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Daniel R · 08-10-2013, 07:06 AM

Perfectlap

I don't know where to begin. This is a a topic best discussed over several hours and bottles of wine.

The performance of Tesla stock is, in my opinion, really just a price of oil story. At the moment, there are only 3 things in world markets that matter. The price of energy, US dollar interest rates and Chinese economic growth.

I will cop it for my opinion here, but I believe that this alternative energy "fad" is just that. The only reason alternatives make sense at the moment is that oil is trading above $100 a barrel. Add government subsidies, cheap raw materials out of China because the Chinese government is also subsidising industry very heavily and taxes on carbon emissions and we have the perfect environment for inefficient "green" technologies to flourish.

Since other posters are talking their book, I will say that I am short oil. I personally believe that the current price is not sustainable. It is inflated by speculators and also by insatiable Chinese demand that is used for less than economically efficient purposes. Chinese GDP growth based on government expenditure financing bridges to nowhere and the construction of ghost cities with the equivalent of muni debt is not real growth. People are not leaving the farms fast enough, a middle class is not emerging, many large businesses are not sustainable without government subsidies and wages are rising due to persistent inflation which is costing China some of it's competitiveness. The China story will not end well.

The one nation to back at the moment is the US (I am Australian btw) as I believe that once the oil price falls back to the $30 - $40 a barrel that it should be the US will be back to the economic powerhouse it was and this will be possible again due to cheap energy. Unfortunately this will mean the death of renewables again, until the next oil spike anyway.

The beautiful thing is that expensive oil is disruptive and encourages us to become creative and find better and more efficient ways of spending energy. Most of our ideas are simply useless when oil returns to a normal level and subsidies dry up. There will be some technologies however (regenerative braking perhaps) that will prove to be useful even with cheaper oil and will continue to save us money and help to reduce emissions for the benefit of the environment. We saw this in the automotive industry in Europe with the oil shock in the '70's when aluminium engine blocks and double overhead camshafts were created to make engines more efficient since fuel had become so expensive. These technologies may not have been developed until much later had it not been for temporarily expensive oil.

Heed the warning, if anyone wants to buy an electric car my advice is to also buy some long-dated and deep out-of-the-money put options on oil. A great hedge for the value of your car.

Now I'll keep some powder dry to defend the backlash...

08-10-2013, 07:06 AM	#36
Daniel R Registered User Join Date: Apr 2009 Location: Perth, Australia Posts: 165	Perfectlap I don't know where to begin. This is a a topic best discussed over several hours and bottles of wine. The performance of Tesla stock is, in my opinion, really just a price of oil story. At the moment, there are only 3 things in world markets that matter. The price of energy, US dollar interest rates and Chinese economic growth. I will cop it for my opinion here, but I believe that this alternative energy "fad" is just that. The only reason alternatives make sense at the moment is that oil is trading above $100 a barrel. Add government subsidies, cheap raw materials out of China because the Chinese government is also subsidising industry very heavily and taxes on carbon emissions and we have the perfect environment for inefficient "green" technologies to flourish. Since other posters are talking their book, I will say that I am short oil. I personally believe that the current price is not sustainable. It is inflated by speculators and also by insatiable Chinese demand that is used for less than economically efficient purposes. Chinese GDP growth based on government expenditure financing bridges to nowhere and the construction of ghost cities with the equivalent of muni debt is not real growth. People are not leaving the farms fast enough, a middle class is not emerging, many large businesses are not sustainable without government subsidies and wages are rising due to persistent inflation which is costing China some of it's competitiveness. The China story will not end well. The one nation to back at the moment is the US (I am Australian btw) as I believe that once the oil price falls back to the $30 - $40 a barrel that it should be the US will be back to the economic powerhouse it was and this will be possible again due to cheap energy. Unfortunately this will mean the death of renewables again, until the next oil spike anyway. The beautiful thing is that expensive oil is disruptive and encourages us to become creative and find better and more efficient ways of spending energy. Most of our ideas are simply useless when oil returns to a normal level and subsidies dry up. There will be some technologies however (regenerative braking perhaps) that will prove to be useful even with cheaper oil and will continue to save us money and help to reduce emissions for the benefit of the environment. We saw this in the automotive industry in Europe with the oil shock in the '70's when aluminium engine blocks and double overhead camshafts were created to make engines more efficient since fuel had become so expensive. These technologies may not have been developed until much later had it not been for temporarily expensive oil. Heed the warning, if anyone wants to buy an electric car my advice is to also buy some long-dated and deep out-of-the-money put options on oil. A great hedge for the value of your car. Now I'll keep some powder dry to defend the backlash...