Tuesday, March 25th, 2008
Environmental Capital, at WSJ.com, looked at a subject we have discussed regularly here—which is: are biofuels a part of the solution, or an unintended exacerbation of the problem of global warming?
As we’ve noted previously, some recent studies indicate that biofuels, such as ethanol, may actually be worse for the environment than the fossil fuels they replace. In our discussions, we’ve usually limited our analysis to which option releases more aggregate CO2 into the atmosphere. However, the Environmental Capital post notes that some experts believe that biofuel production has resulted in a 15% decrease in oil prices. Therefore, if recent policies by developed nations to increase biofuel usage are reversed, would that result in a subsequent 15% increase in oil prices?
We find this question interesting because it presents two options that are not normally pitted against each other in such a manner. If biofuel is worse for the environment than petroleum, but its production results in more affordable oil, will we find ourselves “addicted to corn?”
Photo credit.
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Posted in Energy, General, Governmental Behavior, Greenhouse Gas Emissions | No Comments »
Friday, March 21st, 2008
The Environmental Capital blog at WSJ.com had a interesting post discussing Senator Obama’s stated energy policy. Some of the key points of his policy that the WSJ highlights include:
- Address the issue of Big Oil’s market dominance
- Consider opening the Strategic Petroleum Reserve (SPR) in an attempt to lower gas prices
- Investigate whether there are antitrust issues regarding the consolidated nature of Big Oil
- Look at taxing “windfall” profits of Big Oil
(more…)
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Posted in Corporate Behavior, Energy, General, Governmental Behavior, Governmental Regulations | No Comments »
Sunday, March 16th, 2008
On the final day of the Wall St. Journal’s ECO:nomics conference in Santa Barbara, one of the programs featured a debate between two experts over the claim that peak oil extraction has been reached. (Wikipedia defines “peak oil theory” as: the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters its terminal decline. If global consumption is not mitigated before the peak, an energy crisis may develop because the availability of conventional oil will drop and prices will rise, perhaps dramatically.)
While we have no clue whether we’ve reached “peak oil” production, or not, the fear of inevitably declining oil supplies should continue to create a huge incentive towards alternative fuel development. Once entrepreneurs and businesses realize that demand for oil is forever going to exceed available supply, this will provide investors and developers of alternative fuel supplies protection from being undercut by lower oil prices. (Since demand for oil will forever outpace supply.)
Without having any expertise regarding the nature of global oil supply and demand, it is our personal hunch that much of the reason for high oil prices right now is related to the fact that two oligopolies control much of the global supply: OPEC and big multinational oil companies. It is a fact that OPEC intentionally limits its oil production in order to artificially maintain a higher price for its product. Whether big oil companies collude, is less clear. However, explicit collusion may not even be necessary given the enormous role each individual company has in providing global oil supplies. They could probably affect global prices through discrete decisions to limit production independently. Like we said, it is our hunch that the consolidated nature of this industry plays a role in current price levels. If that continues to be the case, it may be irrelevant if we’ve reached peak oil, since maximum output won’t be reached anyway. Regardless, high oil prices should continue to provide a positive incentive for entrepreneurs and innovators to come up with alternative solutions.
Photo credit.
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Posted in Corporate Behavior, Energy, General, Governmental Behavior | 1 Comment »
Friday, March 14th, 2008
The Wall Street Journal is sponsoring a conference this week in Santa Barbara, CA dedicated to big business going green. The conference, cleverly named “ECO:nomics” is bringing together a who’s who of American business leaders, including the heads of both GE and WalMart. (As well as Bob Lutz of GM.)
As we noted recently, big business has really grown interested in “going green” lately. Some of the program topics for the conference include: “Will Consumers Spend Green to Go Green?” “Ethanol: Reality or Hype?” and “California Green: Promises and Pitfalls on America’s Environmental Frontier.” I didn’t see any topics covering greenwashing on the program list, although I would assume that issue will also be addressed, given its recent popularity.
Photo credit for Bacara Resort (where the conference is taking place).
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