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Oil Hits $107 a Barrel. Yay!!!


It's not all bad when oil hits $107 per barrel. In the past, high oil prices have been the impetus to find alternative energy solutions. Whenever oil prices have dropped, it has made pursuing those solutions infeasible. The price is way up, so let's research and develop!! Wait... Enter the man-made global warming lobby.

107-dollar oil is not all good either. A large portion of the cost-per-barrel increase over the past few weeks has been because the value of the dollar is plummeting. Where the dollar was once about on par with the Euro, you can now purchase 55 Euros with one hundred dollars--not very good.

But historically, the increasing cost of oil has made it feasible to look for alternatives to oil. I'm not sure how a weak dollar plays into this, but let's hope American ingenuity can make lemonade out of this current batch of lemons.

In 1973, OPEC established an oil embargo against the US and other nations that supported Israel in the Yom Kippur war. President Richard Nixon quickly created Project Independence, calling for US energy independence by 1980. OPEC flinched and opened the spigots, and the price of oil stabilized.

By 1981, oil had increased in price to $37 per barrel. About that time Jimmy Carter issued an executive order creating the Synthetic Fuels Corporation. OPEC increased output, and prices dropped back to $14 per barrel.

I think there's a pattern here. Why did OPEC keep dropping prices? Because they knew that at a certain price point, research into alternative fuels becomes feasible.

Fast forward to March 9, 2008. The price of oil hits an all-time high of $107. Sounds like a pretty good time for private entities to start looking at alternative fuels again.

A good place to start (or to pick up where we left off) might be synthetic fuels (oil from coal bitumen). When the world started to restrict trade--particularly oil--with Nazi Germany, the Fischer-Tropf synthesis was used to produce an oil replacement.

But...there is a catch. The synthetic fuel process creates a bunch of carbon dioxide.
Such promise has attracted entrepreneurs and government officials, including the Secretary of Energy, who want domestic substitutes for foreign oil.
But there is a big catch. Producing fuels from coal generates far more carbon dioxide, which contributes to global warming, than producing vehicle fuel from oil or using ordinary natural gas. And the projects now moving forward have no incentive to capture carbon dioxide beyond the limited amount that they can sell for industrial use.
So, the reason we can't be energy independent has nearly everything to do with the faux crisis of man-made global warming.

It's all starting to become clearer.
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Comments

  1. Anonymous3/10/2008 09:08:00 PM

    Interestingly, Wikipedia reports carbon dioxide is a good carrier gas for use in the recovery of oil from shale.

    http://en.wikipedia.org/wiki/Oil_shale_extraction

    ReplyDelete
  2. Anonymous3/11/2008 10:45:00 AM

    I think we should buy Amercian synthetic motor oil. Help our economy and make us less dependent on foreign oil. AMSOIL is a synthetic motor oil made in the US. Not sure about Mobil 1. Just make sure it is 100% synthetic. Just a thought.

    ReplyDelete
  3. Ken3/11/2008 10:47:00 PM

    For at least 20 years the wacko environmentalists have said they would like to see gasoline sale at $5-10 a gallon. They have thought if the price of gas was really high it would force people to use less. They have almost gotten their wish but you won't see them celebrating because in there plan the price of oil would be that high because of excessive gas taxes like they have in Europe. Instead gas may go that high but they are angry because the money is going into private industry not the government.

    ReplyDelete
  4. Frank Staheli3/14/2008 10:31:00 PM

    Tom,

    Good point. I'm excited about the potential of this technology.

    Robert,

    I fear that Establishment Dems and Repubs alike are against making America independent. For what reason I'm not exactly sure, but to paraphrase Thomas Jefferson, you'd think that some of the mistakes we make would be in our favor at least SOME of the time.

    Ken,

    I hadn't thought about it that way (liberals like higher prices, but only if the balance of the higher price accrues as govt tax revenues). But I think you're right!

    ReplyDelete

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