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[OM] Cost of gas [Was Re: OT American express]

Subject: [OM] Cost of gas [Was Re: OT American express]
From: Jan Steinman <Jan@xxxxxxxxxxxxxx>
Date: Wed, 5 Nov 2008 21:33:23 -0800
> From: Chuck Norcutt <chucknorcutt@xxxxxxxxxxxxxxxx>
>
> With that great a discrepancy between sale price and cost of  
> production
> additional supplies or alternatives would start to rear up...

Don't count on it. The world has never pumped more than it did in May,  
2005 -- 85 million barrels of oil in one day. The housing crisis and  
financial collapse are a direct, albeit delayed, result of a growing  
economy bumping up against the glass ceiling of 85mb/d. You cannot  
grow an economy without growing energy consumption.

They've had three years since then to come up with alternatives. They  
didn't find any, even when oil was close to $150.

So now we bounced off the ceiling and are using well under that  
amount, but with the price crashed, no one is working on expensive  
alternatives. One large ethanol firm just declared bankruptcy; they're  
closing down tar sands processing capacity in Alberta. That will cause  
the price to remain relatively low -- perhaps even under $50 -- which  
will fuel growth, which will cause us to bump up against the ceiling  
again. Only this time, it won't be 85mb/d; it might only be 80. And so  
on, until it's all gone, or at least unrecoverable at any price.

Everyone thinks little green bits of paper have something to do with  
it -- they don't. Energy should be priced in energy. When oil first  
gushed at Titusville, PA, one consumed one barrel of oil in getting  
over one hundred out. Today, it's more like five out for one in. The  
tar sands are under three. Biodiesel is about 1:1.3, ethanol actually  
consumes more energy in its manufacture than it produces.

Thus the fallacy of saying, "When the price gets high enough, other  
sources will become available." When the cost of producing one unit of  
energy *is* one unit of energy, it doesn't matter at all how many  
little green bits of paper are shuffled around -- we'll be at entropic  
heat death as a civilization, and will have to go back to living  
strictly off of what the sun gives us. Pray that there's enough oil  
and coal left at that point to make a few more solar panels and wind  
turbines.

:::: By 2030... fossil fuel resources will be totally out by then. --  
Katsuhiko Machida, President of Sharp ::::
:::: Jan Steinman, EcoReality <http://www.EcoReality.org> ::::



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