Shift from gaso­line-based or­der to elec­tric one sig­nals be­gin­ning of the end of oil era

IN HIND­SIGHT, 2016 WILL BE RE­MEM­BERED AS THE IN­FLEC­TION YEAR WHEN OIL EN­TERED ITS PE­RIOD OF DE­CLINE

Resource Digest - - CONTENTS -

The year 2016 was a dra­matic year. I am not sure about oth­ers, but the de­vel­op­ments over the past year have made me re­flect on four is­sues. The rel­e­vance of the cur­rent sys­tem and process of demo­cratic pol­i­tics in what is now re­ferred to as the “post-truth” or “post-fact” world; the be­gin­ning of the end of the oil era; the com­pat­i­bil­ity of our in­flex­i­ble sys­tem of bu­reau­cratic gov­er­nance with the pres­sures of a com­plex, con­nected and con­tin­u­ally chang­ing world; and the fragility of cor­po­rate rep­u­ta­tions.

Politi­cians have al­ways played fast and loose with the truth. As such, the “fac­ti­cide” that marked the cam­paign for Brexit and Trump’s march to the White House should not have come as a com­plete sur­prise. But it did. This was in part be­cause of the gall with which the false­hoods were ut­tered and in part be­cause they re­ceived global at­ten­tion through in­ter­net and the so­cial me­dia. In fact, so much so that the Ox­ford Dic­tionary de­clared the ad­jec­tive “post-truth” as its word of the year for 2016. I am no po­lit­i­cal sci­en­tist but the thought that did cross my mind, as the po­lit­i­cally un­think­able got pushed into the main­stream, was whether the ex­ist­ing elec­toral struc­tures and sys­tems for man­i­fest­ing pub­lic opin­ion were in fact demo­cratic. Whether, to be pre­cise, the Amer­i­can sys­tem of pri­maries and elec­toral col­lege vot­ing for the pres­i­dent; the UK and In­dian sys­tem of “first past the post” for elec­tions to Par­lia­ment or the Ger­man sys­tem of pro­por­tional rep­re­sen­ta­tion—grounded as each are on the bedrock of na­tion­al­ism and po­lit­i­cal sovereignty—were in sync with the im­per­a­tives of a con­nected eco­nomic and so­cial or­der. I found it ironic that these sys­tems had built-in checks and bal­ances to pre­vent the rise of pre­cisely the demagogues and dem­a­goguery that sur­faced in 2016. To my mind, two ques­tions need to be asked. One, whether these elec­toral pro­cesses push the voter into a Faus­tian cor­ner wherein, while it

of­fers them the pe­ri­odic op­por­tu­nity to chal­lenge the es­tab­lish­ment, it lim­its their choices by strait­jack­et­ing this chal­lenge into con­duits man­aged and con­trolled by the es­tab­lish­ment? Two, in con­se­quence, is now not the time for a root and branch re­view to con­tem­po­rise the ex­ist­ing panoply of lib­eral demo­cratic pro­cesses ?

Just over a 100 years ago, in 1911, Win­ston Churchill, as first Lord of the UK Admiralty, her­alded the oil age by or­der­ing the UK Navy to use oil and not coal as bunker fuel for their ships. Coal con­tin­ued to be an im­por­tant en­ergy source, but thence­forth oil’s share in the en­ergy bas­ket rose in­ex­orably. To­day, oil is the dom­i­nant fuel for trans­port, and prima fa­cie, there is no Churchillian rea­son for as­sum­ing this sit­u­a­tion will change in the near- to mid-term. There is no com­mer­cially vi­able sub­sti­tute for oil as a trans­porta­tion fuel and the eco­nom­ics of elec­tric ve­hi­cles is not com­pet­i­tive.

But Moore’s law and “Uberi­sa­tion” might change all this and in short or­der. Moore’s law posits that com­put­ing power will dou­ble ev­ery 18-24 months. And “Uberi­sa­tion” is al­ter­ing the cur­rent owner-op­er­a­tor model of mo­bil­ity. Com­bined, these two forces could re­de­fine the shape of the trans­porta­tion sec­tor. Amory Lovins, di­rec­tor of the Rocky Moun­tain In­sti­tute, uses an evoca­tive acro­nym to de­pict the emer­gent change. The sec­tor, he says, will evolve from PIGS to SEAL. That is, the cur­rent model based on Per­son­alised, In­ter­nal com­bus­tion, Ga­so­linebased and Steel en­cased ve­hi­cles will shift to one based on Shared, Elec­tric, Au­ton­o­mous (i.e., driver­less ), and Light weight ve­hi­cles.

Un­til 2016, all con­ver­sa­tion about a com­mer­cially com­pet­i­tive and scal­able al­ter­na­tive to gaso­line and the in­ter­nal com­bus­tion en­gine came with caveats of con­straints of costs, lim­i­ta­tions of bat­tery stor­age (and hence driv­ing range) and recharg­ing in­fra­struc­ture.

Last year, the con­ver­sa­tions be­gan to ac­quire a ring of com­mer­cial con­vic­tion. An in­creas­ing num­ber of peo­ple, and not just en­trepreneurs like Elon Musk (Tesla ) or au­to­mo­tive com­pa­nies like Mercedes, Gen­eral Mo­tors and Toy­ota but also gov­ern­ments bet on Moore’s law and pre­dicted that these caveats would sooner rather than later be re­moved by the ad­vance­ment of tech­nol­ogy. Given that trans­port ac­counts for 60% of oil de­mand, a world of SEALS would ef­fec­tively seal this com­mod­ity’s fu­ture. I won­der whether, in hind­sight, 2016 will be re­mem­bered as the in­flec­tion year when oil en­tered its pe­riod of de­cline.

The jury is still out on the pre­cise eco­nomic ram­i­fi­ca­tions of de­mon­eti­sa­tion, but I am sure that even the PM will ac­cept it has been poorly im­ple­mented. One can ad­duce many ex­ten­u­at­ing ex­pla­na­tions, of which the strong­est ar­gu­ment would be that the civil ser­vants re­spon­si­ble for im­ple­men­ta­tion were not given suf­fi­cient no­tice. But these ex­pla­na­tions leave unan­swered a fun­da­men­tal ques­tion. Is our steel en­cased, rigid and hi­er­ar­chi­cal bu­reau­cracy, staffed as it is, in the main, by “gifted am­a­teurs”, knowl­edge­able enough to help their po­lit­i­cal mas­ters nav­i­gate the shoals of a com­plex, com­pet­i­tive, con­nected and tech­no­cratic world? Do they have the se­cu­rity of in­sti­tu­tional safe­guards to of­fer ob­jec­tive ad­vice? To be spe­cific, did those con­sulted by the PM about de­mon­eti­sa­tion have a de­tailed un­der­stand­ing about our bank­ing and digital in­fra­struc­ture? And if so, did they feel se­cure enough to share this in­for­ma­tion with the PM, warts and all? I do not have an an­swer to these ques­tions but I will say that the man­ner in which this de­ci­sion has been im­ple­mented high­lights the im­por­tance of in­sti­tu­tion­al­is­ing the lat­eral en­try of ex­perts into the up­per ech­e­lons of our eco­nomic and tech­ni­cal min­istries a la the US sys­tem.

The Tata Group has for decades sat on the perch of cor­po­rate gov­er­nance. It is not a po­si­tion they in­her­ited. They earned it slowly but con­vinc­ingly. To­day, the Group is em­broiled in a con­flict that has se­verely eroded their mar­ket cap­i­tal­i­sa­tion and, more im­por­tant, their rep­u­ta­tion. Two is­sues are de­serv­ing of reflection. One, the im­por­tance of in­di­vid­u­als—they can both make or mar in­sti­tu­tions . And two, the fragility of rep­u­ta­tions. For whilst it al­ways ar­rives on foot, it can leave in a Fer­rari.

JUST OVER A 100 YEARS AGO, IN 1911, WIN­STON CHURCHILL, AS FIRST LORD OF THE UK ADMIRALTY, HER­ALDED THE OIL AGE BY OR­DER­ING THE UK NAVY TO USE OIL AND NOT COAL AS BUNKER FUEL FOR THEIR SHIPS

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