Why Alternative Energy Will Never Pencil Out
Advocates of a smooth transition away from petroleum may be surprised by the consequences of huge swings in the cost of oil.
I first proposed a "head-fake" in the price of oil in 2008. My thesis was that the oil exporting nations had become so dependent on revenues from oil that even as prices plummeted in global recession, they would have no choice financially and politically to pumping every barrel they could. This would increase supply even as demand fell, causing prices to crash.
This dynamic would drive prices down to lows which are widely considered "impossible" in an era of looming Peak Oil. Oil: One Last Head-Fake? (May 9, 2008)
Since that entry was published in May 2008, oil shot up to $149/barrel and then sank to $40 a mere 18 months later--a nearly 75% decline in less than two years.
Full article at: Alternative energy
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