Some very good points, but I don't think I would take farm prices as a best example of free market prices. Although the oil cartel is not exactly trying to keep prices unfettered.
It is the nature of individuals to operate in their short term self interest, but there is some wisdom in the behavior of large (free) markets.
Prices of fungible commodities, like oil, are based on present value and expectations of replacement cost. As prices adjust based on supply/demand and expectations of future availability our utilization of that commodity will change as it becomes more dear. The tightness of our supply capacity to actual demand is increasing the volatility as speculators expecting higher future prices and buy more now.
The EROI is not a hard limit. technology is constantly working to push this break even point lower. We are now pursuing extraction from deep sea offshore reservoirs that were previously considered much too difficult and expensive.
Another twist on the EROI transaction is type of energy. Unlike the classic running the oil well pump from it's own crude, we are getting to the threshold in price benefit for some shale and tar sands that require a lot of energy input to extract. There is already work (in Canada by a French? company IIRC) to apply nuclear power to the oil extraction process... OTOH consuming oil to make biofuel seems counter productive if oil is the precious commodity we're trying to optimize.
I am not optimistic that the typical oil/energy consumer will suddenly develop a long term judgment capacity in their monkey brain to significantly alter present behavior. What I am already seeing is them driving less, and buying less SUVs in response to their current pain and selfish self interest. This is how the invisible hand of free markets works to correct such imbalances (demand destruction due to high price). As far as I can tell, the governments efforts to look like they're doing something has helped very little and maybe hurt in some areas.
I understand the current pain for people living with decisions made based on cheaper oil. This too will pass but there will be some interesting times in the meanwhile. I hope we don't do something more stupid trying to fix this... Probably the most impactful thing in the pipeline for the near future is the major car companies ramping up production on electric hybrids. This will shift a percentage of the transportation energy demand over to the power grid which is predominately serviced by other fuels.
It will take years for this percentage to become significant, In the meanwhile keep your tires properly inflated. Maybe lose 20# to improve gas mileage.
JR
PS: I believe Indonesia just reduced the amount it was subsidizing the pump price of gas it's citizens was paying. After the riots quiet down there will be demand destruction there too.
It is the nature of individuals to operate in their short term self interest, but there is some wisdom in the behavior of large (free) markets.
Prices of fungible commodities, like oil, are based on present value and expectations of replacement cost. As prices adjust based on supply/demand and expectations of future availability our utilization of that commodity will change as it becomes more dear. The tightness of our supply capacity to actual demand is increasing the volatility as speculators expecting higher future prices and buy more now.
The EROI is not a hard limit. technology is constantly working to push this break even point lower. We are now pursuing extraction from deep sea offshore reservoirs that were previously considered much too difficult and expensive.
Another twist on the EROI transaction is type of energy. Unlike the classic running the oil well pump from it's own crude, we are getting to the threshold in price benefit for some shale and tar sands that require a lot of energy input to extract. There is already work (in Canada by a French? company IIRC) to apply nuclear power to the oil extraction process... OTOH consuming oil to make biofuel seems counter productive if oil is the precious commodity we're trying to optimize.
I am not optimistic that the typical oil/energy consumer will suddenly develop a long term judgment capacity in their monkey brain to significantly alter present behavior. What I am already seeing is them driving less, and buying less SUVs in response to their current pain and selfish self interest. This is how the invisible hand of free markets works to correct such imbalances (demand destruction due to high price). As far as I can tell, the governments efforts to look like they're doing something has helped very little and maybe hurt in some areas.
I understand the current pain for people living with decisions made based on cheaper oil. This too will pass but there will be some interesting times in the meanwhile. I hope we don't do something more stupid trying to fix this... Probably the most impactful thing in the pipeline for the near future is the major car companies ramping up production on electric hybrids. This will shift a percentage of the transportation energy demand over to the power grid which is predominately serviced by other fuels.
It will take years for this percentage to become significant, In the meanwhile keep your tires properly inflated. Maybe lose 20# to improve gas mileage.
JR
PS: I believe Indonesia just reduced the amount it was subsidizing the pump price of gas it's citizens was paying. After the riots quiet down there will be demand destruction there too.
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