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Friday, September 08, 2006

Friday's Quote

From an MSNB article entitled "How low can gasoline prices go?":
"At $70 a barrel you could probably find oil in your own back yard. You’d just have to dig awfully deep.”
Wholesale gas prices have dropped below $1.70. Of course, you have to add taxes to that, and taxes per gallon generally range between $.40 and $.60 per gallon. In my part of GA, you can now buy regular at several stations for around $2.45.

One thing that interests me about the whole "peak oil" debate is that it illustrates what seems to be a broad spectrum difference between those who tend toward the conservative side of the political spectrum compared to those who lean toward the left. The conservativish group tends to have more idea about how markets work, and that higher pricing leads to greater supply. The leftish group tends to see higher prices as an indication of a diminishing resource, but don't seem to grasp the idea that this is usually a temporary condition.

I have often read commentary by various sources on the right about the left's problem with personal responsibility, i.e., they don't believe in assigning personal responsibility. This is a logical outcome if you subliminally view life as a set of discrete conditions. But isn't this a trait shared by the extreme right? Neither group is really comfortable with the graduated reality of life, and so they seek safety in absolutes.

I totally agree. The key to lower prices is more supply and we've got ton of it in coal which can be turned into oil.

read about it on my blog:
I think coal-to-liquids has potential, but I'm suspicious of the $35/bbl number that's being thrown around. From what I've seen, it looks like this number is based on an unrealistically-low cost of capital and also doesn't consider depreciation/maintenance on the plant. I don't know how long a c-to-l facility will last, but I'm guessing it's not forever.

Also, people looking at large investments in energy production have to be worrying about what happens to them if oil goes back to $30/bbl and stays there for quite a while.
For those who are interested, The Strong Conservative's post.

I think the cost would be somewhere around $40 a barrel, but it is feasible. The refining process does release pollutants. But it's worth a look as another alternative!
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