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Author: Subject: Does Crude Oil dictate Alternative Fuels?
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[*] posted on 10-20-08 at 03:59 PM   «:|:»  Link to post Reply With Quote
Does Crude Oil dictate Alternative Fuels?



The average cost of crude oil (per barrel) has dropped more than 50% since its record high in July. With the sudden dropped in PPG (price per gallon) will the current drive (get it, lol) towards alternative fuels be stemmed as people's pocket books tack less of a beating? The cost benefits of going to alternative fuels is diving, so the primary reason for doing a switch will become entirely based on the environment. Does anyone think that reason alone will be enough to move us away from petroleum based transport?

Im inclined to think that this recession will be an almost insurmountable hurdle for "green fuel" in the U.S. Americans dont pay enough attention to pretty much anything but our bank accounts, why pay for something that doesn't seem necessary? HERE is a recent article about the OPEC actions being taken to stem the decline in crude oil prices.


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[*] posted on 10-21-08 at 02:16 PM   «:|:»  Link to post Reply With Quote


HERE is another article from the New York Times on the subject. Every american out there should be hoping for a "price band" mechanism being put back in place.

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[*] posted on 10-21-08 at 03:32 PM   «:|:»  Link to post Reply With Quote


it does not dictate alternative fuels, it dictates how much we use....notice SUV sales going down?

Although it certainly helps, the small price increases we see now are not enough to justify the cost of developing a new energy infrastructure. Eventually yes, this could be a pressure that causes that change. But right now I think it is only just talk, talk because it is cool to talk about it right now.

But the prices are a good thing. Making it just expensive enough that people have to think about how they use it is a good thing no doubt (environmentally). And every cent more expensive brings those alternative fuels a cent closer to breaking even. But I just don't think it is enough yet. Wait till gas is $6 then maybe.....


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[*] posted on 10-21-08 at 04:28 PM   «:|:»  Link to post Reply With Quote


So... the price of crude does affect the advancement of bio-fuels?

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[*] posted on 10-21-08 at 08:22 PM   «:|:»  Link to post Reply With Quote


Sure it does. As the price of fuel goes up, more and more work is done on alternatives. No doubt about it. What jent was saying, and its painfully true to Ford and GM; SUV sales are basically gone anymore.

I read something a month or two ago that said the average fullsize SUV has been sitting on the dealer lot for over 250 days! Thats insane! No one is buying these cars anymore. Honestly, I'm stoked. The auto industry can only change so fast, but people can stop buying Suburbans in an instant. And they have.

The auto industry is going to take a huge hurt for the next year or so until they can really switch over their production lines to more compact cars.

I was talking with an investor tonight actually, and I was asking him his opinion on oil prices. He thought that oil will stay below $100 for a while. So my hope that oil skyrocketing like it did, scared a lot of people into finally changing. Now that oil is coming back down, people will really start saving money.

Say that someone switched from driving their fullsize SUV to driving a Carolla because gas was at 4.25, and now its 2.75 they are going to save some serious money.

I don't believe that this will have a major impact on the work being done on alternative fuels. However the impact that it has already taken on the public, is tremendous.


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[*] posted on 10-22-08 at 07:30 AM   «:|:»  Link to post Reply With Quote


Quote:
Originally posted by spank
So... the price of crude does affect the advancement of bio-fuels?

To better clarify....Yes it does...But it more so just reduces wasted usage. We wont see real change till prices go higher than we have seen.


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[*] posted on 11-2-08 at 01:49 PM   «:|:»  Link to post Reply With Quote


I figured I would follow up w/ a new bit of info. I dont know how many of you are aware of T. Boone Pickens and his alternative energy iniative but he has seen his hedge fund drop almost in half w/ the falling price of crude, and with it the drive for alternative energy sources!

HERE is a Reuters article on the subject. Pluse, anyone who watched 60 minutes last sunday is aware of him and his situation.


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[*] posted on 11-2-08 at 02:48 PM   «:|:»  Link to post Reply With Quote


I think as long as oil companies are making money they spend every last cent to stop new ways of producing energy from becoming main stream.
I don't know if any of you watched the new Zeitgeist Movie, which is totally worth it btw, but the Department of Energy said in 2007 that we could be off oil entirely for energy use in houses and this nature with just THREE states being used to full potential in Wind alone. Now imagine Solar in: Arizona, Utah, Nevada, Cali. Then on top of that tidal and wave generation tech.

WE could do it now. What stops us is profit. We could "make electricity so cheap that only the rich would burn candles", but greed stops us.


Also i think jent is correct. Things wont change until it is the choice between eating and living or driving.


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[*] posted on 12-6-08 at 10:43 AM   «:|:»  Link to post Reply With Quote


I know this is an old thread, but I just came across an article about the subject.

Today oil is down to $42 down from $145.


Oil Price Threatens Biofuel Firms

Falling oil prices could cause some alternative-fuel startups to fail.

By Kevin Bullis

The price of oil has dipped to levels that could be far too low for many advanced-biofuel startups to succeed, especially those that attracted investment this summer, while oil was well above $100 a barrel. Tight credit markets will also make it difficult for advanced biofuel companies to move ahead with plans for scaling up technologies and building commercial-scale production plants.

Attempts at developing alternative fuels in the 1980s largely failed after oil prices plummeted, and the recent drop in oil prices has many concerned that something similar could happen today. On Friday, the price of oil had fallen to $40.81 a barrel, down from a high of $145 in July. Those earlier high oil prices led venture capitalists to invest in many companies that would require high prices of oil to compete, says David Berry, a partner at Flagship Ventures. This summer, he says, "people were very happy to say, 'We're targeting $80 a barrel for oil, and we think we're going to make a ton of money.'"

This September, at the EmTech08 conference, Berry predicted that if oil prices were to fall, many of these companies could fold. His own company, Flagship Ventures, has invested only in biofuel startups whose breakeven requires oil prices of $45 or lower. "When we thought about investments, we said we're not going to make a single investment in something that has its break-even point above $45 a barrel," he said, speaking in September. "In that way, we think we can be pretty insensitive to what the price of oil will be over time. If the price of oil falls to $60 or $50, from our perspective, we're going to sit here and say, this is where we thought things might end up."

Berry now says, however, that most of the companies that Flagship has invested in will still be able to hit the break-even point with oil prices lower than $45. One of these companies, Boston, MA-based Mascoma, could still make a profit with oil at $20 a barrel, says Bruce Jamerson, Mascoma's CEO, but only because current government incentives help them compete with gasoline. These include a $1.01 subsidy for every gallon of advanced biofuels, fuels made from nonfood crops, as well as federal regulations that require oil companies to sell certain amounts of advanced biofuels.



In the long term, both Berry and Jamerson think oil prices will be higher. Anticipated production cuts from OPEC would likely keep oil prices above $50, Berry says. "If you look at the price points that OPEC has put pressure on, that has ranged between $50 and $80. And so that gives that range some reasonable set of legs."

"I don't think that the oil prices are going to stay this low for a long time," Jamerson says. "My view is it will probably fluctuate between $75 and $100 a barrel, once we get past the intense part of this downturn."

Even at those prices, some biofuel startups may be hard pressed to compete. This summer, Berry says, "about $200 to $300 million was going into algae companies. And algae has long been shown to have a break-even point between $90 and $120 per barrel of oil."

Jamerson is more concerned about tight credit markets than oil prices. Mascoma is still years away from commercial production, so, as with other advanced biofuel companies, today's prices don't have an immediate impact. But Mascoma is still working out the financing for a large 40-million-gallon ethanol plant in Kinross, MI. This month, it will start production at a smaller $20-million facility near Utica, NY, that will produce 200,000 gallons of ethanol annually. To save cash, the company recently laid off 10 percent of its employees and is slowing down orders for equipment and decreasing travel budgets.

Jamerson, however, remains optimistic. Concerns about financing are "tempered by increasing optimism about support for renewable fuels from the new Obama administration," he says. After the current recession, he says, "Advanced biofuels will be one of the first sectors to come back."


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[*] posted on 12-7-08 at 07:31 AM   «:|:»  Link to post Reply With Quote


There is no doubt that a large portion of the incentives for going to alternative fuels disappears when oil drops as low as it has. This (IMO) is one of the times where simple thoughts about economics dont apply. Is it in your interest to wait until gas goes back to $3.00 to start the process of switching to alternative fuels (to keep your bottom line low) or is it better to start while gas is only $1.75 (premium baby YA!) so that your costs are low while your spending on new infrastructure/technologies so that when gas does go back to atleast $3.00 the new fuel sources are in place and the cost of the alternatives is well below the $3.00 mark making them more competative and also putting pressure on OPEC and others to keep oil prices lower too. Waiting until now (with the economy how it is) was a poor descision in that we all waited until a crisis type situation to begin getting behind alternative energy but depending on how Obama does things things could actually work out to everyone's benefit. If Bush had invested in atlernative energy (LOL) the cost incentives would have been even lower when inflation is taken into account but now that the whole globe isn't doing well the increased buying power of the dollar works to our advantage. We are paying less upfront due to inflation and for the cost of goods that are heavily impacted by petroleum. NOW IS THE TIME! If we wait until the next time oil gets over $100 a barrel the only real cost benefit will be that we aren't paying MORE than $125 per barrel anymore but we will still have to compensate for inflaction and the cost of supplies. When your business model is built w/ the assumption that crude costs will over any extended period of time be increasing what is more to your benefit a proactive plan or a reactive plan?

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[*] posted on 12-17-08 at 04:00 PM   «:|:»  Link to post Reply With Quote


HERE is an article from CNN about the projected use of biofuels in the U.S. according to the Energy Information Association (wtf has this group been saying until now then?)



Quote:

U.S. expects big drop in oil imports
Despite the recent drop in crude prices, the rising cost of a barrel of oil will boost the use of renewable energy and help slow greenhouse gas emissions.
By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: December 17, 2008: 4:32 PM ET

NEW YORK (CNNMoney.com) -- Despite the recent rout in oil prices, the government expects crude to shoot back up over the long term. That is expected to result in a drastic drop in oil imports and a greater use of renewable energy.

Oil imports - which currently make up 60% of all the oil consumed in the U.S. - should drop to about 40%, the Energy Information Administration said in its long-term energy outlook on Tuesday.

The drop will largely be the result of higher oil prices encouraging conservation and an expanded use of home-grown biofuels.

In making its predictions, EIA used an average crude price of $130 a barrel in 2030. That price is nearly double the projections for 2030 made last year - $70 a barrel.

Although the report was not meant to predict oil prices, EIA analysts say increased demand and limited access to new supplies will push crude prices up in the long term, despite crude's recent plunge.

The upward revision in price is a major shift in the government's long-term views on oil supply and demand. Limited access to new oil sources - particularly in OPEC countries - is a major reason why prices should increase.

Renewables on the rise
"People are becoming aware of the fact that conventional supplies of oil outside of OPEC are quite limited," said Robert Kaufmann, director of Boston University's Center for Energy & Environmental Studies. "It's getting harder and harder to tell the story that oil prices will remain low forever."

EIA's higher price estimate could give ammunition to policymakers seeking a big push into alternative fuels, or those seeking a more hawkish foreign policy, or both, said Kaufmann.

He said non-OPEC production peaked in 2004, and OPEC countries are expected to provide a greater share of the world's oil going forward.

But OPEC has little incentive to increase its ability to pump oil. The cartel has seen the world is willing and able to pay over $100 for oil, and many OPEC countries have become accustomed to revenues generated from those high prices. For them, the higher the price the better - so long as it doesn't kill the global economy or spur a mass shift away from oil.

EIA's price revision is in-line with predictions made earlier this year by the International Energy Agency (IEA), a similar group to EIA that has a more global focus.

The IEA drastically lowered its long-term world oil supply forecast this spring - from nearly 120 million barrels a day to maybe 100 million per day by 2030 - citing access to resources as a major concern.

In making its predictions, EIA does factor in the growth of supplies from "nonconventional" oil, like oil from tar sands or biofuels made from plants. It also makes its projections based on current policy, which does not include things like laws restricting greenhouse gas emissions, which could potentially drive up the cost of fossil fuels.

Higher oil prices, combined with some government mandates, are expected to yield a boost in renewable energy use as well.

Renewables should account for 21% of all energy used in the U.S. by 2030, the agency said, up from about 15% currently. Last year EIA said renewable use would remain flat at 15% in 2030.

Under current policies, EIA predicts energy-related carbon dioxide emissions will slow in the years ahead, but will increase about 7% by 2030. Last year the agency said carbon dioxide emissions should grow by 15% by 2030.

Most climate scientists say the world needs to cut its carbon dioxide emissions by about 80% by 2050 if it is to avoid the worst effects of global warming. During the presidential campaign, President-elect Barack Obama pledged to cut U.S. emissions by that amount.

The EIA estimates that if the country were to cut its greenhouse gas emissions by 40% in 2030, electricity prices would rise by about 10% due to the costs of switching from cheap coal to more expensive wind or natural gas sources to produce electricity. The agency does not have projections for an 80% reduction by 2050.

First Published: December 17, 2008: 2:28 PM ET


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[*] posted on 12-18-08 at 10:25 AM   «:|:»  Link to post Reply With Quote


Another relevant artical:
http://tech.blorge.com/Structure:%20/2008/12/17/are-biofuels-still-economically-feasible/

They make a point about oregon which is $7 a gallon for bio diesel there. It also gives some world perspective too:
Quote:
A year ago, Biofuels Digest reported that 86 of 91 approved biofuel plants in Malaysia shut down due to the high price of palm oil and the low profit margins. Fast forward to November of this year, and the situation has not improved even though the price of palm oil has dropped dramatically. The drop in the price of palm oil was actually caused by low biofuel production resulting from low biofuel demand.


Not a whole lot revolutionary, but was good enough to post I think.


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