Tuesday Report - July 31, 2001

July 31, 2001

Forbes Predicts China Will Barter Weapons For Oil Within A Decade

The July 23rd issue of Forbes reports that oil demand in China and India will be dramatic within a decade. Last year Asia accounted for 92% of global net growth in oil consumption, whereas U.S. growth is only 1% a year and consumption in Western Europe is flat.

By 2010 the East-West Center, a Honolulu-based research institution, predicts Asia is expected to be importing 20 million barrels of oil a day...twice as much as the U.S. does today.

With more than 50% of the world's population, but endowed with only 4% of the world's proven oil reserves, East Asia is going to be dependent upon the Middle East for at least 80% of its oil. And the article predicts it's a good bet that China will barter weapons for some of that needed oil.

Starve Ups Alliance Embraces Barter To Move Forward

With venture capital funding drying up, a group of young companies based in Oregon have formed an alliance...naming themselves Starve Ups.

Their goal is to share insight and feedback on their businesses, offer resources to one another, and introduce each other to potential funding sources and customers. (The group excludes funders, vendors, consultants, and service providers who are often found feeding at the pond of start-ups.)

While networking is fairly common among start-ups, this group took it to the next level and formed a unit, and are bartering their individual expertise with each other. Formed in October 2000, the Portland group now has 13 members.

Three Indications Of Slowing Economy

#1) PricewaterhouseCoopers has backed off its prediction of a hotel-industry upturn in 2002, and is now slicing its estimates for lodging performance this year as well. A measure of room price and occupancy, revenue per available room, is, for only the second time in the 32 years such data has been tracked, falling.

(Since 1957, lodging led the decline during five of the past seven cycles, by an average of six months, so it's been a predictor of past recessions.)

#2) Executives who oversee computers and other tech gear at the biggest corporations have no plans to boost spending in the second half of the year, and they say they don't expect a return to their old spending ways anytime soon, according to The Wall Street Journal.

When they do buy something, they want to see a quick payoff from their investments. (That means big-ticket, long-term projects--the kind that mean hefty profits for tech companies--are out, and small deals are in.)

#3) The International Energy Agency, the West's answer to OPEC, says that world demand for oil will contract, and it expects the average growth in oil demand this year to be just 460,000 barrels a day, down sharply from the 1.9 million barrels a day it had initially expected last summer.