About Sticky Feet

About Sticky Feet:

Inside the box thinking. And plotting. Because all the nutters are outside.

Sticky Feet blog at TrivCap provides analysis covering Trivandrum Capital’s investment themes, Peak Oil and India. We believe that on a macro level Peak Oil’s impact is under-appreciated, but events will rapidly overtake and consensus views will scramble to understand that world oil production has reached peak production and will begin to decline unrelentingly, prompting significant transformation of life and living.

The implications of Peak Oil – and we refuse to call it a “theory” any longer – mean that we are on the verge of entering a global energy-constrained phase such as the world has not experienced in more than a century and which is likely to last for decades. For centuries living standards improved in direct correlation with cheap energy availability. In recent history we made two giant leaps, first beginning with the age of coal in the 19th century and, second, the age of oil beginning from the early 20th century. The evidence shows that the age of the Cheap Oil bubble is history.

Prudent risk management would have required us to foresee and prepare for the end of Cheap Oil 20 years before its arrival because of the risk that:

(1) without increasing oil production economic growth may not be possible; worse, the economy may shrink as oil output decreases.

(2) shifting to alternative energy resources takes decades and requires big money investments.

But we have been foolish and may now be left with too little time to make an orderly adjustment to an energy-constrained world. Therefore there is a significant non-zero probability that the post-Peak Oil world will augur in a period of wrenching society-wide economic and social changes lasting for years to come while we adjust our energy mix towards alternatives in the shadow of imposed de-growth and resultant new steady state of financial crisis and declining living standards.

Always leave them smiling: There is reason for hope. First, we subjectively assign about a 50% probability to the above dire scenario, so there is perhaps a 50% chance that we transition to a new energy economy in an orderly manner if we and our governments prepare and activate crash change plans quickly on an economy-wide moon-shot scale. Second, it is possible, proven even, that we can live happy, fulfilling, less materialistic lives at a significantly lower standard of living.

India: Every country will confront challenges in a Peak Oil world under a worst-case scenario. In that sense, India does not measure up as a unique investment theme. However, we believe there are positive factors present in India – ones that Sticky Feet blog will discuss – that lead us to believe that India may cope reasonably well in Peak Oil world relative to other major emerging economies.

This blog discusses issues that fall within the nexus of Peak Oil, energy and development. These are complex areas, so we’ll let the analysis wander and see where it leads. In case there’s something we can’t figure out…I default to what an old friend once said to me: The world is round and people have sticky feet; that’s why we don’t fall off.