An Escalading trend

By Russ Vaughn

I am a strong believer in the long-term growth of energy stocks and this announcement from the Chinese during the Copenhagen farce just reinforces the validity of that strategy for me. As the Chinese wisely recognize, it is the nature of man and the duty of his leaders to better his condition, starting with the necessities of food and shelter. But in a growing, modernizing, urbanizing society, improved transportation of both people and goods is also a necessity.

Of those hundreds of millions now living in poverty in developing nations like China and India, the most likely mode of transport is by foot or at best by bicycle. As their living conditions improve, these hundreds of millions are going to seek faster, more efficient means of conveyance and move up to motor scooters, motorcycles and very small, high-efficiency automobiles.

Within these expanding economies, the growing middle-class will increase to unprecedented proportions. These new middle-class citizens are going to seek larger and better automobiles and better cargo hauling vehicles such as mid-size SUV's and pickup trucks. Those whose good fortunes allow them to migrate even further upward in society will reward that success with even larger and more luxurious means of transportation, the Escalade Echelon, so to speak.

This "escalading" trend, which, by the way, can also be applied to housing, is going to create huge demands for fuels, be they fossil, bio-fuels or others. And this trend will itself require major advancements in the commercial transport infrastructure of these countries in the form of more and bigger trucks and trains. Consider that this country, with only 300 million population, now consumes 25% of the world's energy output, then apply the math to just the two largest of those developing economies, the Chinese and Indian, with a combined current population in excess of 2.5 billion.

Even if the earth is continuing to produce new petroleum supplies in an abiotic process of which I wrote earlier here at American Thinker, this growing demand is going to exert market pressures on the world's energy producing systems that is likely to drive prices upward for several decades. Certainly new energy technologies will be developed to offset some of the demand on fossil fuel supplies but such advancements will generally come at a slower pace than the increasing demand and only with the financial resources of today's huge energy companies.

To paraphrase the advice given to The Graduate, I just want to say one word to you, "Energy."