Toyota and the Race for Oil

Had a great chat yesterday with Lord Rees Mogg at the Pickering and Chatto offices just down the street. Later, he sent over his contribution to the Insider for this week. As you'll see, it's another bullish argument for oil. However, it's not as bullish for European (and perhaps American) industrial manufacturers. “…Toyota sees China as a rapidly expanding economy, which will continue to expand. This will produce a huge increase in demand for automobiles. The motorisation of China is already pushing up the price of oil, now at $37.50 a barrel. It is likely to go further and create a world oil shortage. In turn that will create a demand for green cars. Here Toyota is already in the lead of world development…said to be about three years ahead of Detroit…” Toyota and the Race for Oil by William Rees-Mogg Following a major scoop by the Times here in London, we can only hope that “What is good for Toyota is good for the world economy”. Little noticed by the other leading newspapers of the world, the scoop comes with a Tokyo by-line, giving joint credit to Leo Lewis - the Tokyo Correspondent of the newspaper - and Robert Thomson. He is the Editor of the Times, and used to work in the Far East as a correspondent for the Financial Times. Revealing how Toyota sees the future… The story they have just published is an example of the access which can be gained when the Editor of a major newspaper visits distant countries. The scoop was an interview with Fujio Cho, President of Toyota. He revealed Toyota’s current thinking about the prospect for the world’s automobile industry. This may not have seemed a big scoop in some political circles...but it will have been passed around in the Board papers of every major automobile company in the world. Toyota is not in the habit of revealing its private forecasts to visiting journalists In the Times’ interview, Mr Cho changed Toyota’s policy on the euro. As recently as May of 2003, Shukei Toyoda, the President of Toyota Europe, had said “expansion (in the United Kingdom) is ruled out due to the euro problem.” The “euro problem” is that Britain has not joined, and is not going to join in the next few years. Mr Cho brushed the euro aside. “I am not concerned by Britain’s not being in the euro,” he told Lewis and Thomson; “whether or not the UK joins Euroland is up to the British people.” He went on to forecast that Toyota would be expanding sales to Russia. “Eventually we believe we may have to construct a plant in Russia. On a ten-year horizon, it could become a reality within that time.” Toyota’s expansion plans in the United States, in Euroland, in the United Kingdom, in Russia, are important to everyone - to Governments as well as investors - because Toyota is the world’s leading automobile manufacturer Almost the Microsoft of the automobile industry Toyota is now the second largest producer in the United States, with a global target of four million vehicles next year, and a market capitalisation equal to the Detroit “big three” put together. For the European Central Bank, the important news in the Times’ interview may have been the shift of policy on the euro. But Toyota’s eyes are on China and on new technology. Toyota has signed a series of major partnership deals with Chinese companies, including an engine plant with Guangzhou Auto in the South of China. For us, however, it is the logic of Toyota’s position which is most revealing. Toyota sees China as a rapidly expanding economy, which will continue to expand. This will produce a huge increase in demand for automobiles. The motorisation of China is already pushing up the price of oil, now at $37.50 a barrel. It is likely to go further and create a world oil shortage. In turn that will create a demand for green cars. Here Toyota is already in the lead of world development, so much so that Ford has recently agreed to buy hybrid technology direct from Toyota. The Toyota technology is said to be about three years ahead of Detroit. China changes everything The new demand coming from China changes the outlook for the world oil price, and therefore the forecasts for inflation. It changes the future of technology; it could eventually mean the end of the hundred year reign of the internal combustion engine, and its replacement by fuel-cell technology. Mr Cho told Robert Thomson that this was not just a matter of image, but of corporate survival. Toyota will be producing 130,000 Prius automobiles next year. The Prius is a hybrid using both petrol and electric motors. The preparations for launching the Prius in China are already going ahead. Everything happens faster than one expects. And the motorisation of China is following the pattern of automobile sales in Europe or the United States. That is already creating a shortage of oil, let alone atmospheric pollution. Green cars will be needed and Toyota will make them. The world is being changed before our eyes…

Quote of the Day: Withdraw Your Consent to Be Governed and Go to Jail

"The indictment today reminds us that fulfilling individual tax obligations is a legal requirement and those who willfully evade that responsibility will be prosecuted," --Nancy Jardini, overseer of criminal investigations for the Internal Revenue Service, on the indictment of anti-tax author Irwin Schiff or conspiracy to defraud the United States government. Denning comment: how about a class action lawsuit against the Fed for conspiracy to defraud the people of the United States...or the IRS for armed robbery (collect taxes through coercion and the threat of force)....nahh, after all, a conspiracy, according to the American Heritage dictionary, is an illegal plot. Since Congress makes the laws, and made the law that created and empowered the Fed, I guess it's not illegal, strictly speaking (though I'm not a lawyer). And it's probably not a conspiracy either. The Fed hasn't hid its intention to devalue the dollar by accommodating so much money creation. That leaves fraud. And there, I think the people of the United States have a case. They have a government that spends more than it earns (even when it confiscates its earnings). That goverment borrows in the name of the people to avoid making decisions about what the country can reallly afford. And the managers of the "people's money" have destroyed its purchasing power over time. Yep, sounds like fraud to me. Or just incompetence.