akapital

Is Oil Going the Wrong Way, Or Do We Need to Adjust Our Perceptions?

I am long alternatives and I am long Oil and other natual resources and I was buying at what in hindsigh turned out to be the bottom (at least as of now) because I believe the following:

1. Peak Oil
2. Supply Destruction when oil is sub-50
3. Foreign Demand will far eclipse any decline in US demand
4. Falling dollar

Of course I am not betting the farm (already lost it), but a could chunk of change.

Checking in on Oil's Fundamentals

...a discussion on oil prices without any mention of peak oil production...isn't that convenient. There is a whole other side of the story here that people don't want to consider, oil is finite, the easy oil is gone. Ergo, even if demand does wane, price still could continue to rise. Ergo, I am long oil and all alternatives....but I don't have the energy to explain..hint hint nudge nudge.

Do We Need an Alternative Energy 'Manhattan Project'?

Hey Ed Mitby I am quite impressed on your comments of "a level playing field." You are in my opinion aboslutely correct. The level of tax breaks and other advantages that oil has received over the years is unsurpassed by any other industry. And not simply tax breaks but access to special privileges (e.g. White House energy forums, etc.) Now there is not necessarily anything wrong with this if other energy solutions are also being given this access and advantages but of course this is not the case. Thus, the reason alternative energies were behind in research and development has alot to do with this factor. And when people today still say that solar or wind isn't viable without gov't subsidies they are partly right but the same could be said for oil. Oil would not be a viable energy solution without all the tax advantages and geo-political policy engendared on its behalf.

Although of course solar and wind become viable and desirable when the cost of oil inceases to a level of parity with the cost of alt energy.

What's the point here? Whatever our energy solution it will indeed require gov't subsidy or cooperation of some kind. Why not open up Dept of Energy to all free market energy companies and not only level the playing field but assist in diversifying our energy solutions.

Will Interest in Alternatives Continue if Oil Goes Down?

Good points all around here are a few more which are good reasons why alt may no longer be the alternative:

1. The cost of oil includes gov't subsidies that other industries can only dream of and in some cases would not want on their hands (e.g. are gov't fighting wars and dropping bombs for laundromats?) Further, another cost of oil and fossil fuels is pollution and war. Those are very real costs (see below).

2. So whether you believe in global warming or not, oil is dirty. The ecosystem is not so finite that this has no effect on us. Asthma and allergy rates are on the rise globally. So whether we can attribute fossil fuels as the main cause of global warming (and obviously there is a great case for this) it is immaterial. Pollution is a fact and alternative energies are healthier and cleaner. The case for global warming only reinforces this but to the idiots that deny global warming, global pollution is a fact that is undeniable.

3. The geo-political factor: Oil is endemic or specific to regions and particular places. The sun shines everywhere, fairly equally. Wind blows in varying degress in many places but is still more widely dispersed than oil. Bio-mass for ethanol is almost everywhere. Geo-thermal energy can be produced virtually anywhere. So here the solution is always local and less dependent on geo-political factors.

4. Lastly, the distinction between traditional and alt energies will become more specious as today when companies like BP partner with Verenium (VRNM), and as another example companies like GE perform diverse R&D across many energy solutions.

Will Interest in Alternatives Continue if Oil Goes Down?

BP partnership with VRNM was announced today...that's a big oil company diversifying their interest by investing in and partnering with a company that uses biomass (not food products) to produce ethanol...so the final word on ethanol is not in. There are alternatives within the alternatives and alot of new and interesting technologies out there. Stop digging for oild, keep digging for other alts...

Confirmatory Bias and Oil Investing

Great article, although the confirmatory bias that I (and I think many others) are more interested in transcending is that cheaper or more oil will allay our energy crisis. The alternative view that I (and I hope many others) am a proponent of is that now is the time to invest in non-fossil fuels such as solar, bio-fuels, and wind. I believe that higher oil prices actually reinforce the rationale (both economic and otherwise) to invest in alternatives.

For me, the cost of oil or why it is expensive is secondary to transcending oil and our reliance on a single type of fuel. We need to diversify.

However, the phenomenon of confirmatory bias that you point out is of course most rampant and interesting. We generally see what we want to see...