user396040

Don't Believe Long-Term Oil Forecasts

Long term energy consumption and production projections have been notoriously inaccurate. In the early 1970's, Project Independence projected a 200 Quad (quadrillion btu) US economy by the year 2000- I think we barely made it to 100 QUAD. Several trends do appear to be inescapable: 1. oil has gone and will continue to go from being a source of cheap btus used to generate electricity, heat homes, etc. to being a specialty transportation fuel used for those applications for which its density, and ease of transport give it a competitive advantage, 2. while tar sands, deep off shore drilling, heavy oil and other increasingly exotic sources may be sufficient to clear the market for some time to come, these sources are not inexpensive and thus it is unlikely that the market will clear for any length of time below $50 a barrel.

U.S. Energy Policy Deters Investors

You make some good points. On a couple of issues: coal - it is true the Waxman Markey gives a lot of allowances to electric utilities that burn coal now, but because the allowances are tradeable and the ultilities will be able to sell them if they don't need them because they are burning less coal, there is still an incentive to switch from coal to another fuel - especially, natural gas; natural gas - I agree completely that this has been the neglected fuel - in the days of well head price regulation, regulatory policy actively deterred its production and use - I think natural gas would benefit enormously from Waxman Markey because it generates only half the greenhouse gas emissions of coal and WM does create strong incentives to reduce greenhouse gas emissions. Oil is about halfway in between coal and gas as to greenhouse gas emissions per btu. Oil does not really compete very much with these other fuels any more because it has become a transportation specialty fuel. WM would create strong incentives to reduce oil consumption - but I do not think WM discriminates against oil, it simply requires allowances in line with greenhouse gas emissions for oil as it does for coal and natural gas. In the long run, I think we may move to plug in hybrid cars so that whatever turns out to be the optimal source of electricity can be harnessed to the transportation system. WM is bullish for natural gas, nuclear and alternatives - it is also bullish for carbon capture and storage if that can be made to work.