The Death of Fossil Fuels? Really?

"A century ago, petroleum - what we call oil - was just an obscure commodity; today it is almost as vital to human existence as water." - James Buchan

The End of Indexing

My new book - The End of Indexing - was finally released on the 26th March and has since gone on holiday to Dubai (Exhibit 1). No wonder it needs a break after all that hard work. Just wish I could be there too!

Exhibit 1: The End of Indexing on holiday in Dubai
‍Exhibit 1: The End of Indexing on holiday in Dubai
Source: Martin Bernhardt

Although I haven’t seen any sales numbers yet, the publisher seems pretty happy so far. I could actually do with some help. If you have read the book already (but only if), and you have an account with Amazon, it would greatly help my cause if I could persuade you to spend a few minutes reviewing the book on Amazon. In these social media times, there sorts of things are veryimportant. Apparently, for Amazon to accept your review, all you need is an Amazon account. It is not a necessity that you actually bought the book through them.

A recap of last summer’s story on oil

Changing subject, in June of last year, I wrote an Absolute Return Letter under the title Oil Price Target: $0 (by 2050), and that raised a few eyebrows. At the same time, I added The Death of Fossil Fuels to the growing list of structural trends that I have identified, and that I believe will impact the global economy and financial markets for years to come. Brent oil was hovering around $50 at the time.

Although I did make it crystal clear that it was indeed a very long-term target, and that oil prices could easily move the other way in the short to medium-term, I still took a fair amount of stick from readers, many of whom thought I had finally lost the plot (to tell you the truth, that happened years ago, but that’s a story for another day).

Oil prices will never go to $0, many readers screamed, and they are (probably) correct. Take the chemical industry’s use of oil. A meaningful amount of it is used every day to produce various plastic products, and neither renewable energy forms nor fusion energy (whatever energy form is going to replace fossil fuels in the long term) can ever replace oil when producing plastic products.

I concur with that view, but oil prices are not likely to trade anywhere near current levels in a world that only needs 20-25% of the amount of oil that we need today to make the global economy turn around. Moreover, both gas and coal prices could certainly go to $0. Furthermore, given the direction in which governments all over the world are moving these days, isn’t it quite likely that many plastic products will eventually be outlawed, further reducing demand for oil?