By on January 24, 2013

Reuters has a highly interesting oil and gasoline story. If you are one of the “peak oil” types
, you may not want to hear it. As a matter of fact, it could shake your belief system so much that you scream “BIASSSSSSSS.” As a service to all our readers, we give you a chance to stop before it gets ugly.

So much money is made to convert crude oil in to motor fuels, that power and industry can’t afford it, making power and industry switch to other fuels, mostly gas. Motor fuels however is a low growth industry. What’s more, it could also easily switch to natural gas. The effect is an oil glut.

  • BP predicts a worldwide oil demand growth of just 0.8 percent a year up to 2030 – slower than for any other energy type and only half the projected total energy demand growth rate over the same period.
  • Transport is slow growing as cars are getting more efficient. BP’s Outlook 2030 study shows the fuel economy of new cars in the United States and China falling well below 5 liters per 100 kilometer by 2030 from between 7 and 8 now.
  • In OECD countries, transport fuel demand is set to actually fall as weak economies, a shift to smaller cars, and a move onto public transport in congested urban areas take a further toll.
  • Worldwide, gas, biofuels and other alternatives are expected to steal almost a third of what growth there might be.

Gas is already approaching a similar overall market share to oil in the world’s energy mix. Liquefied natural gas (LNG) already is a viable transport fuel, and oil executives are starting to see a point at which familiarity and availability could tip the balance away from diesel and gasoline.  Big oil players are already heavily invested in LNG.

LNG is expected to replace diesel in trucks and buses, ships, even airplanes first, before it makes a difference in private cars some decades away.

LNG-powered ships are already a reality. The first commercial gas-powered civil aircraft flight left Doha for London on Jan. 9 this year, fueled by jet fuel made from gas.

 

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65 Comments on “Gas Will Get Cheap And Plentiful – That Other Gas Causes A Glut...”


  • avatar
    AMC_CJ

    The biggest question comes to taxes. It’s been proven time and again there is plenty of oil out there. But with cars becoming more efficient, and other sources coming into play, how will the government handle the taxes? We already have an administration that has stated their ok with $5/gal gas, just “not that high, that quick”.

    I know socialist Europe has such a high tax on their fuel to cover other governmental expenses, yet don’t tax diesel as high as gasoline thus making it cheaper over there.

    We’ll never see cheap gas/fuel again. With the way things are heading, if there was a glut, and prices were to drop, I’m sure the powers that would be would love to fill in that new pricing gap with some taxation. This, is of course, not even considering the fact that our money is becoming so worthless it’ll take more of it to buy that source of energy, whatever it may be, and the price of oil has not risen nearly as much when compared to the price of gold over the past few decades anyways

    We will see a “energy crisis” in the form of rising prices; but it won’t be from a lack of supply.

    • 0 avatar
      Xeranar

      That’s such a silly argument to make. Fuel taxes like sales taxes are regressive. There is no benefit to vastly increasing them and seeing a sub-3 dollar gallon would help stimulate the economy.

      Really, I swear sometimes people think in the weirdest ways.

      On top of it all peak oil is about maximum production which we did see until we found these secondary and tertiary sources that may push to a new peak but it is coming.

      • 0 avatar
        CJinSD

        I agree that it is a silly argument to make, but it is one that our current regime has made time and again.

      • 0 avatar
        Landcrusher

        Not all sales taxes are regressive at all. Some, namely luxury taxes, are quite progressive. Putting people out of work while claiming it hurts the rich is certainly progressive. Wouldn’t you say?

        I know that’s over the top, but I couldn’t resist.

      • 0 avatar
        TW4

        Landcrusher, luxury tax and sales tax are both ad valorem, but don’t confuse the concepts. A ‘sales tax’ is so named b/c it represents ad valorem taxation of a majority of goods and service sold in an economy. Luxury tax is targeted at certain individuals via taxation of certain goods.

      • 0 avatar
        morbo

        What would be progressive taxation wise is if the Angelo Mozillo’s and Carl Ichann’s and other banky/hedgy parasitic non-producing types paid the same effective tax rate (28%) that I pay versus paying less (15% capital gains rate).

        But back to cars. Meh. I don’t care how much or what type fuel my 2025 Ford ThunderCougarFalconBird consumes. As long as it has 600 BHP, 1,000 lb/ft torque, is bigger then an Imapala and faster then a cop cruiser, it’s all good. Technology will adapt to the market, always has. Those complaining about gubmint strangling the industry with regulation probably want ‘pre-70′s* era cars that were thirsty, dirty, not particulary fast, and god awful dangerous.

        *I will admit the transition period is painful and full fo AMC Gremlins, but technology will adapt.

      • 0 avatar
        Landcrusher

        TW4, sorry if I confused you, but there are several types of sales taxes. There are also different types of luxury taxes, but there definitely are luxury taxes that are sales taxes.

        While I could have resisted the snipe at progressivism I can’t let a false statement slip through. It is untrue to say that all sales taxes are regressive. It’s a myth perpetuated by statists and parroted by their followers.

      • 0 avatar
        TW4

        Sales tax, in its colloquial sense, is regressive as a proportion of income, and semantics won’t change economic reality.

        However, the proportionally-regressive attributes inherent to sales tax are not the beginning and end of the discussion. There are much better arguments in defense of ad valorem taxation.

      • 0 avatar
        TW4

        Morbo, rich people pay higher taxes than you do for profit derived in the current year. The reason for lower capital gains tax is easy to understand. If your stock increases in value by 5%, but inflation over the same period is 5%, you’d pay tax on inflation. Our economy would literally collapse overnight, and that’s why the old income tax rules allowed for all kinds of fake right-offs and income tax shelter scandals to keep the economy going.

        That area of the tax code was cleaned up with at-risk loss limitations, simplified capital gains rates, and inflation control by the Fed. The system still has some inefficiencies, but taxing all income as regular income would kill our country stone dead, without a complicated schedule of inflation adjustments for long-term gains.

      • 0 avatar
        corntrollio

        Morbo, I doubt you pay an *effective tax rate* of 28%. You probably pay a marginal tax rate of 28% on your last dollar earned at best.

        “Our economy would literally collapse overnight, and that’s why the old income tax rules allowed for all kinds of fake right-offs and income tax shelter scandals to keep the economy going. ”

        No, it wouldn’t. You don’t know what you’re talking about. Capital gains tax rates were identical to income tax rates under Reagan (in fact, it was a linchpin of the Reagan tax plan), and I can assure you the economy didn’t collapse.

      • 0 avatar
        Landcrusher

        TW4 we will have to agree to disagree. If you agree to the propaganda that sales taxes are regressive you do a disservice. While plenty of sales tax schemes in use today, mostly instituted by Democratic Party controlled legislatures, are regressive, they need not be left that way. Exclusions for items like food, items under a certain value, and rebates can make sales taxes fair or even progressive.

      • 0 avatar
        mklrivpwner

        TW4, If the consideration for inflation is the reason for lowered Capital Gains Taxes, the same ought to be considered for Income though wages. Except, whereby Capital Gains inherently earn as a direct result of inflation, wages are not so tied, and infact, lose buying power as a result of inflation. In essence, incomes through wages are doubly penalized in comparison, first by inflation (which Capital gains are inherently immune from), and secondly by the tax rate differential.

    • 0 avatar
      krhodes1

      The difference in taxation between gas and diesel is pretty insignificant in Europe. When I was last there, the price difference was less than $1/gal, centered around $10-$12/gal. People buy diesels because they are MUCH more efficient for a given level of performance, not because the fuel is particularly cheaper. That is just a small bonus, and in many cases more than made up for by the tax on the car being more expensive at purchase time and annually.

      I’m in the school of belief that there is plenty of oil out there, we are simply out of the oil that is super-cheap to produce. As the price goes up, the supply goes up too, both by the fact that it is now profitable to extract more difficult to get at supplies, and demand falls as the higher price makes conservation and alternative energy sources feasible.

      Worrying about running out of oil is just silly. At some point, oil will be expensive enough to send robots to Jupiter to get it – now there is an unlimited supply of hydrocarbons!

      • 0 avatar
        corntrollio

        “As the price goes up, the supply goes up too, both by the fact that it is now profitable to extract more difficult to get at supplies, and demand falls as the higher price makes conservation and alternative energy sources feasible. ”

        Yes, this is exactly what happened. When oil prices briefly crashed due to the economy a few years ago, oil companies were upside down on their investments from when the oil price was high. $130 oil barrels meant that $50/barrel oil extraction could be profitable.

        “At some point, oil will be expensive enough to send robots to Jupiter to get it – now there is an unlimited supply of hydrocarbons!”

        Not quite. Jupiter is almost entirely helium and hydrogen, although we think it might have a rocky core.

  • avatar
    Perc

    For anyone interested in LNG powered ships, check out Viking Grace. It’s Viking Line’s brand spanking new cruise ship, currently in service on the route Åbo (Finland)-Stockholm , via Mariehamn on the Åland Islands.

    Powered by Wärtsilä LNG engines.

    http://en.wikipedia.org/wiki/MS_Viking_Grace
    http://www.vikinggrace.com

  • avatar
    Felix Hoenikker

    It really comes down to how much oil the Indians and Chinese will buy in the near future. The price of oil would have collapsed two years ago but for the rising demand from Asia.
    Oil derived fuels have been too expensive for power generation since the 70s so that’s nothng new.
    High crude prices have spurred a drilling frenzy in North America. How much if any drop in the price of crude oil depends on the developing world’s appetite for motor fuels.

    • 0 avatar
      redmondjp

      The REAL fuel to watch is natural gas. LNG plants are currently being built on the west coast (Oregon, British Columbia) to provide LNG bound for Asia. Japan has all but shut down their nuclear plants and will replace them with gas-powered ones. Williams Gas is currently permitting two new NG pipelines from Canada to Oregon via Washington to supply the new LNG plant on the Oregon coast.

      In the U.S., somewhere between 27 and 50 GW (that’s giga-watts) worth of power plants are scheduled to be shut down in the next ten years (Obama’s war on coal via the EPA in action, see climate change discussion below), and only a tiny fraction of that can be replaced by so-called ‘green’ energy sources. The rest will be made up by natural gas fired plants.

      Natural gas is incredibly cheap right now. But hold onto your hats, kids, as that is going to change in the next decade – it’s going onto the global energy market to get top price so U.S. customers will have to pay top dollar, even if they are pumping it right out of your own back 40.

  • avatar
    tmkreutzer

    LNG powered ships… I miss the days when I would clean up an on-board spill of bunker-c with a shovel.

  • avatar
    28-Cars-Later

    I’ll believe it more when I start reading the same from multiple news sources and multiple oil firms confirms some of the BP figures.

  • avatar
    Conslaw

    The real limiting factor isn’t how much oil we can pull out of the ground in a certain amount of time; the limiting factor is how much new carbon dioxide the atmosphere can absorb without changing the climate. Fracking technology has let us pull more natural gas out, and that gas can substitute in many applications for oil and coal, but that doesn’t mean we can still burn just as much oil and coal with climatic impunity. If low natural gas prices result in lower oil prices and correspondingly higher consumption, we’ve really fracked ourselves.

    • 0 avatar
      28-Cars-Later

      Forget to put on your tinfoil hat today?

      Hehe j/k. I’m not a science major so I can’t dispute your concern, but what I can say however is if Earth’s population is to grow, the amount of consumption must decrease with this amount of growth otherwise the same situation occurs regardless of a price decline/higher consumption.

    • 0 avatar
      Landcrusher

      Unfortunately, there have been no public hangings of climate alarmists. The Enviro Political Complex has poisoned the academic well, and new Kool Aid drinkers are getting harder to find. If someone broke the code on global warming this morning, they will find that they get even less attention than the phony chicken littles ahead of them.

      I don’t believe that every over population theory, peak oil theory, or climate change theory is wrong just because the earlier theories were. But skepticism is now dialed up to eleven. So, if you really think the world will end over climate change then you should work on getting the personal destruction machine focused on past doomsday con artists. After they ave been thoroughly exposed and discredited along with all those connected to them will anyone be believed.

      Repeating the same old same old here ain’t conniving anyone with any sense.

      • 0 avatar

        The principle behind climate change is simple physics. It’s no different from how a (regular) greenhouse will change the climate inside of itself relative to outside. The CO2 lets in the wavelengths coming from the sun, but doesn’t let out the wavelengths reradiated from earth. I would love it if it didn’t work that way, because I like my internal combustion straight, like my bourbon (no stinkin’ EVs or hybrids for me!) but there’s no getting around it unless we figure out how to take CO2 out of the atmosphere that is cost effective and doesn’t give off more CO2. Meanwhile, I console myself that cars contribute less CO2 than eating mammals does.

        By the way, the issue doesn’t break down strictly on partisan lines. A well-respected former Republican congressman from South Carolina has started an institute which aims to gain conservative support for a carbon tax, for reasons that appeal to conservatives.

        http://ehp.niehs.nih.gov/2012/09/can-the-energy-and-enterprise-initiative-improve-public-health/

      • 0 avatar
        TW4

        DH, if you look up the proportion of human carbon emissions to natural carbon emissions, and you examine human destruction of the carbon sequestration system, the cause of CO2 concentration becomes clear. Reducing man-made carbon emissions is just socio-economic policy with an ecological wrapper. Even if we cut emissions to zero, the earth would still theoretically warm, if AGW models are even accurate.

        Republicans support carbon taxes b/c they are the privatization of pollution regulations. What could be better for Republicans than seizing regulatory authority from the EPA via Congressionally controlled energy credits, traded on market exchanges?

        I know why Pres Obama loves the idea. The mercantile exchange is in Chicago. I have no idea why other liberals support the initiative. It reinforces the notion that liberals have no civic or economic platform, only a cultural crusade.

    • 0 avatar
      Georgewilliamherbert

      What you’re missing is:

      A) Methane ( most of what’s in natural gas) is CH4; kerosese / diesel approximates n(CH1.97). You get approximately half the carbon dioxide per unit fuel mass burned for methane / CNG / LNG.

      B) methane is entirely renewable, if we want.

  • avatar
    Landcrusher

    Don’t count on quite the vicious swing that we used to get in oil prices. Even with competition from other fuels. I fairly accurately called the price range on this site years ago, and will do so again. Don’t expect sub $60 oil to last ever again. For the same reasons I gave last time when I disagreed with many prognosticators and called the bottom at 60 then. The range has likely increased due to inflation, but you will have to figure that out, as I can’t manage to parse the government propaganda on that. I think it was 06 or 07 when I called it last time, and the only thing to change was the Obama war on oil exploration which will hit prices in a couple years causing another spike. It may go well over a hundred again.

    Blame the administration. BP failures were jut the excuse to do what they wanted.

    • 0 avatar
      28-Cars-Later

      I often do.

    • 0 avatar
      TW4

      Except domestic production is rising, which means there is a disconnect between the rhetorical platform and the actual policy initiatives. Obama is creating the appearance that he wants to stop oil production, which is an about-face from a half-decade ago when liberals blocked drilling initiatives, and Princess Pelosi said “let them eat cake” when she proposed opening the strategic reserve as a solution to skyrocketing oil prices.

      I do agree that oil will not dip below $60-$80, depending on the strength of US currency. Production costs are too high and global demand projections are still too high to warrant severe price reduction.

      • 0 avatar
        Landcrusher

        Except production won’t keep rising.

        The gas you burn today wasn’t made from oil discovered last week and drilled for two days before that. It’s a long process. Most of the gasoline burned today was oil in an untapped reservoir until at least four or five years ago.

        Its like oranges in a way. Stop people from planting orange trees in Florida and how long before their is a shortage? With oil, it’s about four or five years I believe. Even if they keep harvesting from old trees, and other places there will be a shortage raising the price. DoE stopped gulf activity and kept it stopped for a ridiculously long time. That echo will hit the market.

        It’s amazing how pols refuse to accept this on one hand, and then poo poo calls for more drilling by crying that it will be years before more new drilling will help the supply issues.

      • 0 avatar
        TW4

        The gulf referendum was a protracted affair, but oil production was rising at the time, and it is still rising today.

        You can’t really forecast a price increase by citing political gamesmanship as a market fundamental. If supply is increasing and global demand is flattening, long-term price increases are unlikely, even if the current administration is reducing the rate of supply increase.

      • 0 avatar
        Landcrusher

        Now you you are just being hard headed. What will your story be when for when we hit the point at which the illegal, as decided in fedreral court, ban on activity hits the market in a few years? I suggest the tried and true attack on Big Oil with a side of indignation for blaming the government. It’s worked before.

        Exploration and production affected by the ban hasn’t yet affected the supply. We are only now starting to see the affects of reductions in federal lease sales from before BP.

  • avatar
    nikita

    “LNG is expected to replace diesel in trucks and buses, ships, even airplanes first, … The first commercial gas-powered civil aircraft flight left Doha for London on Jan. 9 this year, fueled by jet fuel made from gas.”

    I hope you don’t believe, or intended to imply, that a civil aircraft flight was powered by Liquefied Natural Gas. Yes, synthetic distillates, that is, light fuel oils like diesel and jet are made from natural gas in specially built refineries. Shell’s Pearl Gas -To-Liquids near Doha, Qatar (starting point of the flight) is the largest one to date. GTL is a whole different animal than LNG.

    Its true that crude oil is not required for this, but “big oil” has the resources and infrastructure to make it work. Shell wont be going out of business soon.

  • avatar
    gslippy

    I’m not a peak oil guy. Fuel prices – corrected for inflation have been fairly steady for decades, which tells me it’s not running out like they told us in 1970.

    BTW, oil is not a ‘fossil fuel’. No link to dinosaurs or plant matter has ever been established for oil. Besides, tar and other hydrocarbons are found on Saturn’s moon Titan, and it never had dinosaurs. Oil is a renewable resource of the Earth.

    Anyway, this report should make Ford happy; the F-150 can continue its reign for years to come.

    • 0 avatar
      28-Cars-Later

      I do hope you’re right, at least from the standpoint of geopolitical stability.

    • 0 avatar
      Xeranar

      . . .just no. I’m not going to argue with you why Petroleum Crude Oil is a plant matter fossil fuel because it would just bounce off. Instead I will point out if it is renewable why have we not simply begun to make it or find it naturally occuring. It is a finite resource. Why is that so upsetting?

      We can afford to power the entire planet with solar with the investment of time and money. Yet we’re fighting a cognitive dissonance battle over the past because we’re too scared to move forward.

      • 0 avatar
        ihatetrees

        I’ll clarify and expand upon your last paragraph:

        We COULD afford to power the entire planet with foot pedal generators and walking with investment of people’s time and money pedaling, walking and consuming locally. Yet we’re fighting an uphill battle against human nature’s desire to improve upon the past because we (for some weird reason) enjoy being rich, warm and well fed.

  • avatar
    icemilkcoffee

    So in summary, oil consumption is slowing because of more efficient cars, smaller cars, publiic transportation and alternative fuels. Sounds like a peak oil advocate’s dream come true. Why on earth would a peak oil advocate not want to read this article? To the contrary, it’s the people who insisted that gas mileage could not be mandated, that alternative fuels is a pipe dream, that smaller cars are death traps, that public transportation is shosholism- these are the people who should be crying in their beers over this news.

    • 0 avatar
      28-Cars-Later

      Um all of those things are still basically true.

      Alternative fuels are still a pipe dream and the poster child, ethanol, drives up the cost of regular gasoline while artificially increasing the price of food and robs us of mileage to boot (shhh it also uses more fossil fuels to produce than if offers in terms of raw energy per gallon but don’t tell the greenies). Cui bono? Large agricultural conglomerates, the Iowa corn mafia, err lobby, and emissions nazis. So in other words, not you. Especially in the light of these figures we should immediately cease and desist the use if ethanol, but well, that won’t happen.

      Gas mileage was mandated but (A) Loopholes were found which actually increased the size and consumption of big trucks/SUVs and (B) CAFE mandates artificially downsized the entire car market save a few models. You may think this is great but this opinion is not shared by all. Its not as if we took the dimensions of 70s/80s traditional cruisers and put a magic hamster drive in them in order to achieve 40MPG. A small car which in 1998 averages 24/25mpg around town who now gets 27/28 doesn’t really impress me much. The electric hybrid was the only revolutionary technology with regard to fuel savings to come out since 1995, gasoline engines haven’t changed much.

      Subcompact and microcars are still death traps, just maybe not quite as dangerous as the 80s and 90s variety. Fifty airbags aren’t going to save you in a serious collision. You might stand a chance in a larger, heavier car.

      Public transportation varies from region to region, in some places its virtually non-existent, and in my region its essentially an inefficient whore for tax monies in need of serious reform. Maybe in a large urban setting its more useful and essential I can’t really say.

      • 0 avatar
        icemilkcoffee

        The whole point is that all these measures have been 1. widely adopted and accepted, and 2. resulted in less oil consumption. In other words- the greenies were right all along and the nay-sayers are wrong, yet again.

      • 0 avatar
        CJinSD

        The only true environmental success of the left in this country has been 4.8 million long term unemployed and 54.6 million workforce dropouts. Less economic activity has cut demand for energy, and it has been mirrored in other countries where misanthropes rule.

    • 0 avatar
      Neb

      Your reaction to this article depends on what kinda peak oil type you are. Like climate change, there’s actually many different statements and ideas inside the phrase; some of them true, some of them not.

      So, if you were a peak oil person (that think that oil is a finite resource very inelastic, so when demand outstrips supply you’d see a peak like with whale oil in the 19th century) you’d love this article, as you think energy hedging is a very smart thing. And it is! Like icemilkcoffee said, you might also see this development as partially a *direct result* of you worrying people about big oil. Now that I think of it, even Jeremy Clarkson fits in here, the most conservative man on British TV.

      If you were another peak oil type (that this inevitable climb is coming very soon, and oil will soon be too expensive for most of its current uses) then once again, you are happy. You believe lots of economic pain is coming, and that hedging like this is smart insofar as it provides a fallback position for industrial society. Once again, you might see this as partially as a result of your worrying.

      If you were a peakist of the most extreme kind (believe that the oil crisis will wipe out industrial society as we know it and the only form of viable transit will be the bicycle and we need to give up any sort of liquid fuel as of yesterday) then I presume you are angry. But then, this person things the world is literally going to implode in just a few years, and I have no idea what would make them happy…

  • avatar
    Big Al from Oz

    Some quite uneducated comments regarding taxation and socialist Europe are being made.

    The US has one of the most protected vehicle markets in the world. Your CAFE/EPA regulations stifle imports. Your chicken tax (25%)stifles imports. Your vehicle design regulations are different than the rest of the OECD. How can you state that the US is less “socialist”. You are the most individual, this is to protect the Big 3.

    They import more Euro tech than the developement of local tech. Why, because your protectionism I stated above has allowed you vehicle manufacturers to fall significantly behind.

    Even your agriculture is heavily subsidised, look at corn which is used from a sweetner, livestock feed, ethanol etc. Dairy is subisidised, the government guarantees to buy milk over production from the farmers.

    Taxation, just reducing taxation will not fix the woes of the US. 38% of your GDP is government spending, 27% of GDP is taxation, add it up.

    You have a huge debt, that needs to be paid off. Tax has to be collected to service this.

    Your economy is so heavily dependent on government money that a restructure is necessary to make it work or you will go bust.

    Just reducing taxation will kill your economy, keep on spending like you are you will go broke. The Euro/Japanese and US are trying to devalue currency to trade out of debt. So if the major consumers are struggling who are you going to export to?

    Understand a bit about economics before throwing around left wing or Tea Party ideals.

    Look at the what governs and regulates your vehicle manufacturers and why the US used very socialist measures to protect that industry.

  • avatar
    TW4

    It’s basically 1980 again. Oil is over-priced, and the US must double its auto-fleet fuel economy, and transition industry away from oil, including industrial transportation.

    The villain is different this time around. In the 70s, OPEC was giving the developed world grief, but now it’s China. Currency pegging has caused global imbalance of trade, and US currency policy has shifted inflation to the Chinese economy. As inputs of production prices began rising, and China felt compelled to buy up vast quantities of natural resources during peak prices of 2006-2008, rather than transition to domestic sustainability.

    Now the US must re-balance the price of oil, steel, aluminum, etc by transitioning to natural gas, increasing domestic oil production, substituting carbon-fiber and high-carbon metal alloys for traditional metals. The US also appears to be discouraging coal powerplants so US coal can be exported to Asia.

    It’s a weird world. Democrats are okay with drilling and mining. Republicans aren’t too bent about CAFE. The Fed is easing, but Bernanke is glib. Markets are bullish in the face of rising taxes b/c everyone knows the US is in the catbird seat going forward. Europe is in an austerity holding pattern, waiting for the US to get its act together.

    The state of global economic affairs makes me believe this article is more fact than fiction.

    • 0 avatar
      28-Cars-Later

      Superb analysis. I find just one part a bit troubling, coal is cheap and if demand drops in North America the price should remain stable or fall even in the face of increased Asian demand. Do you/we project the price of coal to appreciate over time because of this demand and hence are proactively moving away from it to cheaper sources?

      • 0 avatar
        TW4

        I think politicians and macro economic policy-makers are indifferent. It seems that everyone is dedicated to closing the the trade deficit at almost any cost. Falling coal prices will be accepted as long as coal exports help us close our trade deficit.

        India is also a major coal importer, and they allegedly have one of the least reliable grids on earth. Perhaps the US is banking on a US-India connection to raise coal demand as India gets its grid sorted.

      • 0 avatar
        28-Cars-Later

        I hadn’t even thought of the trade deficit, excellent observation.

  • avatar
    Pch101

    “Big oil players are already heavily invested in LNG”

    Yes, but that’s primarily because gas has to be converted into LNG in order to make it possible to transport it via ship. When it gets unloaded from the ship, it then gets converted back (at a high cost) so that it can be moved overland via pipelines.

    “LNG is expected to replace diesel in trucks and buses, ships, even airplanes first, before it makes a difference in private cars some decades away.”

    Gas is bulky. Its relative lack of energy density constrains its usefulness as a motor fuel. Gas is ideal for running factory equipment and consumer residential usage, as storage isn’t a factor for those applications, but gas is far from ideal for running a car, particularly smaller cars because of the space required for the fuel tanks.

    At this point, there is no viable substitute for gasoline or diesel. And it’s a bad idea to become overly dependent upon diesel for passenger car usage, since diesels users have to compete for supplies with industrial and agricultural users in ways that gasoline consumers do not.

    • 0 avatar
      nikita

      That is why GTL may be an answer going forward. Instead of liquefying at cryogenic temperatures, with all the handling complications, make NG into synthetic diesel using Fischer-Tropsh. Then it can be transported, stored and used with current infrastructure.

    • 0 avatar
      Neb

      True dat. When dealing with cars that have really tight space requirements, it is the only game in town at the moment. Even fuel cells are a no-show, thanks to the packaging requirements…

    • 0 avatar
      Georgewilliamherbert

      Pch:
      Gas is bulky. Its relative lack of energy density constrains its usefulness as a motor fuel.

      The relative lack of volumetric energy ( mass energy density is fine ) is of no significant impact upon use in ships, trains, trucks, and buses; of mild significance to cars; and very problematic to aircraft.

      Cars can handle it. I am an engineer and have at one time or another worked on several of the transportation nodes above, plus rockets. It’s just not that big a deal.

  • avatar
    Vance Torino

    There is no problem for Progressives like me:

    A slowly rising tax on carbon…
    lets the market do the work to achieve a social benefit.

    So simple, even politicians can’t understand it.

    • 0 avatar
      CJinSD

      What can constitute a problem when one considers totalitarian intervention to be a market force and expanding poverty to be a social benefit?

      • 0 avatar
        Luke42

        If you’d do your homework, you’d realize that the market is already thoroughly distorted by bizarre subsidies and poorly considered taxes. So, you’ve gotta include fixing THAT when you make your comment, in order for your comment to have anything to do with reality. Your comment implied that we have a free market for energy now, and we really don’t.

        Now, if we want to roll back market distortions and let the free market work, I argue that we actually DO need a carbon tax to do it. The reason is because there are many costs of extracting, transporting, and burning fossil fuels that don’t show up on the balance sheet. These are often referred to as externalities. We can and should have a hearty debate about what these externalities are and how they translate to dollars. But the market won’t provide a meaningful price signal until these costs show up on the balance sheets of the market participants.

        We’ve kind of hacked around this with a patchwork of regulations, subsidies, and other government interventions. But we could simplify the whole thing while reducing the role and influence of the government in the market by replacing those regulations that distort the market (as opposed to those the directly protect the environment), and replacing them with a carbon tax that pays for the negative consequences of using fossile fuels. The positive consequences of using fossil fuels show up reliably on everyone’s balance sheets as income and profit, so they’re already accounted for.

        This seems like the moderate-conservative solution to a LOT of problems, while reducing government power and regulation, and it leverages what markets do well. And I like it too, despite being kicked out of the Republican party for lots of good reasons over a decade ago…. :-)

      • 0 avatar
        Landcrusher

        Luke,
        I don’t need homework to know about the externalities. I also don’t need any studies to know that very little existing taxes or regulations will likely be removed when this new layer is added on, and that the opportunities for corruption and fraud will increase greatly.

        The whole thing is a magnet for money to come to Washington to influence the rule makers. If anyone wants to talk about eliminating taxes on production of value and instead tax consumption and pollution then that’s serious. Otherwise, it’s not about the environment, it’s about money and power.

      • 0 avatar
        CJinSD

        “The positive consequences of using fossil fuels show up reliably on everyone’s balance sheets as income and profit, so they’re already accounted for.”

        Increased life expectancy, food surpluses, elevated standards of living, and freedom of mobility are fully accounted for on balance sheets? These are the externalities that the progressives are trying to reduce with their tax plans.

      • 0 avatar
        Luke42

        CJinSD:

        I’m a progressive, and I can assure you that I’m trying to solve problems rather than destroy the things you hold dear.

        Accusing liberals and progressives of such things doesn’t help your cause, doesn’t explain anything, and doesn’t have anything to do with anything…. Other than proving how conservative you are, I guess, but just saying how conservative you are isn’t going illuminate the issues or change any minds.

        Landcrusher:
        I need studies (and the theory that goes with then) to change my mind. People don’t like to change their minds, but I’m committed to finding the truth, though, so I force myself to go through that process when it’s rigorously shown that the new truth is better than the one I have. So, I personally need the rigor of data and theory.

      • 0 avatar
        Landcrusher

        What would a study investigating the likelihood that adding a carbon tax/market scheme will reduce existing regulation little while increasing government power and corruption greatly look like?

        Also, I hope you apply great skepticism to these studies you rely on. So few of them pass the smell test anymore.

      • 0 avatar
        Kevin Jaeger

        Luke – I’ll take your word for it that your sincere. Usually conservatives eventually stop believing you because we’ve spent our lives pointing out the obvious unintended consequences of the progressive schemes.

        C: price controls cause shortages. It’s obvious economics 101.
        P: Companies are gouging, government intervention is required.

        Shortages happen, conservatives point out the consequence was obvious. Eventually we conclude that causing shortages was the intent.

        Pick your progressive intervention of the day and watch the conversation repeat ad nauseum. If you are actually sincere consider seriously the unintended (but predictable) consequences.

    • 0 avatar
      ihatetrees

      At least such a tax would be simple and transparent (and honest) about the (supposed) cost of burning carbon based fuels. But good luck getting the Chinese and all their new coal based power to go along.

      Heck, I can sympathize with progressives regarding the possible Black Swan effects of man-made climate change. But the risk does not seem to justify (their solution of) brutally locking billions in the 3rd world into poverty.

      If you seriously think carbon-based fuels cause radical climate change, the only solution (short of revolution and war) is cheap nuclear power. The Chinese will NOT stop building coal based plants until it is cost effective to switch. And renewable energy just doesn’t cut it financially.

  • avatar
    Beerboy12

    I wonder if the analysis takes into account (it is not mentioned) emerging economies such as China, India, Russia, Brazil and large parts of Africa. As their economies grow the growth in vehicle ownership will hugely out pace population growth. Considering the low-tech, poorly maintained vehicles that these poorer nations will be using their demand for fuel could be dramatically more than in Europe, UK, Australia and the USA.

  • avatar
    niky

    Don’t know why this article would upset anyone who “believes” in peak oil.

    We’re already at or past the peak for traditional Arabian oil. That fact hasn’t changed. Oil Shale finds are proving to lose productivity not long after they are tapped. Peak Oil, there, done with. That’s it.

    And all the alternatives cost more to develop, because no way in hell is anybody drilling for Oil Shale for lower margins. Only LNG makes as much sense as gas or diesel… or even more sense… but adoption slowed after gas prices fell back down.

    LNG won’t last forever, but it’s a good interim technology with low costs to adoption that can be applied almost universally to our current auto fleet. Except for you lot with those stupid expensive gasoline direct injection motors…

    • 0 avatar

      The thing about the alternatives is that people rarely think about all of the steps involved and the costs in energy and money. And that’s the stuff that matters. It doesn’t matter if someone’s found a way to make a fuel that is just as good as oil in almost all respects if it requires 3x as much energy to create it and a massive new infrastructure to keep it going.

      I also don’t understand how this somehow disproves peak oil. There have been delays and alterations to Hubbert’s Peak before, because it is an approximate curve. There’s no reason to believe that this isn’t just another odd bump on the graph. In fact, near the peak you’d come to expect these kinds of irregularities due to governmental interference, uncertainty in the global markets, geopolitics, etc.

    • 0 avatar
      Luke42

      Natural gas kicks the peak oil and climate change problems halfway down the road.

      As a pragmatic person, I see this is another a good thing and inevitable. Peak oil is going to happen sooner or later, probably before I retire. Peak oil is inevitable, bit the details of when and how it happens are negotiable if we as a society have our act together. Using the next best fuel seems to be the natural thing to do. I LIKE electric cars and photovoltaic panels, and I expect to own them – but society at large will probably just use the next best fuel, which is both practical and the obvious consequence of three hundred million people making decisions on their own – which is how we do things in the USA. So, larger scale adoption of natural has sometime in the next 1-3 decades is a practical and inevitable consequence of peak oil and American culture.

      The people who are upset by hope and partial solutions are doomers and/or ideologues. These people dont live in the real world, and there’s really no practical way to satisfy these people, so why even bother….!


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