MARKET PERSPECTIVE

By J Mulraj

OCT 25-NOV 1, 2024

The Politician or the Scientist?

Open any newspaper. The first page has distressing news – wars, deaths, destruction, bombings, all created by politicians spreading vituperative hatred. Reading it saddens the heart and generates pessimism for the future. It’s only in the inside pages that one learns of scientific breakthroughs which, like the glimpse of light at the end of a tunnel, give rise to optimism for the future.

Look at the wars fought over energy resources. Consider the ongoing conflict in Syria, triggered by public protest against the ruler, Bashar Al Assad, in 2011. Apparently, the genesis was a project to build a pipeline, carrying Qatari gas, to Europe. Funded by Saudi and with US support, the pipeline would have created an alternative source of cheap, environmentally natural gas for Europe, to compete with Russian gas. The impediment to the project came from Syria, through which the pipeline needed to pass. Bashar Al Assad refused permission. Public protest started. A civil war erupted. Citizens fled to avoid being caught, many ending up in Europe, leading to a cultural crisis there, which persists.

Then there was the Venezuelan brouhaha. The country has the world’s largest oil reserves, and its erstwhile leader, Hugo Chavez, plundered the resources of PDVSA, the national oil giant, using the resources to assist neighbors whilst neglecting to invest fully in exploiting its oil resources. When he was defeated by Maduro, the US called it a rigged election, and sanctioned its oil out of the market. Prices rose.

On becoming President, Donald Trump fully exploited the technology of fracking, or horizontal drilling, to increase supply of crude oil, resulting in USA becoming a net exporter rather than an importer of crude oil. The US economy did well, though fracking entailed a poisoning of ground water.

His successor, Biden, banned further leases of Federal land for fracking, so as to preserve the environment, but, at the cost of high inflation as the US once again became dependent on the Middle East, (especially Saudi Arabia, the largest producer), for crude oil. Biden then made the intemperate remark, calling crown Prince MBS a pariah, most unstatesmanlike for someone begging for more oil to be produced by him. Obviously, MBS did not agree to produce more.

So Biden instigated the Russia-Ukraine war, by pushing NATO to consider accepting Ukraine as a member, a huge red line for the Russian bear. The Russia- Ukraine conflict started, and continues. The Nordstream pipeline, supplying Russian gas to Europe was blown up, (Pulitzer prize winner Seymour Hersh wrote that the US did it, not the butler). The conflict, and the wanton and irresponsible destruction of a pipeline, plus sanctions imposed on Russia, all led to a further reduction in energy supply and thus a sharp hike in prices, triggering inflation.

Not yet satisfied, the politicians are fomenting the problem in the Middle East, between Israel and Iran, plus its proxies of Hamas, Houthis and Hezbollah. Unless someone shows statesmanship and sagacity, the situation can escalate into a wider, regional, conflict and, God forbid, a nuclear one.

This is what the polity has brought the world to.

Now turn the newspaper pages to the Science section and study how scientists are tackling the same issue, viz. energy. Tony Seba, an authority on technological disruptions, has a think tank, called RethinkX. RethinkX has predicted that Solar, Wind and Batteries (SWB) will disrupt existing energy systems by 2030 because the combined cost of solar, wind and batteries has fallen 80% between 2010 and 2020. Seba says it will be possible to build excess capacity, at a very low cost, creating an abundance of energy, in each country.

This means that SWB will have the ability to make countries independent of other countries for their energy needs! No need for wars or conflicts, death or destruction!

By the end of next week, we should have a newly elected President of the United States. Let us all pray it is one who has understood the vision of the scientists and the power of technology.

India should invest heavily in battery storage capacity, as China is doing.

Last week the BSE Sensex closed at 79389, for a weekly fall of 13 points.

Investors should be eyeing the US elections. Trump has promised, if he wins, to drill baby drill for oil, using fracking, and bring down inflation (perhaps technology should, hopefully, develop to save groundwater contamination). He has vowed to quickly end the Russia-Ukraine war. He can easily ask Zelensky to negotiate, by threatening to withdraw financial and military support. He can ask Russia to resume energy supplies to Europe and work out plans, perhaps European funding, to restore the Nordstream pipeline. German industry is reeling because of expensive energy. Volkswagen is shutting three plants in Germany. He can deploy new technologies, with the help of Elon Musk, to improve productivity. He can, using family connections, bring warring  parties in the Middle East to the negotiating table.

A win by Kamala would lead to same old, same old.

So this week is crucial. For the US. And for stock markets.

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Comments may be posted to jmulraj@asiaconverge.com