In the aftermath of Deepwater Horizon, BP’s stocks have rallied, Halliburton has been named to the Dow Jones Sustainability Index and many people are wondering if the world has slipped into a self-induced amnesia.
But not Mark Mills, founding partner of Digital Power Capital, a private equity firm that invests in energy-oriented technologies. To Mills, a physicist, it seems perfectly normal that BP and Halliburton are poised to make the comeback of the century just three months after the worst oil spill in history was capped.
It’s simple: Every minute of every day, the world spends roughly $4 million on oil. By this Friday, exactly 90 days since the Deepwater Horizon gusher got plugged, $504 billion of oil—or 7.2 billion barrels—¬¬ will have been pumped into hundreds of millions of automobiles, airplanes and ships across the globe.
Mills, a keynote speaker at Wharton Business School’s upcoming energy conference, is no oracle, but he can look into the future and say with confidence that oil isn’t going out of style anytime soon.
“There’s nothing on the horizon that can compete with oil as a transportation fuel,” Mills says. “Even at twice the price, it’s better than the alternatives in terms of energy density, overall efficiency, cost and safety. It doesn’t matter what people would like to believe, there’s nothing in the physics to replace oil.”
It’s a fact that the stuff that sometimes pollutes the worst is often the most efficient at delivering energy, and that’s saying nothing about world demand. For every biofuels breakthrough and every gallon of ethanol produced, millions of new car owners in China and India flip the ignition in their first set of wheels.
The same goes for electricity, which Mills says outpaces demand for all other forms of energy. More than 70% of U.S. energy is used for non-transportation purposes. In other words, gadgets and gizmos and a mind-boggling multitude of other life-enhancing devices may continue to become more efficient, but there will continue to be ever increasing numbers of them.
That means for every solar panel installed and every wind farm erected, millions of new cell phones, thousands of plasma-screen TVs, and perhaps an electric car or two gets plugged in. To Mills, the lesson is not that there’s no hope for energy efficiency or a place for renewable alternatives in the world’s portfolio. It’s that conventional energy—oil, gas and coal— is just as ripe an opportunity for clean-tech investment as wind or wave technology.
According to Mills, huge investments will be made in ensuring efficiency and safety in conventional energies in the years to come. Already, $100 billion is spent globally every year on electric transmission and distribution infrastructure. Twenty percent is in the U.S. alone, and the nation’s grid is about to get a major “smart” upgrade. The next generation of nuclear reactors will be small, compact and incredibly powerful. The coalmines of the future will hopefully be safer and cleaner. The point is, though, that there will still be coalmines.
“From an investment perspective, you need to know where to go hunting,” Mills says. “One of the most energy intensive things on the planet is information technology; the information economy has to operate 24/7.”
It’s not so surprising, then, that when prompted for his most promising investment picks, Mills turns to offshore drilling. Think 3-D imaging to make ocean exploration an exacting science and deep-water wells with safety mechanisms that actually work. The opportunities exist in preventing Deepwater Horizon from happening again, not from looking for a replacement for offshore drilling, Mills says.
“You have to know what you can change and what you can’t change,” Mills says. “A long time ago, people thought we couldn’t fly because we’re heavier than air, but engineers did find a work-around. So should we think engineers can make a solar-powered car? Sure, they can make one, but you wouldn’t want to use it; it’s not practical. In aviation terms, it’s the equivalent of a hot air balloon. Solar has other applications for sure, but the idea that solar replaces oil is, in essence, silly.”
Article by Amy Hsuan. Amy is an MBA at the Wharton School of Business, which is holding its annual energy conference “Bridging the Gap” on Oct. 29. Amy reported on renewable energy for The Oregonian in Portland, Ore. prior to moving to Philadelphia to pursue an MBA.
Just one more opinion; which in this case appears to be aimed more from an investment perspective than an engineering perspective.
Also, confusing at best: in one sentence he’s saying that at one time people believed they could not fly; then, in the next sentence he’s saying we won’t make solar cars because they are too slow…..
Please, planes were too slow and too short on distance also, but in short time, we have improved on it. There are many electric cars today that will already cruise at over 80mph and do so for hundreds of miles; and they are improving and dropping in price every month. They are just as comfortable and just as sexy as petrol-fueled autos. Will over the road trucks be in the picture? Of course, with time.
So I contend the author’s premise is flawed; flawed to the point of being no more than a sales pitch for investing in fossils. What’s new in that? Why do we need another new capital-funder in the fossil segment? That’s a lay-down deal before even try. We have thousands of them already. Now, if he wanted to show some ability to address a challenge, go raise funding for the solar cars that should be out within a year or so. If you don’t believe it will (is) happening, fine. But don’t go publishing articles stating it’s impossible. I can only assume the obvious regarding intent.
Mr. Mills says.
“There’s nothing on the horizon that can compete with oil as a transportation fuel,”
It doesn’t matter what people would like to believe, there’s nothing in the physics to replace oil.”
The coalmines of the future will hopefully be safer and cleaner.
It’s not so surprising, then, that when prompted for his most promising investment picks, Mills turns to offshore drilling.
“A long time ago, people thought we couldn’t fly because we’re heavier than air, but engineers did find a work-around. So should we think engineers can make a solar-powered car? Sure, they can make one, but you wouldn’t want to use it; it’s not practical. The idea that solar replaces oil is, in essence, silly.
Can someone explain me why Mark Mills is a key-speaker on a conference about Energy? (other then spicing up discussions with outdated points of view). He is obviously not very well informed about anything else then making money on oil. Its sounds to me like someone who dislikes the idea of renewable energy taking a place in our society. Not so interesting. Renewables have a place and are growing. Period.
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