Ray, <//At $40 there are still all sorts of altervatives which are economic. //
Start naming them. >
Okay, some altervatives:
Wear a pullover/sweater/jumper/jacket/singlet.
Buy a little car/bicycle/running shoes.
Move closer to work.
Use the CDMA cyberphone instead of the SUV.
Insulate things.
Dig more coal.
Dig more geothermal steam.
Dig more Orinoco emulsion.
Dig more gas.
And of course, dig more oil [production can be boosted by more holes in the existing reservoirs and more reservoirs can be found].
Windpower.
Photovoltaics.
Sugar beet/cellulose to ethanol or other stuff.
Noocular power.
Population reduction [I'm not recommending that as an economic alternative, just that it's going to happen either voluntarily because women don't seem to want to have 10 of my babies or many of other blokes' or because H5N1 cuts us down to size].
Holiday nearby [instead of an aircraft ride away].
< //Saudi Arabia, Iran, Iraq and Russia won't stand for it. They'll boost production, open the spigots and regain market share.//
I told you that the world is at 99% of available capacity>
Okay, it's true that I was being sloppy and spigots aren't wound closed [not many anyway]. My point is that at $40 a barrel, they can make a LOT of money. They can increase production by drilling more wells, building more pipelines, securing Iraqi pipelines against Islamic Jihad. My comment on spigots reflects the fact that Saudi Arabia and others do artificially reduce supply because they have an idea on what price will maximize their long run returns. That price is more like $30 a barrel than $50. I think they overestimate the long-run price they can get because so many alternatives are available at even $30 a barrel, let alone $40 and $50 a barrel.
OPEC doesn't want to lose market share. Once a noocular reactor is turned on, it doesn't turn off again just because oil prices are cut to $10 a barrel. The big cost in noocular is in the construction and decommissioning bonds. Buying the uranium is relatively cheap. It's not like a thermal power station where the oil cost is the big cost and the power station is relatively cheap. OPEC needs to avoid too many alternatives being built. Once a photovoltaic source is installed, it has zero operating cost, so it won't be shut down either. Crop fuels can be shut down because they have high ongoing production costs.
Mqurice |
