.

Value adding to crude oil is a straightforward way to increase revenues once you have installed the necessary equipment and have the required numbers of trained personnel.

I have put together the table below to show different polymers with their prices, their world market share and how much of Kuwait’s revenue this would represent.

For example polycarbonate, a transparent, highly impact resistance plastic common in the automotive industry, sells for about $5 per kg.

PTFE, a high tech fluorocarbon polymer sells for about $17.5 per kg.

But the demand for both of these polymers is low compared to crude oil volumes. Even if Kuwait was producing all of the worlds requirements for these two high value polymers, it would not provide any where near the replacement revenue for the State.


World Production (million tonnes per year)

Bulk Market Price

($ per kg)

World Market Value

($ billion per year)

% of World Crude Market Value

Profit at 20% Margin

% of Kuwait Income ($45b)






















Polyester (PET)














Acrylonitrile-Butadiene-Styrene (ABS)














PTFE (Teflon)







Crude Oil (Kuwait)





Crude Oil (World)





Prices and quantities are from various years eg 2012, 2013, and 2014 and are indicative only for the purposes of general trends and forecasting for this article. Further details analysis would be necessary to undertake investment level decisions.

When considering what products the petrochemical industry should focus on, the table highlights that advanced polymers are high value but are not high volume. It also highlights the large scale of investment needed to produce a viable revenue source from advanced polymers. Also there is no one single polymer that would replace crude revenues. Instead a mix would be required, determined by market demand, capital expenditure, and feedstock availability.

Let’s consider two countries in the region, Saudi Arabia and Iraq. Saudi Arabia presently produces 75% of all Petrochemicals in the Middle East (and 10% worldwide). In 2013 Saudi petrochemical production was 86.4 million tonnes and the total value was $66.9b. Note that this equates to only $0.77 per kg, so it’s not in high value polymers, but in mid value intermediate polymer feedstock. In Iraq, Shell has just signed a $11b deal with the Iraqi government to build the Basra Nibras complex (operating by 2021). This is a petrochemical facility with a modest 1.8 million tonne per year capacity. Also, it is not making high value polymers, only intermediary polymer feedstock. Further capital investment is required to do higher value adding.

For an exercise, let’s assumed that the profit margin for a basket of high value polymers is 20% and that that basket sells for $2.5 per kg. This includes all capital investment, operations, maintenance and replacement allowance for the equipment (depreciation). Therefore the net profit will be $0.50 per kg. Thus, with 1,000,000 barrels per day of oil (123 million tonnes per year) converted into a high value polymer would yield $26b in net profits per year, or about half of Kuwait state requirements.

So this is possible, though with considerable capital investment and the time to establish it.

3) Aquaculture for High Efficiency Protein Production

What else can these countries do when oil is no longer wanted for burning? Well, it will still remain a low cost source of energy, and that means that other industries can be supported with it. One such industry is aquaculture, the most efficient form of protein conversion of any animal husbandry practice, as the table below highlights:

Feed Conversion Ratios


Kilograms of Animal Feed to Produce 1 Kg of Animal Meat











This is food for thought for oil rich nations with abundance of sunshine, water, and hence cheap energy. Growing fish and shrimp for hungry expanding world markets is a possible viable investment path, especially as the forecasts of collapsing wild fish and shrimp stocks come more frequently into the news.

One of the fastest growing food industries due to it’s high feed conversion ratio is shrimp farming. Iran has increased shrimp production to 8,000 tonnes per year in only about 15 years, and Saudi Arabia is producing about 25,000 tonnes of shrimp per year over a similar time frame.

There are plans for a 9,000 tonne per annum shrimp farm in Iran which will double production from that country and put it on level with Saudi Arabia.



However, growing shrimp is not a replacement for crude oil sales. It’s a supplement.

Here’s why.

The market price for shrimp is around $5 per kg and they cost about $2 per kg to produce. Hence the net margin is $3 per kg.

To produce $1b net profit per year requires 300,000 tonnes of shrimp.

Note that world shrimp production is about 4 million tonnes per year.

About 40,000 Ha is required to produce this much shrimp (if growing white tail vannamei).

The Kuwait land area is 1.782m Ha, so 2.2% of Kuwait’s total area would have to be converted to shrimp ponds.

Incidentally this much land would also produce about 100 GW of electricity if photovoltaic cells where installed. This is the same amount that both China and India are committing to install by the early 2020’s.

So the volume of resources required is large whilst the net return is comparatively low, despite the fact that it is healthy and expanding.

So, there you have it. A stool with three legs provides the greatest stability:

1. Finance 2. Polymers 3. Food

Perhaps fishing and textiles will again be the mainstay for the region in years to come as it was before oil.

Author Deck Mr. Jeremiah Josey is an Australian who has been living in the Middle East for 7 years. Knowledgeable in the energy markets, he is the Chairman and Director of Oil & Gas of Swiss based Meci Group, a business and investment consultancy operating across the Middle East, Central Asia and Russia.

The End of Oil? Oil Pricing for 2015 and the Rise of Solar Energy

I wrote this article for the Al Jarida newspaper and it was published on Saturday 24 January 2015.

It’s a further development of my previous blog on how technology is changing the way the energy market operates and how the oil price may never rise again.

It is published here:

Al Jarida Article 24 Jan 2015 (Go to Page 16)

Al Jarida

The End of Oil? Oil Pricing for 2015 and the Rise of Solar Energy

For oil prices, it’s a possible flat line in my opinion. Sideways. In fact with recent dramatic changes in the cost of energy we may be witnessing the end of oil. If oil stays low for long enough it may never rise again.

Said in June 2000, by Sheikh Zaki Yamani, former Oil Minister of Saudi Arabia (1962–86), “Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the Oil Age will come to an end not because we have a lack of oil.”

How so? I hear you ask. How have we reached the end of our modern “Stone Age”?

I say yes. Let’s have a look at why.

Economically, world energy has hit and passed a price equilibrium point between two competing mediums: fossil fuels, and solar energy. This means that how we do busy will change. And it will change rapidly now. For instance, mobile phones took out the land line market in a matter of years once mobile phones became cheap and available enough to do so. They were the better option technically and economically.

Energy from fossil fuels has historically been cheap and this enabled the great economic boom of the past 100 years: a population explosion from 1.7 billion people in 1900 to over 7 billion now, and GDP from $2.7 trillion (adjusted) to over $75 Trillion in roughly the same time period (per capita moving from $1,600 adj. to $10,000). The Green revolution (food production). The Technology revolution (computer development). The Connectivity Revolution (mobile phone & internet) and now the Knowledge revolution (P2P and social networking). All fuelled by cheap energy. And now this low cost energy has engineered it’s own replacement: Solar energy.

Looking closely at Illustration 1 below we see these low fossil energy prices. We also see the rise in crude oil prices to between $10 and $20 per mmbtu that caused the oil shocks of the 1970s. Renewable energy, particularly wind and solar, attempted to rise in this time, but their high technology cost was so great that when oil prices dropped again in the mid 1980’s so did interest in alternative means of keeping us warm, cooking our food and illuminating our homes. Just keep burning fossil fuels was the acceptable, economic solution. That is until now. Solar technology costs have plummeted, especially in the last 6 years, coming from an astronomical $220/mmbtu to now being at the same level as Brent crude and LNG at around $15 per mmbtu. And it’s still falling.

Solar Price Falling

As far as economics go, fossil fuel prices are going the wrong way (up) and solar pricing is going the right way (down).

So what is really happening with the tumbling price of oil? Is Saudi Arabia attempting to displace US supply by shutting down high priced tight oil investments? Are there moves afoot to destabilise the Middle Eastern power base by cutting revenues of Iran for their support of the Syrian regime and other related matters? Are there plans to destroy the asset side of the Russian balance sheet and topple their eastern European hegemony?

Yes, it may be all, or some of these things. For now.

But these are still small compared to the impending impact of economics and the immutable power of the sun. I don’t think that solar prices are having any direct effect on oil demand right now, but I believe that very soon they will. We may find that the price of oil does not rise again, or if it does, not for very long before demand falls for the final time. Remember that more than 40% of crude oil consumption is by passenger vehicles and that’s an important fact when considering the low cost of generating power from the sun.

Led by their wallets, consumers will migrate towards solutions that are supported by lower cost energy and they will seek them out as manufactures support their demands. So it’s just a matter of availability of options. And what is the option for reducing energy costs: locally generated electricity for domestic consumption and electric vehicles or EVs for transport. EVs are 90 percent cheaper to fuel and maintain than gasoline cars (Rocky Mountain Institute).

Those options appear to ready now. Today, EVs can be purchased from many of the major vehicle manufactures from around the world. For instance BMW, Chevrolet, Citroen, Fiat, Ford, General Motors, Honda, Kia, Mahindra, Mercedes Benz, Mitsubishi, Nissan, Renault and Tesla to name a few. In fact BMW are expected to phase out internal combustion engines within 10 years (Baron Funds, September 14, 2014). So that means within the very close and near future, almost half of the demand for crude oil will evaporate. The Sheik’s prediction will come true. And about the image of electric cars, in 2013 the fully electric Tesla Model S won the Car of the Year (Motor Trend) for all car types, not just EVs, and was quoted as being the best car ever tested. Ever!

What continues to drive down the cost of solar energy is mega solar projects and continued large scale PV installations. For example the Indian government has made its intentions clear to have 100 GW of installed generating capacity by 2022 and China are planning 100 GW by 2020. That’s the equivalent of 200 nuclear power stations. And pricing will be around $0.06 per kWh – on a par when levelled with present energy costs (nuclear, coal & LNG).

Is the fall in oil price here to stay. Perhaps not just yet. It depends the uptake of EVs, and that is a matter of their availability. But soon low oil prices will be here to stay.

Our choice in this energy shift is to be leaders or let others lead.

Author Deck

Mr. Jeremiah Josey is an Australian who has been living in the Middle East for 7 years. Knowledgeable in the technology and energy markets, he is the Chairman of Swiss based Meci Group, a business and investment consultancy that operates across the Middle East, Central Asia and Russia.

See www.JeremiahJosey.com and www.Meci-Group.com for more.

2015: The Year For the Downside of Solar Energy and the Upside of Banking

Solar Concentrator

Photographer: Chris Sattlberger/Getty Images

Downside of Solar? Yes, downside.  The side where you slide down and things get easier and more efficient, and lower priced, and better, and people want more of it. That’s what is happening with solar power.  Look at this slope for US energy pricing:

Solar Price Falling

Source: EIA, CIA, World Bank, Bernstein analysis

(Henry Hug, is natural gas, Brent is crude oil, LNG is liquefied natural gas)

This solar slope is definitely a diamond double black run.  (Yes I love skiing).

Notice how the other energy sources are climbing.  That’s cross country skiing and really, a lot of work. The scenery is great though.

So what’s been happening in solar that is different in the other energy sectors: technical advances are improving output, reducing costs. As more people want it, they leave established alternatives and make it main stream.

I’m saying that that is what has happened to solar recently.  I’m just choosing the start of 2015, since, well, its the start of 2015. I’m also suggesting that oil prices may not return to previous highs.  Has the down side been seen yet, no I don’t think so, but it is getting close.

Oil prices may rise again, but not for very long.

Demand for electric vehicles is expected to rise rapidly from 2017.

Nafeez Ahmed and Tony Seba explain why here How Solar Power Could Slay the Fossil Fuel Empire by 2030.

Said in June 2000, by Sheikh Zaki Yamani, former Oil Minister of Saudi Arabia (1962–86), “Thirty years from now there will be a huge amount of oil—and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the Oil Age will come to an end not because we have a lack of oil.”

Are we are  getting to about that time the Sheikh mentioned?

See that 44.1% blue pie piece below?  That’s all burnt in passenger cars.

Crude Oil

From Renewable Energy World.

The falling solar prices will lead to distributed energy generation and this will break the hegemony of centralized energy production and reticulation.  This the heart of the world financial system presently. A good example is Africa. It cannot be tamed primarily because it doesn’t have centralized energy infrastructure.  This may appear a little complicated, but stay with me.

This is what I mean by the upside of banking.

The financial system is having it’s own problems and seems on the brink of collapse, as James Quiin, Executive Business Editor of the Telegraph elegantly put it two days ago.


He covers it well, though I would add that fractional reserve banking is the core of profit generation for the modern banking system, coupled with excessive derivative trading. These two systems are under heavy strain presently.

Changing direction a little further to discuss the upside of banking, I see that the people of China and Russia have a great deal of contiguous history, both recent and ancient: Russia, 1,000 years and China, 5,000 years. This means lots of lessons learnt from the mistakes of their ancestors. For instance in the early 1,000’s and for 500 years China tried and failed with paper money systems 5 times before the people ignored the government and switched to silver for their medium of exchange.  Each successive Chinese government had tried to print their way out of debt. China also has recent living memory failures, similar to Russia.  So I see that they are acting as a group of interested people, as a collective, rather then the haves and havenots system of a monarchical, plutocratic system common in the west presently. For instance, China has a history of executing bankers caught defrauding customers and investors and Vladimir Putin has an approval rating of almost 90%.  So, ostensibly Russia and China are for working for their people and will adopt technologies and social systems that benefit everyone.  So I foresee solar and new financial systems quickly being adopted in these countries.

Moving on…

2015 is also good year to start on the down slope of oil demand, so a new currency won’t be petrodollars.  It will be remain  commodity based, however more likely onto gold and silver. Meanwhile, Russia, Iran and China are active in forging closer ties.  It’s not about competing with the USA business model. These alliances form natural blocks for US companies accessing resources.  For instance Afghanistan has over $1T in gold and lithium deposits…  This is part of the reason why Russia was interested back in the 80’s.

Tom Randle over at Bloomberg made this interesting article about 8 weeks ago:

Every time fossil fuels get cheaper, people lose interest in solar deployment. That may be about to change.

After years of struggling against cheap natural gas prices and variable subsidies, solar electricity is on track to be as cheap or cheaper than average electricity-bill prices in 47 U.S. states — in 2016, according to a Deutsche Bank report published this week. That’s assuming the U.S. maintains its 30 percent tax credit on system costs, which is set to expire that same year.

Even if the tax credit drops to 10 percent, solar will soon reach price parity with conventional electricity in well over half the nation: 36 states. Gone are the days when solar panels were an exotic plaything of Earth-loving rich people. Solar is becoming mainstream, and prices will continue to drop as the technology improves and financing becomes more affordable, according to the report.

The chart below shows how far solar will come out ahead in each state in 2016, assuming a worst-case scenario of lower tax credits. The blue bars show the anticipated cost of solar energy (assuming a conservative 20-year lifespan for the panels) minus average electricity prices. Positive numbers indicate the savings for every kilowatt hour of electricity.

Grid Parity to Reach 36 States in 2016

US Solar Price Parity Chart

Source: Deutsche Bank, EIA. Graph shows LCOE minus average electricity price

Solar has already reached grid parity in 10 states that are responsible for 90 percent of U.S. solar electricity production. In those states alone, installed capacity growth will increase as much as sixfold over the next three to four years, Deutsche Bank analyst Vishal Shah wrote in the Oct. 26 report.

The reason solar-power generation will increasingly dominate: it’s a technology, not a fuel. As such, efficiency increases and prices fall as time goes on. The price of Earth’s limited fossil fuels tends to go the other direction. Michael Park, an analyst at Sanford Bernstein, has a term for the staggering price relationship between solar and fossil fuels: the Terrordome. I’m not sure exactly what that means, but it doesn’t sound very forgiving.

The price of solar will soon undercut even the cheapest fossil fuels in many regions of the planet, including poorer nations where billion-dollar coal plants aren’t always practical.

Solar will be the world’s biggest single source of electricity by 2050, according to a recent estimate by the International Energy Agency. Currently, it’s responsible for just a fraction of one percent.

Because of solar’s small market share today, no matter how quickly capacity expands, it won’t have much immediate impact on the price of other forms of energy. But soon, for the first time, the reverse may also be true: Gas and coal prices will lose their sway over the solar industry.


So, there you have a few changes on the world stage, conveniently coming together at about the same time: the fall of oil, the rise of solar, and the shakeup of the financial system. A good time to plan new investment and business strategies for yourself and your family.

Jeremiah Josey


Starting out 2015 with an Ode to Unity

New Earth

Today, tomorrow or the next, we will collectively look with our hearts, our minds will be idle. Connecting our third eye through to infinite intelligence, tethering our mind to the guidance of the earth bound resonance we all share from our bodies made from mud, made of this Earth.

This would then become the discussion and preoccupation of the mind: how to improve this connection, this growth, our expansion. This would be the passage for humanity, our quest, our “salvation”.

Then what a vision and a vista will be before us. Then, instant balance would ensue, at all levels, all relationships between all humans, all areas.Jeremiah Josey




Ha! The stronger the mind, the more challenging the quest.

Only when the mind lowers it’s ever vigilant guard, and allows the heart’s soft utterances through to be felt and amplified by this wondrous body we each possess.

Then through all, and as one. Instant balance. Instant full potential expansive life for all species on this but a tiny speck of space dust. A speck of diamond, but a spec no less.

Our minds are brilliant tools. Connect that brilliance to the brilliance of our bodies and soar!

It is all within reach.Smily Earth All inside each of us.

Tether the mind. Release our potential.

Have a happy, happy 2015!

Earth Hands

Seasons Greetings and Financial Events for 2015


As we close the chapter on 2014 and turn our attention to what lies ahead for 2015, I think I can safely say that 2014 has been like no other.

I’ve been studying the financial markets for several years and the signs are approaching quickly now that indicate it is important to consider new investment strategies and different attitudes as we move into 2015 and the longer term.

Events like:

– Drop in oil price

– Sanctions against Russia

– US economy no longer able to maintain the look good image

– Trouble in the EU

– Impending collapse of world financial system

This video captures key events coming up:

Watch “Signs US Economy in Trouble, Russian Bear Not Wou…” on YouTube –


This is scary news however there is a plan that can be followed:

This is what I recommend for 2015.

– Get as much excess cash and equity into silver and gold as you can.  75% silver. 25% gold.

– Focus on maintaining your income and reducing expenses.

– Expect deflation in the short term.  Very low interest rates.  A few months.

– There time enough to get organised.

– Borrow against your availabile equity and buy gold and silver.

– Then hyperinflation will kick in.  Slowly then very fast.  Everywhere.

– Property values will fall in real terms but the hyperinflation will hide it.

– Then sell some of the newly valued gold and silver to pay off the debt.  Because that amount of debt won’t change.

– Then wait for the right time to convert the gold and silver back into cash flow producing assets.

That will be in about 2 or 3 years as long as there is no war with Russia.

Otherwise 10 years…

The video above captures the key events coming up in the next few months:

– Weapons to Ukraine.

– Expected depression in the US xmas spending figures.

– A bankrupt EU.

The signs are indicating that it is time to change investment strategies.

I wish you the best for 2015 and let’s remember that good investors are making money when the markets are up and making much more when markets go down.

Best regards,

Jeremiah Josey