Monday, February 23, 2004
Phase Changes in Oil & Telecom
An energy analyst who doesn't want his name used writes:
We did, in fact, "Hubbert" the peak of conventional land-line telephony. In 2000, at the International Switching Symposium, Lucent CTO Bob Martin told me that in 1999 more conventional circuit switch ports were sold than ever. Maybe 2000 was as good plus or minus. After that, downhill. Do we care? I certainly do. But I think energy will be a much more radical transition than the Communications Revolution.
Caution. The two situations are not parallel.
First, the shift in telecom is driven by the pull of new technologies. In contrast, the shift in oil will be driven by the push of a resource running out. In other words, we're not using the Internet more because the supply of circuit switching is becoming scarcer while demand for circuits grows! And conversely, we are not about to reduce our use of oil because some wonderful new energy source (promising gigagallons where there used to be kilogallons) has broken upon the scene. In one case push could become shove. In another, pull could become twang. Expectation (and market demand) in these two cases are likely to have radically different trajectories.
Second, oil and telecom have different supply-demand histories. The history of telecom is a history of scarcity and high prices. We are only now getting to where we have more than enough bandwidth (only in local area networks so far). In contrast, until recent years oil has been in a state of chronic oversupply; only now is it becoming scarce.
Third, there has not yet been a war over telecom, to my best knowledge.
This is not to say that oil folks can't learn from network folks, and vice versa. Will the transition from abundant conventional oil to scarcity be smooth and uneventful? Ahem. That's one scenario. Will the transition from scarce telecom to abundant bandwidth share any characteristics with telecom other than state change? That's another question.
We're [a large] independent research firm in the energy business. We get paid to pay attention to supply/demand, geo-political and technical issues. We are paid to get things right and not candy coat them for any particular interest.The comments of "Energy Analyst" provoked me.
*snip**snip*
- Yes, 'the oil' as conventionally defined is running out.
- However, the history of the oil business has been to change the definition of 'conventionally defined' . . .
- We are in the process of changing the definition once again. The new definition will include tar sands, LNG, Deep/ultra-deep water, etc.
- Once changed, there looks like plentiful supply until past 2020.
[The energy situation is] similar to the transition we are seeing in telecommunications . . . one could 'Hubbert' the peak in copper-pair lines per capita, but no one would really care. The phase transition is on. Some of it consumers can participate in directly like VOIP, dropping a land line for a cell, etc. but some of this is invisible such as the switch out of the back-bones of the Telcos to IP.
Fuel switching is a big issue . . . the question is not if, but when. Can we make the switch successfully and profitably? Jump too soon and we may be over invested in capacity before demand exists (the question currently facing LNG, and by extension hydrogen), jump too late and all the good opportunities may be gone.
We did, in fact, "Hubbert" the peak of conventional land-line telephony. In 2000, at the International Switching Symposium, Lucent CTO Bob Martin told me that in 1999 more conventional circuit switch ports were sold than ever. Maybe 2000 was as good plus or minus. After that, downhill. Do we care? I certainly do. But I think energy will be a much more radical transition than the Communications Revolution.
Caution. The two situations are not parallel.
First, the shift in telecom is driven by the pull of new technologies. In contrast, the shift in oil will be driven by the push of a resource running out. In other words, we're not using the Internet more because the supply of circuit switching is becoming scarcer while demand for circuits grows! And conversely, we are not about to reduce our use of oil because some wonderful new energy source (promising gigagallons where there used to be kilogallons) has broken upon the scene. In one case push could become shove. In another, pull could become twang. Expectation (and market demand) in these two cases are likely to have radically different trajectories.
Second, oil and telecom have different supply-demand histories. The history of telecom is a history of scarcity and high prices. We are only now getting to where we have more than enough bandwidth (only in local area networks so far). In contrast, until recent years oil has been in a state of chronic oversupply; only now is it becoming scarce.
Third, there has not yet been a war over telecom, to my best knowledge.
This is not to say that oil folks can't learn from network folks, and vice versa. Will the transition from abundant conventional oil to scarcity be smooth and uneventful? Ahem. That's one scenario. Will the transition from scarce telecom to abundant bandwidth share any characteristics with telecom other than state change? That's another question.
Comments:
Post a Comment
