Dana Blankenhorn

The Death of the Oil Patch

Lost in my commentary on the coming decade was its first chapter, called The End of Oil.

The global economy has become dependent on oil since I was in college. Oil is behind most of our current problems, from global warming to the rise of Putin.

But the fall of oil is made possible by one fact. At the start of this decade I called it crossover. It’s the point where wind energy, and solar energy, become cheaper than energy from fossil fuels.

We made that crossover on schedule, in 2016. Since then, as I predicted, costs for renewables have continued to fall.

This is especially true for the most important form of renewable energy, efficiency. Insulation, LED lights, better furnaces and appliances, and computer controls mean demand for electricity in the U.S. has been stable through this decade. As a result, utilities have embraced electric cars, a technology as old as fossil fuels, but abandoned early in the 20^th century because electrical systems hadn’t scaled but oil infrastructure had.

All this should be good news. But it’s not. It’s a crisis the likes of which we haven’t seen since World War II.

Even OPEC now sees demand for its product falling. The International Energy Agency has cut its demand forecasts repeatedly this decade, and now agrees with me.

Where Have You Gone, Al Gore?

The Sun shines. The wind blows. The tides roll. We live on a molten rock.

Yet in 2019 California’s electricity was still running through a centralized system that was obsolete 20 years ago, when then-Vice President Al Gore coined the term “enternet,” predicting renewables could make the energy grid resilient. 

Now that his vision is possible, he’s silent.

Ordinary people are now way ahead institutions of this. Residential solar is growing at 30% per year.  The fastest growing occupation over the next decade is expected to be that of a solar power installer.  Old solar panels are even recyclable, into anodes for new solar panels.

Fall of the Moolahs

A political tsunami is most likely when Wall Street gets out of step with the economy.

While it’s not yet showing up in the statistics, the U.S. economy is already in recession.

If you import or export, your business is down. If you’re a retailer, your business may be gone. If you’re a farmer, only the government is holding you up. If you’re a manufacturer and you’re not named Boeing, you’re struggling. If you’re in transportation you’re hurting. If you’re in the oilpatch, you’re dying.

The reason this isn’t apparent can be seen in the latest headlines from Maersk, the Danish shipping company. Their sales are down, but so are their costs, so their profits are up, and so is their stock. 

How can profits be rising, and thus stock values, if we’re in a recession?

Apotheosis of Nationalism

An apotheosis is the glorification of something to a divine level, the treatment of a human or institution as a god.

It’s a climax state. As with a swamp that has become a forest due to the steady deposit of leaves, it’s unstable. It’s the last step before a fall. Anyone and anything can become Icarus. Our doom is sealed when we get too close to the Sun.

Nationalism was born in the 18^th century. Ours was the first new nation. Nationalism has dominated political organization since the 19^th century, because it delivered leaders beyond those of royal blood. The reign of Louis XVI, then, was an apotheosis for the imperial model. The tumbrel began the end for the divine right of kings.

We’re now at the apotheosis of the nation state. Everyone is now part of a nation state. We can’t conceive of any other structure. Nation states, their leaders, and their philosophies send their people off to war for the glorification of “the people.” It’s a continuing competition for resources, both human and physical. Nationalism is the ultimate zero-sum game. For my nation to prosper, other nations and people must suffer.

Elizabeth Warren on Tech Street

Ronald Reagan was not oil’s first choice in 1980.

John Connally was first. George H.W. Bush was second. Oil accepted Reagan and, through Bush, won political power for a generation, power it still has in the face of tech’s need for human capital.

So it is that we come to the 2020 game. Tech has been in the economic driver’s seat for 12 years, but in the political back seat for three. Tech has suffered for this. Its priorities have been ignored. It has been scapegoated by an Administration working in the interests of oil.

Technology is Democratic. It’s not a question of who tech prefers. Tech needs a seat at the political table, it will have a seat at the table, and that table will be Democratic. Assuming, of course, that democracy survives.

Trump is Not Unusual

Lost in The Eternal Now, reporters make One Big Mistake in writing about Donald Trump.

They call him unique.

There is nothing unique about Donald Trump. Yes, he is attempting to overthrow gains the American people won from tyranny over the course of 100 years.

But all those fights were against other Americans, and American governments. We have been here before. We have always been here.

Let’s not even talk about slavery or the Indian genocide. Let’s not even play Ragtime, the book, movie or musical where a black man is put down while a white immigrant rises.

Let’s start with that great liberal hero. Woodrow Wilson.

The Twilight of Nationalism

If mankind still exists in 2119 their historians will write about this era as the Twilight of Nationalism.

Nationalism was essential when economies were based on resources, machines or muscle. In the era of clouds and devices it’s increasingly irrelevant. The global nature of our existential crisis makes nationalism an outright impediment to the survival of mankind.

Thus, it’s no coincidence that nationalism has been a rising force in the decade now ending. Just as it concentrates the mind to know you’re to be executed in the morning, so it is for leaders and political movements. Seeing sunset in the distance you do what you can and ignore the consequences you know are coming.

The Trump election acts as a midpoint and permission slip for all this. Nationalism was already on the march, in Europe, in the Middle East, and in Asia, through the agency of Russia, when Trump came to office. But Trump has given nationalistic impulses around the world permission to act. There is no American opposition to ultra-nationalism anywhere, no alliance worth protecting, no counter example to follow.

Thus, nations push their boundaries outward, fearing any force that might threaten their power, and ignoring the natural internationalism essential to economic growth and climate action.

That’s why Brazil is going after its rain forest. That’s why India is going after Kashmir. It is why China is going after Hong Kong. That’s why England wants to detach from Europe, why Eretz Israel is a thing, why Saudi Arabia seeks dominion over its whole peninsula. If you can afford it, nationalists think, seize the day. The window is closing.

One Nation. At War. With Itself

In August of 2019, the United States is a nation at war with itself.

We are at war with fundamental changes that must occur if the country, and the world, are to be saved from the Industrial Revolution.

We’re also at war with the essentials of economic growth in our time.

As I have written many times, the gating factor in technology is human capital. Trained, eager, free minds, willing to think the previously unthinkable, to model it and make it reality. This is where money is made today.

The more such people you have, the fewer of the other kind, the more money you make. The more freedom these people have, the greater their access to money, to new ideas, and to one another, the more your society prospers. This is Israel’s secret sauce.

Resources don’t matter. Machines don’t matter. Muscle doesn’t matter. Minds matter, more than anything.

The 2020 Game

The Tell on what will happen in 2020 came in late July of 2019.

Trump’s most loyal lieutenants, attorney general William Barr and Treasury Secretary Stephen Mnuchin (far right), issued existential threats against the Cloud Czars. Under Trump’s orders.

The Cloud Czars, for those unfamiliar with my current work at InvestorPlace, are Microsoft, Amazon.Com, Google, Apple and Facebook. As technology has come to dominate the economy, the Czars have come to dominate technology.

They’re the Cloud Czars because the tool which dominates technology is cloud computing. It combines parallel processing with virtual operating systems and open source techniques to hold down costs.

The 1979 Game

An industry’s takeover of politics tends to be defensive.

It happens when that industry seems to be riding high. It acts against leaders whom neutral observers may credit with that rise.

I covered this story 40 years ago. In Houston.

The oil industry did great in 1979, despite Jimmy Carter’s cardigan sweater. Saudi Arabia, more Texas’ ally than America’s, had proven the economic power of resources with its 1973 embargo. Iranian mullahs believed they could use the same economic force against America. Oil understood this as a threat to its interests. Carter saw oil’s profits as leverage he could use against the Iranians.