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From this month’s issue:
The supertrend in which Uber is already taking part is the transition of vehicle use from one that concentrates on distance, to power. In the post-automobile growth era, the culture has become re-acquaninted with the fact that the highest and best use for vehicles is the short-distance hauling operation, in which concentrated energy (oil) is employed to ferry improbably large loads that would otherwise take many human hours of labor. In order to control uniformity of the ride-service to users, and to reduce exposure to upward volatility in oil prices, it seems inevitable that Uber is going to continue to concentrate on the short-distance market, and will eventually have to invest in capital equipment: namely, electric vehicles. Whether Uber builds a fleet of EVs (electric vehicles), or helps drivers purchase their own, is an open question. The important point here is that global transportation will become increasingly bifurcated between long and short-distance travel. Governments, as previously discussed, will increasingly take over the responsibility to provide interstate high speed rail, commuter rail, and light-rail. That leaves a fairly large and enduring market around the great urban sprawls: not only in the OECD, but in the Non-OECD. Given that the spread between a gallon of gasoline and an eGallon (see graphic below, from doe.gov) will continue to widen, it’s inevitable that Uber will have to eventually embrace EVs. The prospect that Uber will eventually own a lot of depreciating capital equipment may take the shine off its current business-model and attractiveness of its prospects as a growth company, but there would seem few ways Uber can control costs during the next repricing of oil—which is also likely to not be accompanied by an advance in wages. The good news is that the prospects for significantly higher electricity prices, at least in the US, are low. While Terrajoule.us remains firm that global oil supply has permanently entered a constrained era, the growth of inputs to global electricity has no constraint—just yet. North America has enormous reserves of natural gas; coal reserves globally are gargantuan; and best of all the growth of renewables will continue at its astonishing pace.
Also in this month’s issue:
The model portfolio as of 31 August 2014 is up +11.92% since inception, having recovered nicely since the market declines of summer. This month will see the cash level taken down to zero, as we head into Autumn fully invested. Using the last bit of cash left in the model portfolio, we are going to become heavily weighted this month in oil…