Oil Prices (and why Peak Oil is irrelevent)

As of this writing, a barrel of Texas Light Sweet crude would cost you $123.64, according to Bloomberg. This is down from the oil bull market price of $140 or so per barrel. Interestingly, this also the price that makes switchgrass ethanol (gasoline from tall prairie grass, corn husks, and so on) economical.

Prices go up, prices go down.

The only real concern regarding energy prices is that they support crummy states like Saudi Arabia, Iran, Venezuela, and Russia. The less market-oriented countries need to import oil, the less oil-rich countries can avoid market discipline by selling what they fond under their feet.

As the auto production market adjusts to high prices, the long-term shift away from oil begins. Concepts like Ethanol Hybrid Electrics and other mindbending combinations approach the market, making peak oil a mute, meaningless and irrelevent concept.

6 thoughts on “Oil Prices (and why Peak Oil is irrelevent)”

  1. Better than that is to get away from cars and roads and to a rail based system.

    Over 2/3rds of all oil in America is consumed in the transportation sector, which is why Carter’s “sweater” suggestion was totally doomed to fail, and rubber tires on asphalt or concrete roads is aupid way to do it.

    And, I think it is important to recall, it was Eisenhower’s Secretary of Defense, who also happened to be he former head of General Motors, that created the Interstate Highway System. You might think it is convenient, but it is a) not efficient, and b) a _real_ stretch to suggest it was vital for national defense.

  2. Not going to happen, Josh. Nor should it. Rail is 19th century technology, the automobile is 20th century. Not sure yet what the 21st c. version of general transportation will be, but the clock never runs backwards. History moves forward, often inefficiently, occasionally motivated by self-interest. Join it.

  3. Thank in terms of the factors of production: land, labor, and capital.

    Old Core Europe and Japan have crowded with less available land than the United States has. So it makes sense for them to trade both labor and capital for more land — in other words, to have the high-density living and working arrangements which make rail transport make sense. The United States has much more land undre much less stress, so that arrangement does not make as much sense. For any level of economic development, western Europe and Japan would rationally have more rail transport than the United States.

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