SPA Annual Conference

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SPA Annual Conference

• Population, Peak Oil Climate Change
• 15th of March 2008

Peter Strachan B Sc. SF Fin
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Where in the world are We?

• The Big Issues
• Climate Change
• Peak Oil/Resources
• Water Security
• Fuel Price Security
• The rise of the East/China

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Oil Finding Development Costs

• FD Costs up from 5/bbl to gt20/bblProduction
  costs up same amountNow need 50/bbl to break
  even on new oil

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IEA Stats Point to Oils Peak
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Current Oil Market Status
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Peak Oil Production

• Oil production is peaking NOW!
• US recession will slightly stall peak
• A substantial, real oil price rise is expected
  over coming 5-10 years
• Renewables alternatives fuels plus technology
  can not bridge the gap in time

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Response to Peak Oil

• Replacing 2-3 mmBOPD with renewables will not be
  achieved
• Technology will not come to the rescue in time
• Economies already jostling for a place at the
  energy security barrier.
• Market Political Response!

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Golden Age of Cheap Oil Passes
1990s an, infamous age of waste and cheap
oilToday we buy 1/3 of the energy per dollar of
average income
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A World of Scarce Oil

• China in Africa Sth America securing supplies
• National oil companies 60-70 of world supplies
• Nigeria, Venezuela, The Gulf, Mexico, North Sea
  all in decline
• Giant fields all in decline
• Market breakdown
• Rationing, Competitive bidding, violence!

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Gold Production has Peaked!
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Gold Close Up - What Next?
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Gold, Like Food

• Response to Ag Mining technology
• New products
• Seeds, genetics, fertilisers, pesticides
  (petrochemical)
• Metallurgy, satellite telemetry, Geophysics
• New mining agricultural methods
• Irrigation, large diesel powered tools
• Open pit mining economies of scale

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Food Supply
Corn, grain, oil seed prices all through the roof
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Peak Resources No Magic Pudding

• Driven by 80 years of population growth from 2 to
  6.7 billion ( 4.7 Bn!! )
• Long period of sector under-investment
• Rapid wealth expansion globalisation
• Secular decline in real commodity prices appears
  to be at an end real price rises now expected

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What a Coincidence!
8,000 BC population was 5 million, year 1 pop 200
million.
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Where Are We?
Hot spots
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Some Estimates

• The more robust estimates calculate that between
  90 to 110 billion humans have ever walked the
  planet.
• Global population rising at 1.5 pa 65-100
  million pa!
• 40 live in Brazil, India China
• getting richer demanding a higher protein diet.

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As Goes Taiwan, so Goes China
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Per Capita Consumption

• Grains steadyProtein risingFuel Parabolic

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Where will the People Live?
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And what will they Eat?
A quadrupling of crops for fuel leaves little on
the plate
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Food or Fuel
Contribution to Increase in global corn
consumption
The SUV ate my dinner!
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China Struggles to keep Up

• Less Arable land per capitaArea under farms
  struggles to keep upPollution reduces yield?

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Where is This Leading?

• Destroying the Planet!Oceans dyingAirWaterCl
  imate . . .

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Lets Talk About Implications?
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Factors for Human Advancement

• Localised Critical Population Mass plus
  Enlightened Leadership
• Early China
• Alexandria
• Constantinople
• Florence of the Medici
• Harnessing Energy
• Ox, Horse, Water, Steam and
• Oil Gas

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What Have we Achieved

• 61 countries with 44 of the Worlds total
  population have TFR lt2.1 children per woman
• But large demographic bulges ensure growth will
  continue
• Amongst them China, Spain, Italy Australia

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Way Forward

• Global response required
• Tackle corruption Lack of education
• Individuals can make a difference
• Reducing Fertility
• Carrot and stick
• Educate empower women
• Resist fiscal measures which encourage births
• Grameen Bank, Micro Credit, etc
• Political social approaches

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Way Forward

• Deal with existing demographics
• Can not be altered
• Bulge coming through
• Hugely skewed to young population in
• Middle East
• Turkey
• Africa Sth America
• Work to restrict the demographic Bulge
• Legal systems
• Humans have proved to be inventive

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Where Are we Going?
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If we fail, the ecosystem will sort itself out
with unpredictable consequences for human life on
Earth
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(No Transcript)
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How do you monitor risks?
StockAnalysis
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How Does StockAnalysis Work?

• Bottom Up
• Stock Picker
• Resources General (anything that makes us
  money!)
• Driven By Top Down Philosophy

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Finding Less Conventional Oil
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The Oil Age Ends
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ADDING ALMOST A TRILLION BARRELS GAINS ONLY 10
YEARS
EIA Add 900 Million barrels, Gain 10 years.
Production
History 1 Trillion barrels already consumed
Some Forecasters 1 Trillion barrels already
consumed peaking about now
Time