Hot dog. We have found a blue zillion (maybe a purple zillion) barrels of oil in the Gulf of Mexico. The price of oil is gonna drop all the way down to what we were horrified about when it got up to. There will be a car in every pot, a hog in every garage, and we will dwell in the house of prosperity.
Furthermore, they have tested jet engines on synthetic kerosene, and Malaysia and Indonesia are gonna flood the market with "biodiesel" fuel made from palm oil. Surely goodness and mercy will surround us all the days of our lives.
Hold on, though. There are a few kinks in the hose …
It seems that the oil found in the Gulf of Mexico won't hit the marketplace for six years. (That's not going to help much this weekend.) Also, that oil find was made possible by new technology and — guess what — expensive oil. According to one report, that new oil will be competitive only if oil prices stay above $40 per barrel. Remember when we thought $40 a barrel was awful?
Many "experts" have long said that we haven't yet run out of oil, but we have run out of cheap oil. The flip side of that is that the high price of fossil oil makes it feasible to hunt for oil that used to be too expensive to go after.
In other words, you can probably forget about buying gasoline as cheaply as you did in high school. It ain't gonna happen.
On the other hand, you probably will be able to buy it cheaper than you bought it last week, and a lot cheaper than you would have to pay if new discoveries and new alternatives are not sought out and utilized.
Yes, according to Aviation Week & Space Technology (September 4), our military has tested jet engines on a half-and-half mixture of "synthetic kerosene" and jet fuel. Couldn't tell the difference. I don't know how expensive it is, but it doesn't matter yet, because it will be awhile before it's available at the pumps.
Palm oil? The Economist cites Ralph Sims of the International Energy Agency as saying that palm oil fuel will be economically feasible only if the price of fossil fuel stays above $50 per barrel.
On the other hand…
The technology that made it possible for Chevron et al to drill a recordbreaking well deep below already deep water is indeed big news. That technology will get better and cheaper, and will certainly make us less dependent on foreign oil. Likewise, we will get more efficient at biomass and synthetic fuels, and that, too, will be a big help.
It's always good to remember that we once got our oil from whales. When it got too expensive, we went to coal oil until we found a cheaper alternative, fossil fuel.
Let the free market roll.
