The world is in an energy crisis. Ok now that we have that out of the way, let’s talk about Mark’s book “The Cloud Revolution: How the Convergence of New Technologies Will Unleash the Next Economic Boom and A Roaring 2020s”. Mark lays out the next economic boom and the accelerated path that we are on. The new technologies being invented and implemented are moving at incredible speeds. The book is laid out in a very orderly method to show that this has happened in the past in the 1920s and is going to be a much larger economic boom through the magnification of the cloud.
Personally, I liked the way Mark laid out the past and the impact of technology and included over 800 references. This clearly was not a work of fiction, but rather common sense and facts. This next economic boom is coinciding with the fourth commodities boom in history and will be the largest. The commodities boom is being driven in part by the energy crisis and supply line fractures.
The energy crisis took 20 years of bad energy policy to get to this point, and we will not fix the problems in the next 20 years. While it is important to head to carbon-neutral as soon as possible, the only way we can make the migration to renewable energy is through clean energy tech, nuclear, and increased technology energy-saving products. Our discussion with Mark covers the EV and the practical issues. It was fun pointing out that the WWII submarines were the early adopters of the hybrid technology that we should use to bridge the gap on current EV limitations. (That was the only smart point I made)
Please watch the podcast, and buy his book, as I have a bet with Mark. If it gets over 20,000 views he will buy me dinner. Let’s see if Alex Epstein, Michael Shellenberger, or Tom Clancy take the challenge to come on the ENB Podcast and talk about their books.
Buy Marks book on Amazon:
Automated Transcription of the podcast – We disavow any mistakes unless they make us funnier or appear smarter.
Stu Turley, CEO, Sandstone Group [00:00:06] Hello, everybody. Welcome, and today is a wonderful day on the Energy News Beat podcast by Sandstone. My name is Stu Turley, president, and CEO of the Sandstone Group. And I mean, we’ve got a cool story to tell you today. We’ve got Mark Mills, Mark Mills. Thank you very much. You are a wonderful follower on LinkedIn and welcome and thank you for stopping by.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:00:29] Thanks for having me. I appreciate
Stu Turley, CEO, Sandstone Group [00:00:30] it. I’ll tell you, being a senior fellow at the Manhattan Institute, you’re the president of the Digital Power Group for 20 years, northeastern Northwestern University School of Engineering. You’ve got a pedigree here, sir, strategic partner at Cottonwood Venture Partners, as some Peregrine alums,
Mark Mills, Author, Forecaster, Speaker, Inventor [00:00:50] although we change the name of Cottonwood, the Montrose Lane for those who are not, it should be. I think it’s updated up by Magic’s LinkedIn site, but that’s my buddies literally putting our money where our mouth is in terms of software and the future of energy in oil and gas.
Stu Turley, CEO, Sandstone Group [00:01:04] Oh, and last time you and I had a podcast about a year ago, we were talking about how much energy and fossil fuels were used on the renewables. Right. We’ll have the misnomer that it’s it is renewable is good and your knowledge on the how much CO2 is generated in building wind farms.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:01:25] And so it’s just the inconvenient fact that everything in the world, from robots and computers to wind farms and any kind of power plant, you have to dig something out of the Earth, use energy to convert it into something useful, operate a machine and it wears out and you replace it. And all of that uses energy. And because hydrocarbons are roughly 82 percent of all world energy, that means somewhere somehow there’s a lot of hydrocarbons being used to do everything.
Stu Turley, CEO, Sandstone Group [00:01:51] Oh, I’m telling you after that. It was kind of fun because you were throwing stats around, and it’s one thing to have a discussion and it’s another to back it up with facts. What’s up with the world with facts? And I and my head’s exploding because your book, The Cloud Revolution, just came out and I preordered it and got it on Amazon. And I, as you can tell here, I was getting ready for this in March when my wife goes, What book are you? She’s tired. You know she’s a she’s glad she doesn’t have to talk to me. But the funny thing was, I was sitting here looking at this for my wife. Yeah, I’m sorry. She was like, You’ve never done anything for me that way. And so what prompted you to write this book?
Mark Mills, Author, Forecaster, Speaker, Inventor [00:02:38] Well, in part, my wife, her inspiration. I mean, also, she’s been a partner in business literally for a very long time and has edited a lot of what I’ve written. She did not edit this specific book. She was the one that I would say next to my mother, who came earlier to train me to pay attention to how you form words and write. My wife, Don Imus, has been a terrific editor over the years and very insightful. So what I hope is a book that is, you know, accessible. I mean, it’s a dense book because I have a lot of facts, but I try to make it accessible to people who are not experts in the fields I write about, which is again driven by my wife’s admonitions and editing over the years. So that’s why did I write it? Because I think especially young people and those of us who are older but hope to live longer lived a pretty exciting time. Despite all the chaos politically in the dystopian anxieties which are always present, you don’t have to be a historian, but it helps to read history. Human beings always create a lot of trouble, and we have political systems that don’t work that while we fight and have wars. But somehow, somehow the world is wealthier and healthier. Overall, a much better place to live today than any time in history is over. I mean, in a sense, and I use the phrase in my book The new normal lists, the new normal lists essentially saying, Look, there’ll be disruptions in specific industries. You know, the banking industry has been disrupted by fintech, but you know, it’s just banking and, you know, news has been disrupted by the social media giants. True, but it’s still news. There’s nothing big going on. I think that’s going to propel the economy. Nothing that’s going to change lives ever again in any significant way. It’s sort of the new normal of slow growth. Get used to it. If that were true, and of course, my book, I try to make the case that it’s affirmatively and profoundly not true. But if it were true, well, you should be a pessimist because the only future wealth for the world will come from redistributing other people’s wealth if there’s no net wealth growth. And we go back to the Middle Ages before the Middle Ages were the primary mechanism for gaining wealth for a nation that’s just at that level or a person was to steal somebody else’s stuff as opposed to expanding the pie. Technology expanded the pie. Is it over? Not even close. I think we’re on the cusp of the biggest boom since the 1920s, which is why my subtitle is the roaring 20s,
Stu Turley, CEO, Sandstone Group [00:05:00] you know, and that’s what. The cool things about your book, and I’m sorry for being so stoked about this, we were teased before we started. I’m almost
Mark Mills, Author, Forecaster, Speaker, Inventor [00:05:07] like you. It’s nice to have somebody stuck to the darn thing.
Stu Turley, CEO, Sandstone Group [00:05:11] You know, I’m almost a Mark Mills stalker, you know, because I read all your stuff and everything else. But I really love the fact that you start in the 20s and all the way through the chapters, you say, Wait a minute, here’s the history of fossil fuels. Your chart in there on fossil fuels starts up here. Hey, we’re burning wood. I mean, excuse me, renewables. And they’re burning. And it’s bad because you’ve got the cow dung and renewables and everything else in the houses. It’s not healthy for people, and there were some great things in there. So everything in here for our topics is just, you know, like in the silicon when we go from transistors. I worked at Intel for a while and for 12 years, and we always made the joke that there must have been aliens. Because when you go from the transistor starting to all of a sudden you have five hundred thousand, you know, processors in one chip. It’s whatever the number is now. I mean, it’s ungodly. And then Moore’s law is the transistors would double every so many year, every
Mark Mills, Author, Forecaster, Speaker, Inventor [00:06:14] 18 months or
Stu Turley, CEO, Sandstone Group [00:06:15] every 18 months. Thank you.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:06:16] You know, the thing that you’re picking up on it that I was, was deliberate. But what one has to constrain excursions into history. So what I tried to do as I looked at each subject, whether it was machines and transportation or employment work or energy automation communications, as you try to think in terms of the patterns in the past or the history matters, that usefully predicts predictive. But what happens in the future? Because you know that old adage that history doesn’t repeat itself, it rhymes. What we mean is there are patterns that are predictive. So I looked at histories, patterns, and technologies briefly, as you know, and trying to map that out to what’s going on now, what is the pattern and is it echoing, is it rhyming with is it similar to what happened last time? Because if there’s a discontinuity, a change, then you want to know. So your point. I worked at RCA back in the day when it was a semiconductor fab and worked on large-scale integration contemporaneous with when Intel started, and so I spent the first part of my career designing processes for LSI. So we went from a time when in 1971, so here we are on the anniversary. This is anniversary number 50 so that the CPU is 50 years old today this year. Wow. 71 was the Intel four thousand four, which have, as you know, four thousand transistors on it. So today, an Intel chip or an Nvidia chip or ownership, it’ll have on it several billion transistors. The chip is bigger. I mean, the Intel chip was maybe that big chip, maybe this big but three billion transistors and not just from the bigger chip and the biggest chip. This is a misnomer today. You have a sense of the trajectory and that industry is a dinner plate. Size has two trillion transistors on it. They buy a company called Cerberus. It’s an A.I. chip or, you know, machine learning, right? But that trajectory started with the invention of a new class of switch to two becomes a transistor, the invention of something called an integrated circuit. So in silicon germanium. So now you have do we have anything like that today? Well, OK. How about biocompatible bioelectronics CPUs? Is that by that? We mean is, you know, not just something I can wear on my skin like an intelligent Band-Aid? Well, there are those or something I could implant voluntarily. I can implant like a pacemaker, but something much more sophisticated or something that I could swallow. Let’s say what I call as you know, a consumable computer, right? I don’t mean swallowing, you know, in 1980, IBM PC, I mean, a computing function that’s in the center. It’s smaller than a brain, smaller than a vitamin pill. So inside a vitamin pill is a biocompatible soft, soft disassembling that is, there’s a limited life maybe last hours or months that the purpose of which is to take diagnostic information about you or you give it to a cow because we really care about the health of the animals that we raise for food, right? You could make biocompatible dust. That’s our sensors that we sprinkle in the agricultural fields and can be communicated with the way we communicate with the easy pass. You don’t have to have power in smart dust. You have to have power in the drone that overflies, interrogates the smart best to ask questions like Do you need to water? Do you need fertilizer? So it’s like asking the plant needs fertilizer. So this kind of Elazar expansion of the information system is anchored in materials and sensors. This is consequential. Right? And this is happening. You read in my book, you know this all across the landscape of what we do in society. So it’s about much more than social media facts. I don’t think if and I forgot if the words social media appear in my book, they might appear five times because that’s yesterday’s news. It’s important, but it’s not new, right?
Stu Turley, CEO, Sandstone Group [00:09:56] And you know, you sit back and you kind of go back. And also I get into every. But he is going in the oil phase and everything else, these need oil in order. Do you like your iPhone? You want to have an iPhone, you got to have oil and gas in the transition to renewables is going to take years, and the commodities boom that we’re in right now. You talked about how the next boom is going to be the cloud boom. And some of the quotes in here are phenomenal when you sit back and go natural gas supplies, over 70 percent of the current energy used to fabricate glass and other things in the scale of this and everybody’s bad-mouthing natural gas. And we and we’re going to have it in in order to do that, like in Europe with the natural gas. They’re going to have a food shortage because of fertilizer.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:10:49] We’re living in an odd sort of siloed schizophrenia going on. We have, in a large measure, a cap of we’ll call them self-appointed futurists who are saying all the innovation that we should care about is in so-called cleantech, wind, solar and batteries, stencils of wind farms. That’s where innovation resides. That’s where the competition for the future is. And then almost totally disconnected from that sort of meme are the people who are talking about virtual reality, augmented reality, the metaverse. Now, because of what Facebook is talking about robots and drones. Right? And the discussions are taking part in two different magisteriums as if they’re not connected. You can’t make stuff without using energy. You can’t operate stuff without you using energy. And if you invent things that didn’t exist before, you create net new energy demand. So before there were airplanes, there was no demand for energy to either make them or fly them. Obviously, the world consumes, you know, pre-pandemic eight or 10 million barrels per day just for flying before computers were invented. There was no demand for energy to make computers operate them. But well, today, computing broadly, you know, the cloud uses about as much energy as global aviation. So are we we are innovators going to invent new things that require more energy in the future? Of course. I mean, again, that’s what I try to map out of my book. It’s not that we won’t make the things that we already use more efficient. Of course, we will. That’s why they become more useful because we make them more efficient and then people use more of them and energy use goes up or stays sort of flat. But we don’t eliminate energy use by adding efficiency. We increase the utility of the thing by making it more efficient and cheaper, as you know. I mean, it’s that, you know, connecting those dots is what I really want to do, which I wanted to write the book. I wrote the book because we’re preoccupied with the wrong things. It is important to produce energy, but there’s no transition away from hydrocarbons. There’s an addition coming from right solar and batteries, which is consequential. I mean, lithium batteries are genuinely quasi-magical, deserve a Nobel prize. So your point, you know, this wouldn’t exist. One of the key inventions to make this work. It was a lithium battery. Otherwise, our phones would all look like a Gordon Gekko, you know, giant brick that was made famous in that movie that dates us three.
Stu Turley, CEO, Sandstone Group [00:12:56] That was my first cell phone. This just dates me. Did you have one of the bricks that you held up your head and got big? We had guns back then from holding up these, so you
Mark Mills, Author, Forecaster, Speaker, Inventor [00:13:05] got that right. And you got about 30 minutes of IV total if you were lucky. Yeah, if you’re lucky.
Stu Turley, CEO, Sandstone Group [00:13:10] So hey, and back to the eve and everything else. And again, you come back to energy, you go from whale oil to cars. And this going from the 20s and whale oil and everything else and you talk about, you know, the EVs, everybody’s got the Tesla on the brain and they’re thinking, Hey, wait a minute, I got to have me a Tesla and you’re, you’re sitting there the way we talk in Texas. I got to have me a Tesla, you know, and now the Tesla,
Mark Mills, Author, Forecaster, Speaker, Inventor [00:13:37] you got to get it for lightning. That’s what you got to want to buy.
Stu Turley, CEO, Sandstone Group [00:13:39] Oh, lightning. Oh no.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:13:41] Ford, the Ford electric pickup truck. You got a Full-Size pickup, they said. F-150 size. Yes. Like a Tesla. All battery power. I mean, heck, if you’re using your truck just for driving to work, which is probably about 90 percent of trucks in Texas, my guess right now, you know, maybe electric was fine for you.
Stu Turley, CEO, Sandstone Group [00:13:59] Why not? Well, I’ll tell you an electric in Texas when I go out to the Panhandle and when I go to Midland to work,
Mark Mills, Author, Forecaster, Speaker, Inventor [00:14:07] that’s a little different. That’s a long hike there.
Stu Turley, CEO, Sandstone Group [00:14:09] Yes. And so Texas, we got some long roads. And when I’m on a rig out there and things, you don’t want that.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:14:17] Well, actually, that speaks to the utility function differences, right? I mean, if you want to drive to work five miles a day, ten miles, it consumes 20 miles. You actually own a house, which is not true for everybody, but for a lot of people in Texas, you have a place to charge it overnight if you want to take a drive to West Texas and haul some whole lot of stuff for people. Batteries become problematic, not impossible. Just very inconvenient. Right. And of course, look, the essence of this Tesla debate, which is fascinating to me, is that if you first, you can unravel the technical argument how we got to give credit, Elon Musk for doing something nobody’s done in a century, but I was on the Car Doctor radio show yesterday. So it’s about cars. I love cars. I grew up as a mechanic, raced motorcycles, so I love it. Has a lot of batteries I did I repaired electrical equipment, too, and I worked on radios and TVs. I’m agnostic, the power sources. You want to find out what works right? The tassel was made possible by the genius of Elon Musk. Nobody has started a car company successfully in a century. Subsidies aside, it’s not enough to explain it. It just isn’t. It’s a good car. It’s the most impressive engineered battery in the world. Still, I don’t think anybody’s engineer is as high quality, higher density, valuable large as battery waste. Most people don’t know this half a ton. The battery in a Tesla electric car a thousand pounds, but it’s a complex machine of cooling systems, heating systems, thousands of welds, battery control, electronics, battery management for charging, and it’s a tour de force of complex engineering, which sounds a lot like an internal combustion engine. Let’s just say it’s a matter of record in terms of complexity. Right. But the point is whether the car is fueled by electrons in a battery or which is the electrochemical process or fueled by electron exchange and a combustion process, which is in our physical chemistry process. Whether that energy, whether it’s still a car, if it’s a gerbil on a treadmill with a rubber, bands wound up and it worked fine. It’s still a car. The car was a revolution over the horse. Oh, but changing the food the horse, eh, wasn’t revolutionary. I mean, you know, different farmers would have got the money. But going from oil to batteries is like changing the food horses it’s not a revolution and an economic utility function. It changes. It changes some things, but it doesn’t change much of the world. What I’m interested in are what are the transportation modalities, new things that will change the world? Well, easy. Everybody was about drones are, you know, flying freight or flying cars? Well, yeah, that’d be a big deal if you could make it practical. It looks very clearly based on things that already exist. And, as you know, at least a hundred different startup drone companies at various stages of development, a few actually in commercial flight that can move freight autonomously by air packages up to tens of kilograms. Not really heavy freight yet. This is a distinction with a difference, as they say, and the fact that it is now possible is a consequence of the confluence that I write about in my book. It’s materials, the right cereals revolution, a change in the kinds of machines we have that can make things and it’s an information revolution. These things have to be driven by very complex computers that can’t weigh more than a few grams and can’t consume a lot of energy. Right. The combination makes eventually the flying car possible. Now, the flying car will come before the autonomous car on the ground, in my opinion, just because of the physics of communication. But both are. Both are now clearly in our future. The flying taxi, probably sooner by a fair bit in urban-suburban areas, not urban areas. And then the flying, you know, personal car denigrated because flying cars have been promised since nineteen, I think 43. When Henry Ford predicted them predicting flying cars for, you know, almost a century. Turns out, it’s really hard to piece of engineering that involves a lot of things that no one knows how to do until around now, right?
Stu Turley, CEO, Sandstone Group [00:18:04] But you know, in your book, you
Mark Mills, Author, Forecaster, Speaker, Inventor [00:18:06] uses a lot of energy. Sorry.
Stu Turley, CEO, Sandstone Group [00:18:08] Oh yeah. Oh no. You talk about the inverse effect of you’ve got the small ground right now and they’ve got a power supply and they’re limited to the amount of weight that they can carry. If you get bigger and bigger, there’s a certain tradeoff. You got to go to fossil fuels now in order to get there. How soon do you think that transition is going to come into that next level? Because isn’t that the biggest problem right now to go to big kinds of drones?
Mark Mills, Author, Forecaster, Speaker, Inventor [00:18:34] Sure. So, so you know, the thing that’s fascinating here again, this is why I sort of mapped in the book out. The way I did is to answer that question. You have to know something about the physical limits of the primary energy sources, something about the state of the technologies that exist today. What can we actually build with available machines and materials, not what we would like to build? And then you want to imagine, are there any game-changers in terms of what is called the discovery of not the underlying process began and the discovery of how I could build something? Can I use computers in short, right to accelerate the innovation process by doing in silico testing, testing an airframe in a computer simulation instead of a real airframe? The answer is yes, but it takes a what a hell of a powerful computer. Yeah, once I say that everybody is in their head as well, OK, we have powerful computers. It turns out the power you need to do a full flight simulation. Let’s just use flying as an example about one generation away from that being cost-effective and feasible by when I say one generation. The generations of supercomputers switch over every five years to serve a new plateau, so a couple of years away from doing in silico flight testing of new designs for airframes in the very near future. Now, how will I power it? Well, it depends on what I want to carry power to weight ratio. If you’re a gear head and your race, or if you’re a pilot, everybody knows if you’re not tethered. All it matters is the power to weight ratio. I want maximum energy in the smallest. If your possible so that I can actually carry cargo, so you this is where the physics comes in, it matters the right energy density of lithium to chemicals that is the maximum amount of energy inherent in the molecules of lithium to chemicals, which are very energetic, measured in battery terms as 500 watt-hours per kilogram. That’s what you can have before you make a battery and have lower energy density as you make the battery because of infrastructure oil. I remember five hundred one hours per kg theoretical energy density oil theoretical energy density is 12000 watt-hours per kilogram. So we’ll keep using oil to power machines that fly for a very long time. But for small machines? For short distances? Yeah. Batteries are actually more than adequate. It depends on your duty cycle and weights and velocities. But if I happen to think, as I wrote that the killer app as I say it, in fact for aviation is the hybrid. It’s using hyper-efficient, small internal combustion engines with an electric airframe and batteries. But you hybridize, you get all kinds of optionality, all kinds of efficiency, all kinds of safety benefits. And those are the things that matter of the had not, not whether we’re using oil or not. Come on, I’ve
Stu Turley, CEO, Sandstone Group [00:21:09] been I’ve been such a big fan of hybrids because, you know, the Old World War Two submarines were hybrids. Yeah, I mean, that was a great design. And when you run a World War Two submarine off of the generators, they pop those bad up generators up and they are designed to redo those bad. Those were some big batteries in the technology. In those old World War, Two submarines are phenomenal.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:21:33] Well, they were. So this is a great example in history, and I didn’t put that in my book, but it’s a great one. You sort of have to pick and choose examples. Otherwise, instead of a 400-page book, it becomes 800 pages, and oh, you bet, then it’s a real doorstop.
Stu Turley, CEO, Sandstone Group [00:21:45] Nothing, but oh no, I’ve been sleeping with this one for a while. So I mean, no.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:21:51] But you’re right about the so the architecture of hybridization is known for a long time right to make it really useful. You want a couple of things to happen. You want the engines themselves to become even more efficient and smaller, which has happened from engineering and better materials. You want the battery itself to become much more energy. Dad’s obviously World War Two led acid batteries were now in the lithium, which gets you four times the density. It’s a big deal. And then to make hybridization really work because you’re switching between a chemical, electrical and mechanical world, you’re trying to mediate three different pieces of physics, which all have different velocities. Behavior is really complex to do optimally and safely. You need very sophisticated sensors and control systems computers. Right. That was done reasonably well, but not with the degree of low cost, high efficiency. That’s now very easy to do, which is why hybridization is becoming this sort of the cynical canon of drive trade.
Stu Turley, CEO, Sandstone Group [00:22:43] You know, I would love to figure out and I would buy a 150 today if it was a hybrid. I mean, you put in even a four-cylinder in that bed and give me electronics so that that thing can charge the battery while I’m going to write a check right now today.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:23:01] Yeah, there’s you know this so-called series hybrid or parallel hybrids that have it, say, 20 to 30-mile range batteries and then and an internal combustion engine gives you the dual function commute to work. Yeah, comes on. You can plug it in if you want. The disadvantage of those currently is that you have to have to drive trains, right? You have to have gone. Yes. So it costs a little more. You can’t pay for it. And impure savings, the cost of gasoline, because if you want an if it’s just money, you want to deal with, the best pickup truck you could buy from a pure fuel efficiency basis is the new midsize pickup the Ford announced this year, and it gets an all in gas models almost 40 miles per gallon. Oh wow. It’s a supercharged four-cylinder engine. You know, automakers know they can make internal combustion engines incredibly efficient, right? On average, people have not wanted to pay for that because they cost more. So we’re moving into a world that’s partly animated by, I should say, fuel because of the climate. I get that. So if you think that whatever, but really what’s driving and no pun intended the progress of these new drive trains is that we’re wealthier economies. People have the luxury when you have a lot of money to say, I just like the idea that there’s a reason that there are. I think that the total number of automakers in the world niche and major is roughly 100 120. There’s a lot of OK. And the number of models of cars that exist, of course, with thousands, if only metric was got for people in a car or two people in a flatbed and optimal efficiency and meet the safety standards there before models of cars, not a thousand or four thousand. Right. So people buy options because they buy for reasons other than pure utility, which is a measure of wealth. Right? That’s what that’s right.
Stu Turley, CEO, Sandstone Group [00:24:48] But you know, Mark, you said just a little bit ago that you are an automobile enthusiast and motorcycle enthusiast. So you buy from emotion, don’t you?
Mark Mills, Author, Forecaster, Speaker, Inventor [00:24:58] Exactly. Most people. Most people. All automakers know as Elon Musk, that was full of, well, people, people, people buy brands because brands are emotional, but you still have to make a quality product. Yep, it’s very difficult to have a brand of any product or service. I don’t care if it’s a restaurant, you know, a delivery service, they’ve got to do two things. Deliver incredible value reliability. But you as a consumer, we all want, for many, many things, will pay up for the emotional feature, the content, the brand feature. Well, that’s human nature that we can afford to do. That is the whole point of my book. I come back to my book if there’s more wealth. We have societies that
Stu Turley, CEO, Sandstone Group [00:25:40] has got to plug the book a few times.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:25:42] Sorry, wealth creation is what we want to have happened for them, you know, for more people than we have happened in the last century. The last century has seen American per capita wealth. The average wealth rises 700 percent in real inflation-adjusted terms. Nobody, nowhere else in the world has that happened. No, it’s the biggest gain and personal average wealth in all of human history. A period where did it come from? Two things. It came from an economic social system plexus, a political system that allowed the flourishing of entrepreneurs, but the entrepreneurs had to have something to innovate a bill. It came from technology. That’s so we just started out. Why did I write the book? I wrote the book Because America, I still believe set aside politics of the day is still America. So I think the culture is largely intact with fractures, and I’m very aware of the fractures allergies. We have always had challenges, but we have incredible opportunities technologically today. You remember in the preface I wrote about the challenges people just forget. We forget the pain. We don’t read our history. 1920 began as a horrible, horrible year in many respects. Third cycle the pandemic of 1918, the third deepest recession in the 20th century, occurred in nineteen twenty wrong. We had race riots all over the country. I mean, dozens of people killed thousands of federal troops police called out in the streets. And this was that was the year that the Army Air Force. I mean, you want to example grotesque problems bombed the black neighborhoods of Tulsa, Oklahoma.
Stu Turley, CEO, Sandstone Group [00:27:13] I was about to say that that is a horrible, horrible thing.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:27:16] Well, I mean, look, the race racial tensions were off the charts. And the country, you know, obviously has struggled with these issues for a long time, but wasn’t there simply weren’t strolling. But then we also had 1920s was the rise of one of the most odious scientific facts and theories of maybe all of history, which was the eugenics movement. Eugenics was seen as settled science accepted by all the intelligentsia, all the major universities, including and all of the Ivy League. What a grotesque scientific theory, you know, that ignited debate and angst and anxieties of our time. There’s a wealth disparity, then the Gold Coast of the robber barons. I mean, the wealth disparity that was off the charts. We are beginning to approach the same level of wealth expansion. If you like here, we’re talking about, yeah, there’s nobody is wealthy in real terms. You had as Rockefeller was in the 1920s, but you know, Bezos and Musk are creeping up there. They’ll get there. It’ll ignite the same kind of political anxieties now that there that already is. Right? So yeah, the point of that is, you know, is that it’s easy to think our problems are unique, right? Different in specifics, but they’re not different in character.
Stu Turley, CEO, Sandstone Group [00:28:28] But you know, if you think Mark, you know, just like that, Tulsa was so horrific. But we’ve had three other commodity booms in history, and we are now in the fourth commodity boom that within wealth separation, the wealthier get wealthier in the middle class, goes away in commodity booms. And I’ve been writing that this is going to be the single worst commodity boom for wealth separation ever because of energy.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:28:53] And if you’re right and
Stu Turley, CEO, Sandstone Group [00:28:54] I’m sitting here, everybody is going like, nobody’s listening. And it’s kind of like, Hey, guys, we’re here and
Mark Mills, Author, Forecaster, Speaker, Inventor [00:29:01] it’s already started, so. Let me agree with you on what’s happening and suggest to you, I think we have the opportunity that is possibly unique in history, right? They moderate and mediate and conquer the destructive effects of a commodity boom because commodity booms are great for the sellers of the commodities. Right. And the traders always do well. Well, first traders always do well. They’re like lawyers. So I think the profession, I should have been a legal trade. I don’t. But you’re right. We have two things going on the if we have a period of growth where we are the V-shaped recovery the world wants to grow and it wants to keep growing after the recovery from the shutdowns. So that drives demand for goods and services, drives energy demand. And you can’t change the fact, as you know. Let’s stick with the hydrocarbon commodities. Eighty-four percent of all energy, oil, coal, and gas. Simultaneous with that, the governments of the world are providing disincentives to invest in production uncomplicated that drives a boom. Price, despite the short-term oscillations, the net tailwind is higher, and we know this because even with the recent announcement that the shale industry in America looks like it’s really dramatically increasing current plans for investing, it is still only at 80 percent of the level spending pre-COVID. So the world’s already blown past oil demand pre-COVID as of late, and the world has not come close to resurrecting oil production. So that means prices go up simultaneously. Governments of the world, as you know, are pushing subsidies for wind, solar batteries. As you know, I’ve talked about this before. Since you and I talked last, several major studies have come out pointing to the fact that but I had identified from other studies earlier, the world is not now producing, nor planning to produce a sufficient quantity of the minerals that are needed common ones like copper, nickel, steel and lithium and lithium. There are not enough mines in the world nor planned in the world. In fact, there aren’t enough known reserves, never mind mines of the minerals needed to meet these goals so long before the goals go away and they will go away. Right? Demand will push prices up. Not overnight. These tipping points and all of a sudden, they just blow for all the commodity minerals, which will spill over into all the other markets that need those minerals because the electric car takes 300 percent more copper. You don’t think that’s going to increase the cost of the car when copper is demanded. Come on. Yeah. So what? What do we know? You’ll get this big boom and we already saw it start, by the way. So photovoltaic panel prices are up this year. 20 percent reverse the long-run decline. Why? Because coal is more expensive in China. China makes 90 percent of the panels. Polysilicon is incredibly electric intensive to make. So they went up. Battery prices, which have been for Teslas and the like, have been on the decline now for a decade-plus because of the learning curve. They dropped by 20 percent a year and 30 percent a year, just bom Bom Bom from a thousand dollars a kilowatt-hour now to 180. Right? Big drop. They only dropped a few percent in 2020, and they’re going to go up the net. We look backward at what happened in 2010. When they’ll be up, they’re going to go up first in the trend. Why? Because 70 percent of the cost to make a battery. Are the commodities, nickel, cobalt, lithium, manganese. So how do you people think that these batteries are going to get cheaper in the future when 70 percent of what they’re made from is a commodity? The commodity means it’s already in mass production and we’re going to increase demand. Thousand percent and expect the price to go down. So what happens? We’ll have a double-double whammy, which will make everybody unhappy consumers and politicians. Your gas-powered car will be more expensive to build and more expensive to run. Your electric power car will be more expensive to build and more expensive to run. So they’re both going to go up. No one’s going to win. Everyone loses, including consumers. The only winners are the commodities traders and to a limited extent, the miners. But the miners don’t. No producer really wants a bubble because no bubbles get you blamed the last time we price the bubble. Remember what happened with the windfall profits tax, which people have forgotten about, and you criminalize the profits that you’re making that you had nothing to do with creating? You didn’t? The price go up. Bad policies dead. But when you get profits from that, the government comes along said, Oh, guess what? You are criminally offensive. I’m taking that away. That’s what will happen. But what will happen after that, right is the real question. We’ll have a period of high prices. Commodity boom, right? What does it last? If it lasts as long as two things go on, OK, that’s as long as policymakers stay stupid, and that could be forever. John Kerry is one of the current policymakers. Stay in power and keep stupid policies in place because I think there becomes a political revolution and we change our attitudes toward the production of my everything. I don’t just mean the production of oil and gas. Your mind about producing stuff. Stop making it hard to produce stuff because we want cheaper stuff. So I think that it too will change, but will also change as the tool kit to drive efficiencies is changing. So we’ll use oil as an obvious example is going to be a lot of pressure on the oil fields to improve productivity and efficiency with fewer work with a lower workforce. Right. Because they’ve been told not to come here because it’s a bad place to be. You should go work and build solar panels, partly because it’s just a cultural shift, partly that a shift that that’s what happens. So what will happen is the oil industry will be forced to use more automation, more software, not because they love it. Nobody loves software. Nobody loves to change how they do their business. The velocity of efficiency improvements in those tools, as you know, is very high once you figure out how to use them. So I think the combination of robots in the cloud, A.I., intelligent assistants, intelligent analytics, that’s made it useful. But that, I mean was user interfaces that nonprogrammers can use, which is hard to do. That’s what’s coming. That combined with robots that are useful when I say useful there, I mean the same thing. You can’t cage the. Robot, so can’t go near a person because a robot might kill him by accident, that’s what we would do with robots for 60 years, right? You put them in cages that keep people away from being killed. Robots have to be able to work where humans work, cobots. But that’s a very difficult technical problem. It’s been solved. We know how to make control systems so that we can cohabit with machines. That’ll make me more productive. This trend, which is not notional as you know, are all tools that already exist that are already viable for a significant share of the market, both the virtual and the both. I call it the robot tools. Those are now accelerating into commercial viability. That reality, which has nothing to do with plans of government, is going to be is going to save us from long term inflation and long term commodity bow. Wow. When I say that, I don’t mean let’s take 10 10 weeks to conquer, but I think it well, history will look back and see the boom and say, Look at that one. That commodity cycle was shorter than anyone in history. Right? That’s what we’re going to see. I sure
Stu Turley, CEO, Sandstone Group [00:36:02] hope so. And, you know, I was sitting here thinking about everything you were saying, and I think that you’re going to see the political incompetence change. They’ve done a stealth launch on their news story. And if anybody heard the new accords that were going on that we just had in this GOP 2016, they put in the COP26 natural gas is considered a renewable and they step that in the infrastructure bill. The infrastructure bill has natural gas. As a renewable, nobody picked that up and I’m sitting here kind of glad you did, but I’m sitting here kind of going, Hey, wait a minute now you’re going to see everybody go. Natural gas is OK, and it’s going to be because they realize natural gas has got to be there and they’re going to have to prove to their base that they’re not stupid.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:36:51] Well, I think what will happen is that both will happen. We’re not going to get rid of dumb policies and subsidies for wind turbines and batteries, and it’s going to keep going. It’s just it’s very hard to unwind that stuff. So what will happen is this realization Europe saw because of the continent-wide? Well, so continent-wide wind laws are very predictable, right? They happen constantly over the decades. What’s unpredictable about them is exactly why they occur, so that that feature is devastating for electric grids because, you know, it’s going to happen. If you’re a politician, you pray it doesn’t happen on your watch because if it does, you get what happens in Europe. You get blackouts and massive price increases, the plants shutting down fertilizer going away. It’s really ugly. Right. So right. The solution? More natural gas, more oil. But you see it. Do you do both? So here’s the bottom line here’s what’s going to happen. OK, the cloud and robots are going to allow the oil and gas industry to make lots of oil and gas cheaper in the future than in the past, which will save the bacon of the people who are forcing expensive stuff on the economy simultaneously because the expensive stuff is still a minority of the supply. So I have expensive batteries, expensive windmills, and they are expensive to operate. We operate them, but I take the pain out. In fact, they can even completely hide the higher cost of those savings by having a real cheap hydrocarbon, which is effectively what we’ve done for the last 20 years. And we’ll keep doing that because it’s I don’t have any illusions that we’re going to suddenly say, Oh, oh, gee, you’re right, we need oil and gas. So let’s stop all the solar wind stuff that’s not going to happen. What will happen is we’ll do both which, which is to be fair, in a democracy and in a world. We don’t know really what the future is. You always need all the above. That’s fine. And is there some corruption and graft and kleptocracy and all this? Yeah. Gee, what a surprise. I mean, news flash,
Stu Turley, CEO, Sandstone Group [00:38:39] it’s been around a long time.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:38:41] You want to rein it in as much as you can. And you know, pure, pure theft is, is obviously, they don’t need new laws for that. The kleptocracy is what you have to reign in because being a kleptocrat, not illegal, you know, putting your finger on the scale to make sure you get more money out of the infrastructure bill than some other party. That always goes on. But you know, the fix to that is are not new laws. It’s that old adage sunlight. Just make sure we all know where the money went, who got sunlight like that one? All the money. That’s the best use of solar energy. It might be right there. Follow the money.
Stu Turley, CEO, Sandstone Group [00:39:15] Follow the money. You know, Mark, I’d say I want to give you the last word, but you’ve had such a lot of great. I’m going to have to transcribe this and then go through it all again, and I want to give you a shout-out again. The cloud revolution and I’m a fan and I guarantee you I’m going to go out to Amazon and I’m going to make sure everybody else does give you a great review because this is one of those books, and I hate to say it, but you got a lot of references in here that are like, you’re not making this stuff up, right?
Mark Mills, Author, Forecaster, Speaker, Inventor [00:39:47] That was, you know, I forget how many references, maybe eight or nine hundred. The whole point of the references is there is exactly this. If you look at what’s happening in we didn’t talk much about the material science revolution, what’s going on and. Manufacturing, which I write a lot about as well. The key for me looking at the future is not trying to guess about what you’d like to have happened, but to find out what somebody has already done and that’s commercially viable, which is the point of a reference. And to say that that’s a consequential thing. It’s like night again. 71 invention of a transistor that was a microprocessor. An integrated circuit was consequential. We couldn’t have predicted everything that would happen from that. But when I was in that industry and you were two, you knew it was a big deal. You knew some of the things that enabled, like better computers, smaller, faster computers. You knew that everybody knew that, right? Arthur C. Clarke, as I quoted my book, said it was a study in a computer room, which we’d call today a data center at the time. I think he did the interview in 60 late 60s. Right. And so you got the spinning, you know, tape drives, and he’s standing there predicting that computers will be done on desktops but handheld by the turn of the century. How do you know that? Well, it’s not a science fiction writer. It was a very smart scientist. That’s to me what’s exciting about where we are today. We have those kinds of transformations going on, and I tried to document it, and I hope I make people as excited about the prospect as if we are. Maybe we’ll let the entrepreneurs do their business.
Stu Turley, CEO, Sandstone Group [00:41:14] And I truly think we’re going to need all forms of energy, and the way to get there is clean energy, tech, energetic tech, tech. Take the key there. Mark is tech. And again, I hate to keep bragging about your book, but man it, it is there, so I hope I can have you back on it.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:41:32] Bragging That’s fine. Thank you.
Stu Turley, CEO, Sandstone Group [00:41:34] I hope I can have you on a podcast again, and I’m going to have all your contact information as we release it. This will tag you and everybody needs to follow Martin Mills on LinkedIn and anywhere else because I guarantee he is a wealth of knowledge besides having a fantastic haircut. And I mean, I’m right there with you, Mark. So thank you for stopping by the podcast today.
Mark Mills, Author, Forecaster, Speaker, Inventor [00:41:57] Thanks for having. Good to talk. Appreciate it. See?
