Biggest Trend of All Part II

by | Jun 18, 2004 | Archives

A message at looked at how gas prices recently hit $7.31 a gallon in the UK and asked what kinds of business and investing trends this could bring.

Another message reviewed the power that comes from sharing in masses.

So let’s look at some wise comments that readers shared.

The first reader was concerned with a recession as he wrote:

“Thanks for the posts. My first reaction is we're in for one hell of recession as the cost of consumption goes up. The powers that be, eg Washington and big business, have done much to maintain the status quo re our source of fuel and will probably continue to do so until the change is enforced, eg business sucks.

“Most of the alternative sources of power have been bought up by the oil companies themselves and are controlled either thru mothballing or inadequate (in terms of the need for alternatives to replace oil) investment. Take a look at FUEL (ticker, can't remember the full name). Most of their projects are being done with funding from firms like Texaco.

“I have little knowledge of solar/wind/wave technologies in themselves but hope some of them can be rolled out fast enough to prevent hyperthermia being the new way out for potless boomers. Pessimistically, J.”

Rising fuel prices could certainly bring a temporary slowdown as there is a redistribution of wealth. But what trends will such a redistribution bring? Will it? Here's what another reader believes.

“1. Travel will be more expensive, so local businesses that enhance the enjoyment of local residents will benefit as more people stay home and seek their entertainment in their communities: fun centers like batting cages, miniature golf, etc.

“2. Investments in alternative fuels (fuel cells, biodiesel, solar power, wind power, electric cars, etc.) will fair well when the companies are run well.

“3. Fuel costs for heating and cooling homes will rise; thus, investments in companies that improve energy efficiency of buildings, homes, internal spaces will do well – alternative building techniques may become more mainstream, such as superinsulation techniques, polycrete, straw bale, etc.”

This is a good study in equals and opposites. Whatever happens will create some type of trend.

Another reader certainly does not think it will stop our love affairs with cars as another reader (an MD) writes:

“The astounding price for petrol und Benzin…….What does it mean? It means that people will drive their cars, almost regardless of the price.

“It also means that European rail companies are running a deficit…except for certain times and places, the trains are running at less than a desirable capacity.

“Not long ago, I was in Munich and got lost [easy to do]…I then got swept onto the Autobahn to Salzburg and could not get over to the right to exit. It was bumper to bumper from Munich to Salzburg…needless to say, the traffic crept along at 1 to 2 miles an hour with long periods of just sitting in the blazing sun……..this happens with alarming regularity all over Europe. Too little space and too many people and cars…I finally was able to exit about 100Km down the Autobahn. I returned to Munich via side roads.

“There was also a time in Frankfurt when I had to keep driving because I couldn't find even a place to stop to look at the map…no place to stop because the Parkhäuser were all full and the hotel had no parking…the only place to stop and park was the car rental agency. So after a few hours of 'circling' Frankfurt, I just returned the car that I'd had for only a few hours…we then took the train which was essentially empty, while the Frankfurt to Karlruhe Autobahn was packed.

“Regardless of the price of gas, people will drive, regardless…So much for the vaunted European concern for the environment. Then, there's Italy…times when I couldn't cross the street because the Vespas formed a phalanx.

“I'm curious what your other readers make of the high cost of gas in Europe.”

We can learn much by thinking about this doctor’s comments. Why do people keep driving even as prices of gas rise? His answer is for convenience and knowing this can help us spot some very interesting trends as we will see next message.

Until then, Good investing. Gary