What happens when our money is useless?

August 28, 2009

Kuwaiti Money

Kuwaiti Money

Last year during the Obama vs. McCain political campaign I got into a heated argument with a colleague of mine on the effect the results of the American presidential elections would have on our small nation, Kuwait. My colleague was quick to point out Obama’s agenda against fossil fuels and what would be the inevitable results of his presidency for the renewable energy race. And I pointed out that his pro-renewable energy attitude would have both a negative and a positive effect on our country if we do chose to prepare for the worst.

It hasn’t been long since Obama’s inauguration, and defiantly much shorter than I expected it to take him, yet he has changed the automotive industry drastically. Following Chevrolet’s file for bankruptcy, the government laid down some ground rules for the company to operate on for the next decade or so. For Chevrolet to gain government financial support, it would have to create a fuel-efficient car that would do at least 200 MPG and become the best selling car in America within the next ten years. For engineers it seemed like a tough challenge, and for us it means nothing but financial instability.

The all-new Chevrolet Volt does 230 MPG, and that’s the first wave in the war against fossil fuels. What is more, Nissan have already ridiculed Chevrolet by hinting at a car they are working on that would give close to 400 MPG. All car companies are researching and implementing technologies that considerably reduce the fuel consumption of their engines; great for us as a consumer, bad for us as producers of fuel.
To put things into perspective for you, average road going cars today do close to 20MPG and the best fuel-efficient car, the Toyota Prius does only 50MPG. My Ford Mustang does 14MPG!! A jump from 20-40mpgs to 200-400mpgs would mean a 90%-95% decrease in fuel consumption. And that my friends would mean a 90%-95% decrease in fuel sales, and ultimately a 90%-95% decrease in fuel prices which inevitably means a 90%-95% decrease in Kuwait’s annual revenue.

Now these numbers are my personal guesstimations (I have a way with shitting considerably accurate guesses and arbitrary calculations), but there is no denying that the effect of a car with an increase in mileage per gallon that significant, would be negative for our economy which thrives on the sky-rocketing prices of black gold.

And it would also be ignorant to assume that the prices of oil are governed through the consumption of petrol in personal cars alone. Crude oil is built up of numerous sediments and when broken down gives a load of other stuff, some bi-products are the petrol and diesel fuels we use to power today’s automobile engines. (Click for details)

Kuwait produces around 2600000bbl/d (Barrels per day) and exports almost 85% of that oil. And its safe to say 70% of the use of crude oil is fuel for transportation, for cars, bikes, trucks, and airplanes. Using these statistics, which are derived from OPEC, and multiplying the average number of barrels produced, by the price of a barrel of oil (Average price forecasted for a year is $82/barrel), we can calculate Kuwait’s earnings to be in the region of 50 million Kuwaiti Dinars a day or $176’300’000/day. Sadly it does not feel like we live in a country with that form of income, I wonder where all that money is going? Hmmmmm.

With all that money going around I almost forgot what my point was.

Surely not today, and indefinitely not tomorrow, but sometime in the distant or maybe near future within our lifetime, the value of crude oil will drop significantly and it will render the existence of our future, tough. That is unless we chose to do something about it.
Our vast and precious desert territory was once redundant in its scorching heat and infertile soil. When seeking a source of income, our ancestors would fish for food, build houses out of mud, fashion boats of wood, dive for pearls, and trade palm dates and pearls for spice, gold, weapons, wood and everything else that was needed by it’s population. This country’s history was built on having an important and strategically located global trade port. Anything that needed to get to Iraq, the Ottoman Empire or the Mediterranean region would have to go through Kuwait. Who could have ever guessed that our futile land would later gave us a precious black liquid that would enable it’s country to become globally significant.

But our land is generous in that it never stops giving, every once in a while they discover new oil fields and gas reserves beneath the ground and areas around our sea. With this land, we possess vast flat fields that I’m sure hold more generosity than the eye can see.

In the race for renewable energy sources, the current placeholders are wind-turbine energy, solar power, nuclear power, tidal energy, wave energy, hydroelectricity, geothermal power and biomass energy. And if we abstract these even further, we can see that nuclear power and biomass energy as well as a few others considered renewable are not actually clean for the environment, but cleaner than what is currently and readily available as long as people choose to use it. This leaves us with solar, wind, tidal, wave, hydroelectric and geothermal power, each run on renewable natural sources. Solar, wind and hydroelectric energy run on energy radiating from the sun, tidal and wave run on the motion of the moon, geothermal on the Earth’s natural heat. I would say that at least solar energy and wind energy are abundant in Kuwait.

I’m not going to suggest we should build solar farms and wind turbines to power our cities because even if we see the age of oil grow old and die, we will always have the oil to burn. And there are many reasons why solar power and wind power are currently very primitive in supplying a constant source of energy, the main reason being that the technology they are composed of is still in it’s early stages; solar cells and photovoltaic’s cannot run in places of a high temperature and humidity and still cannot produce a power supply as significant as burning fossil fuels; they are inferior in efficiency.

Should we choose to join this energy-race, our land, coupled with our brilliant engineers and dedication could be the perfect combination for creating a better and more efficient technology; A superior and advanced renewable energy technology, which we could then sell, to maintain our country’s state of being.

Or you know what? We could just keep pumping out ignorant generations until we eat ourselves out of existence and history. Maybe when all the money is gone we can sell our comedians and politicians for $175’000’000/day. Yeah I’m sure the whole world will find Funoon TV hilarious and entertaining.


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