Thoughtbits

This blog is really dead!

2008-02-01T20:36:00.001+01:00

If you haven't noticed, this blog is DEAD! I write in English on futuramb blog and in Swedish on Scenariotankar (which is really a bad name but...)

See you there!

Former Aramco top executive reveals clues to the Saudi situation

2005-09-06T10:24:00.000+02:00

Peter Maass is a journalist writing a book about the current oil situation wrote this interesting New York Times article about the state of Saudi Arabia's oil production. It turns out that nobody outside Saudi Arabia actually knows how much oil is available and which capacity the system really has.

Quote from article:

The most worrisome part of the crisis ahead revolves around a set of statistics from the Energy Information Administration, which is part of the U.S. Department of Energy. The E.I.A. forecast in 2004 that by 2020 Saudi Arabia would produce 18.2 million barrels of oil a day, and that by 2025 it would produce 22.5 million barrels a day. Those estimates were unusual, though. They were not based on secret information about Saudi capacity, but on the projected needs of energy consumers. The figures simply assumed that Saudi Arabia would be able to produce whatever the United States needed it to produce. Just last month, the E.I.A. suddenly revised those figures downward -- not because of startling new information about world demand or Saudi supply but because the figures had given so much ammunition to critics. Husseini, for example, described the 2004 forecast as unrealistic.
...
When I asked whether the kingdom could produce 20 million barrels a day -- about twice what it is producing today from fields that may be past their prime -- Husseini paused for a second or two. It wasn't clear if he was taking a moment to figure out the answer or if he needed a moment to decide if he should utter it. He finally replied with a single word: No.

End quote.
>> The New York Times article in Energy Bulletin

China - the world's factory for cars as well

2005-04-22T21:33:00.000+02:00

During the Shanghai Auto Show, DaimlerChrysler shocked the automotive world by announcing their intention to export small cars from China to the United States. This is just another step in China's direction towards becoming the world's factory. Auto parts have been manufactured in China since long, and the problems to compete with the west so far have just been the quality. Gradually the quality is increasing and is currently on par with Korea and rising.

China's Commerce Ministry is forecasting the automotive exports, which mainly consists of auto parts today, to increase from $11.8 billion last year to between $70 and $100 billion by 2010.

If we haven't done our scenario work about how the world will look like when China steps forward, it is about time now!

The main problem today is that our institutions are almost completely unable to think about decline. TV-program after TV-program is reporting on the effects of the business tsunami created by WalMart and others... but who is building the structures that will come after? If it is necessary for the old organizations to die and for others to rise from the ashes, who is creating the new frameworks and mindsets for them?

International Herald Tribune - China on brink of cracking car market

Consequences for US after the oil peak

2005-04-14T00:08:00.000+02:00

Since most of the countries in Europe have experienced several oil crisis, we think we know what it is all about. And maybe we are right, but all the previous oil crisis situations have been temporary. The coming one is not temporary but one that will prevail - it is a permanent situation. The solution is not to hide and bunker, but to change to other sources of energy and as fast as possible change our patterns of behaviour to a more sustainable way.

For Americans this issue could turn out to be much more interesting, or should I say, stressing. What is happening in an oil crisis situation in a country which does not have a decent railroad system. Most people and businesses rely on cars, trucks and aeroplanes. How will this affect the big cities which rely heavily och trucks for the food supply. What is happening on the national security scene with a country which has been going to war several times since to 1970:s mainly to protect their oil supply?

James Howard Kunstle has written a book by the name The Long Emergency which have been adapted to an article in The RollingStone where he discuss the consequences for the American society. It is an interesting and sometimes frightening reading. This is quote from the beginning of the article:

Carl Jung, one of the fathers of psychology, famously remarked that "people cannot stand too much reality." What you're about to read may challenge your assumptions about the kind of world we live in, and especially the kind of world into which events are propelling us. We are in for a rough ride through uncharted territory.

Read the article

IMF - Oil price will remain high

2005-04-09T18:03:00.000+02:00

In a recent report IMF acknowledges that the Oil price will remain high. The IMF report doesn't however seem to acknowledge the uncertainty that China's oil consumption will grow exponentially when certain income levels are met (see my blog: Criticial Uncertainties in the Oil forecasts.

In the report IMF are forecasting a sustained oil price at levels between $69 and $97 in 2030. The message to the world is of course to adjust to these new levels.

One of the really big question marks is how and when George W. Bush will react and what measures he will take. In a critical article in NY Times (free registration required> Thomas L. Friedman asks the relevant question:

How will future historians explain it? How will they possibly explain why President George W. Bush decided to ignore the energy crisis staring us in the face and chose instead to spend all his electoral capital on a futile effort to undo the New Deal, by partially privatizing Social Security? We are, quite simply, witnessing one of the greatest examples of misplaced priorities in the history of the U.S. presidency.

This article spread quickly in the world, which only underscores it's relevance.

Will the IMF report be a mile stone in the process to change the American mindset towards a new relation to oil?

Read about the report in an article in International Herald Tribune.

More arguments towards oil peak scenario

2005-03-16T22:49:00.000+01:00

The analysts who pointed out strange things at Enron before it chrashed is now commenting the coming oil peak.

Since last fall, Herold has done peak estimates on about two dozen oil companies. Herold believes that the French oil company, Total S.A., will reach its peak production in 2007. Herold expects 2008 to be critical, with Exxon Mobil Corp., ConocoPhillips Co., BP, Royal Dutch/Shell Group, and the Italian producer, Eni S.p.A., all hitting their peaks. In 2009, Herold expects ChevronTexaco Corp. to peak. In Herold's view, each of the world's seven largest publicly traded oil companies will begin seeing production declines within the next 48 months or so.

This is another argument in the scenario describing $200/barrel scenario. An oil peak before year 2010 seems more likely for every day.

Read the article: Salon.com News | Running on empty

Even the US government knows about the coming oil peak

2005-03-12T00:52:00.000+01:00

Many bloggers including WorldChanging and Bruce Sterling is together with me convinced that the oil is bound to peak in the near future. Al Jazeera recently wrote an article pointing out a US government report which clearly explain the unevitability of the coming oil peak. The question is not if, but when.

From the report summary:

In summary, the problem of the peaking of world conventional oil production is unlike any yet faced by modern industrial society. The challenges and uncertainties need to be much better understood. Technologies exist to mitigate the problem. Timely, aggressive risk management will be essential.

In the report there are three scenarios analyzing the effects if

the actions to meet the oil peak is immediate
the actions to meet the oil peak happens 10 years from now
the actions to meet the oil peak happens 20 years from now

The question is what US government will do about it. How do we prepare here in Europe?

WorldChanging: Another World Is Here: "Oil Peaking is Going to Happen"
Al Jazeera article about the report
Download the report here

Critical uncertainties in oil consumption forecasts?

2005-02-24T00:26:00.000+01:00

How certain is the oil consumption forecasts for 2010 and beyond? After being appointed to the issue by an old copy of the February 23, 2004 issue of Fortune Magazine and it's article Can China Keep The Lights On? I searched through a number of forecasts from a number of different analysis institutes and government agencies. As usual the differencies where few and the forecasts could with small adjustments be carbon copies of each other. None of them seemed to take notice of the fact one analyst of Bear Stearn explained to the writer of the Fortune article: In some cases energy consumption growth is far from linear but follows an S-curve pattern. When the average income in a region suddenly exceeds $1000 dollar per capita and year the energy consumption accelerates exponentially for some time depending on the number of people and other available resources until it flattens out. This reasonates well with my knowledge from the years in the automotive industry. Mobility consumption follows the same S-curve pattern and has the inflection point at about the same average income.

If the analyst from Bear Stearn is right the oil consumption in China 2010 could be 13 million barrels a day rather than 8 million barrels a day. Adding up the numbers and assuming that only China will be having this knee effect gives that China would consume about 14% of the the world's oil production and not 9% as most forecasts tell. This also means that the global oil consumptions forecast numbers for 2010 will increase from 89 million barrels a day to 94 million barrels a day.

One of the major problems when talking about energy consumption and production in China is that they don't have a energy department in the government. The official numbers are therefore probably even more uncertain than usual. But what is probably worse is that the lack of energy department in the Chinese Government results in a much more slow perception and consequentially more slow and unfocused reactions when it comes to energy issues.

There are actually two uncertainties related to this issue. One is the uncertainty about China's real oil consumption increase until 2010 and beyond. The other uncertainty is about the perceptions of all the actor organizations and governments who have a stake in the issue. Since investing in oil production capacity is a rather long term investment issue, the risk are that a number of them will plan their investments according to the current forecasts. The result of that will probably result in even more bumpy years ahead when it comes to oil price. Which is the worst case you could think of? $100 USD per barrel? $200 USD per barrel? $500 USD per barrel? What will the consequences be for national security and international relations if the consumption forecasts will be severely miscalculated until 2010?

Most people are focusing on the consequences of Scenario A, but what about the others? Today I read Carl Bildt's blog about what is happening with the oil industry in Russia. If the oil production in Russia is in such bad shape the consequences of these scenarios may well be much worse.

Scientists agree: humanity is the cause of climate change!

2005-01-19T15:43:00.000+01:00

After several years in the automotive business I have now and then been involved in the discussion about climate change and if humanity is to blame or not. The argument propelling the ignorance in the car industry have always been that there are scientists on both sides. An article in Science Online tells about some research about what scientists really think based on what they've published. It becomes quite clear that the scientific community is united. Humanity is to blame!

Based on this fact all we have to do is take the consequences and act.

I wonder in what other areas this could be true that scientists actually agree but the public view of the issue is that there exists no common truth. The dangers of mobile phones seems to tip over to be regarded as a truth... Which are the others?

Read the article at Science -- Oreskes 306 (5702): 1686

When CIA, the Pentagon and the UN agree...

2005-01-07T14:12:00.000+01:00

...it is most probably true or at least highly relevant! What do they agree on then? That the global issues like

shortage of drinking water
climate change
global infectious deseases
the increasing gap between the rich and the poor

will have huge impact on national security for the western world and in particular the US.

The question is not if or when we should do something but how we should organize the work that should start immediately.

Maybe 2005 is the year when this will happen or att least start to emerge. Jamais Cascio and Alex Steffen have started a blog site called www.worldchanging.com that acknowledges the fact that we already have models, tools and ideas. The problem lies in collecting them, organizating them and informing about them.

In the aftermath of the tsunami in asia I recognise an increased attention in global problems. Both the reactions from my friends and the writings on the blogs I read seems to suggest that other important global issues also comes on the agenda.

What do the CIA, the Pentagon and the UN Have in Common? - Independent Media TV

Interesting debate around the most pressing global matters

2004-11-23T10:57:00.000+01:00

The Global Consensus project gathered 38 of the world's top economists in Copenhagen to create the top list of challenges to humanity. On the top positions were HIV/Aids, hunger, free trade and malaria, but not climate change. This have of course caused a debate.

From the pragmatists (e g Bjørn Lomborg) there is the argument that we should focus on those problems we actually have a chance to do something about.

From the idealists the argument is focused on that the stable climate is a "system condition for civilisation".

Read about the issue yourself:
SocietyGuardian.co.uk | Society Environment | First things first

I think it is very good that a debate around these kind of global questions takes place, and that is exactly was Bjørn Lomborg has been striving for.

From my view it is also a very clear sign that the political agenda is continuing to shift from the left-right scale to a idealist-pragmatist scale. Something which is also happening at both the regional, national and local scenes. Unfortunately it is seldom recognized since the democratic and political mental models and mechanisms are clouding the views for most of us.

IT Doesn't Matter - but articles about the issue might...

2004-09-15T22:12:00.000+02:00

Being a strategist and management thinker originally raised in an IT community you might think I would be upset by the first article in HBR by Nicholas Carr called IT Doesn't Matter. The answer is no. It is not because IT is useless or uninteresting, but all revolutionary technologies matters just a short time and then become widespread and invisible. It was the same thing with the wheel, arguably one of the most important technical inventions in our civilization. Until it was spread of course it mattered on a strategic level, but then?

The debate sends other signals to me. All those people who argues against Carr must apparently believe he is wrong and believe that IT still matters at the strategic level. Some of them are of course right in their own specific context where IT still matters, but I'm very afraid that most of them are just believers. The IT religion is showing itself in bright daylight and is now forming around their technocratic thought patterns.

What Carr is probably hoping for is more nuances in the discussion about IT on the strategic business agenda. The results may as well be the opposite and may close whatever channels that may be open today. IT equipment is so cheap and so technically advanced that most IT-organizations may well, in their urge to prove the strategic importance, actually drive operational efficiency down the drain. Bad communication between the IT organization and management is very dangerous. Think about what might happen if you treat your plumber bad... The IT organization really have power to obstruct even if their power to elevate your business is rapidly decreasing.

Nicholas G. Carr: IT Doesn't Matter

Unethical management behaviour - business as usual?

2003-12-20T01:27:00.000+01:00

It is hard avoid noticing the scandals based on unethical (and sometimes illegal) management behaviour these last years. In Sweden we are currently unravelling the Skandia scandal which havent been settled when this is being written. Today's it seems likely that at least one of the daughter companies have been showing the same kind of behaviour.

Why does these things happen and why now? I have a theory based on three factors

company maturity
stock option focus
the aftermath following an imploding stock market

When a company (and it's industry) becomes sufficiently stable the character of company changes. The external focus decreases and the mental models of the internal structure is getting more and more stable in the minds of the managers. The power positions are becoming fix points in the organization. The stage is then set for the chess-like power game to take place. Since the structure have stabilized the power players enters the arena. In the beginning these players are smart individuals, but after a while pack behaviour takes place. Axelrod's theory about collaboration arguably suggests that collaboration is a natural consequence of prolonged conflict and so it seems in companies. These smart individuals are falling in favor of more group oriented position players who actually collaborate and build power structures. After a few years all important positions are taken by people from basically the same (small?) group. These are closed groups of relatively few peopla who effectively picks right minded individuals for new members. These groups are of course becoming more and more closed when it comes to worldview and values (e.g. ethical values).

If we add the nature of these emerging collaborating groups in maturing industries and markets to the idea of avoid hard cash by rewarding management groups with stock options and inflated valuation it is easy to see where it is going. During a stock bubble there are always appearing some wonder kids whose businesses are valuated to enormous numbers. These numbers changes the frames of thinking. If he or she is worth that much, why shouldn't we? When things goes up nobody cares since most people are running in the game themselves.

The interesting part happens when the bubble bursts. Most of the involved people who don't have secure positions usually follows the stock market down to the new low levels. Many are losing money and a different mindset emerges. That doesn't seem to reach these closed management groups. Since they are basically closed to the world around them they can still maintain their levels of management compensation not understanding what the fuzz is all about.

Values and ethics are socially constructed properties. Groups which are able to shield themselves from the world will then be able to maintain values and truths even if the world is changing.

A lot of people have opinions about these issues and at Wharton they have talked to a number of different scholars about the reasons. Read it in the article by the name Business Ethics.

Citizens strike back for transparency...

2003-10-13T14:50:00.000+02:00

The terrorist attack sept 11, 2001 has changed the borders between personal integrity and the demand for security. American and other western world citizens is today accepting much more government control than before. But what is the price of that? Two MIT researchers are working on create more balance in the relation. By using P2P technology - the technology used in the music switching networks - they are creating a platform aiming at increasing citizen insight into governmental work. The idea is to enable citizens to put together all the bits and pieces of information and create a common picture of government actions. Read the article in New Scientist

If the US Government is unable to stop this by legal means, citizens of tomorrow will have a really powerful tool in their hands. The consequence for governments and politicians is probably that they in the short run will be even more focused on what the public say and think than doing their job. In the long run I think there is even a bigger risk that the government increasingly will cover their actions "for the sake of national security". The war about the 1984 society or not is definitely afoot and one successful terrorist attack is the reason.

Consumption as political activism?

2003-10-10T15:09:00.000+02:00

A popular statement about the new age is that we vote with our money. Since the new ruling powers are not the nation states, but the large corporations we as consumers are the new political grass root power which make impact by our daily purchases. Really? What political purchases have you done today?? In the article Let's Act Like Citizens, Not Consumers at http://www.commondreams.org/views03/0929-12.htm Betsy Barnum argue that consumer power is a myth and she has four pretty good reasons for saying so.

Rapid Climate Change - a big issue

2003-10-10T11:05:00.000+02:00

There is a inherent problem with issues that are too big to grasp. They simply does not connect to our daily lives or thoughts for the most of us. The demographic issues is one example. Environmental issues in general are difficult, but ones that take on a global perspective are extremely tricky. The issue of Rapid Climate Change is one that has been evolving over many years. Read about it's story in this AIP essay at http://www.aip.org/history/climate/rapid.htm

What about the catagory of Big Issues? Is any political system today really organized to deal with these issues or do our new global perspective require new political models??