Caltorguy

$300/Barrel Oil Is Coming - Barron's Interview

OK famos, please then tell at what price per litre or gallon diesel made from coal can be profitably produced and sold. My point is that well it is technically possible, it will be very expensive, and require significant capital costs and energy inputs but ultimately these will be necessary. In fact coal-derived diesel hybrids may be the car of choice 20 years from now when straight up gasoline will probably cost $20 a gallon or more.

$300/Barrel Oil Is Coming - Barron's Interview

Nikola - Well if you applied our model for health care to housing it would look something like this: free housing would be declared a social imperative; the government would nationalize the entire US housing stock and private housing would be made illegal; every American would be issued a "housing insurance number" and bureaucrats would dole out housing according to need. Since the system would produce no revenue, no new housing would be built and each year Americans would get less and less housing, resulting heavily rationing and long wait lists (sort of like the situation the old USSR as I understand it). I don't think you are anywhere near that yet down there!

$300/Barrel Oil Is Coming - Barron's Interview

Human labour is a form of energy - I don't recall how many person hours of labour that a bbl of oil translated into but it's a lot and some say, this "free" input explains much of the economic and productivity growth over the last 100 years. Scarcity does determine value, and as value rises above the marginal cost to produce, more will be produced theoretically unless these costs are very high which they are in the case of oil. There are a trillion bbls of oil left in the world - what will the marginal cost be to produce the last one $300 a bbl or $3,000,000...?

$300/Barrel Oil Is Coming - Barron's Interview

Famos - one minor details is that Hitler had access to slave labour, which greately reduced the input costs - the problem with nearly all forms of alternative energy, from syncrude to wind and hydrogen is that it takes almost as much energy inputs as you get out (more in the case of hydrogen). Light sweet crude in places like Saudi (or Texas 50 years ago) gave you a ratio of 20:1 - that is 20 units of energy out for every one in - and those days of all but free energy are ending, which, whether we like it or not, will change the way we live.

$300/Barrel Oil Is Coming - Barron's Interview

Dave M. - an election was called yesterday in Canada and it appears the Conservatives will be elected back to office, who are about as socialist as Sarah Palin. The (Conservative) PM is also from Calgary and is campaigning against new taxes on the energy sector. Alberta did raise royalty rates, although they are still among the lowest in the world, and it bears mentioning that the size and speed of the oil sands development in AB is something that would likely not have been possible in the US with far more stringent federal environmental rules, and a more organized (and well-funded) environmental political movement. So while I would await the election outcome (Oct. 14th), Cdn oil and gas cos, including the royalty trusts, are probably about the best investment you'll find (look at COS.UN on the TSX - good assets and pays 11% dividend, or CPG.UN which is a Bakken (Saskatchewan)play, and pays about 7% yield).