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Bill Pflanz
db said:Okay, Tim, so let me see if I got this straight. I may save a bunch of money on gasoline, however, my electric bill will increase (no net gain?). Of course, if everyone follows suit, then the law of supply and demand will result in electricity prices increasing and gasoline prices decreasing. This will cause folks to jump from electric, back to gas and the see-saw ride begins.
Tim's analysis is correct in that energy is energy. The difference is in the cost of production and the related efficiency for converting it into useable energy. If a significant number of hybrids entered the market place, it should drive down the price of crude oil assuming that crude oil is not used to make the electricity. With the increase in knowledge and improvements in nuclear power, the use of electricity could result in less crude oil usage from that source.
We ran out of $3 oil in 1973, then we ran out of $12 and then $30 oil. Now we may be out of $40 oil. That is different then being out of oil entirely. There are analysts who are predicting oil to stabilize back to $40-50 oil as production increases and demand decreases as a result of the current $60+ price. Oil producers seem to be willing to invest to find oil at a cost of $25 and expect to get a reasonable return even at $35-40 per barrel.
There are some geopolitical implications of choosing one form of energy over another. Reducing crude oil usage will have a signficant impact on not only the Middle East but also countries like Mexico and Venezuela. Less money in the oil producing countires may result in more instability in the world rather than less since they may not have an economic replacement for that wealth.
While we are picking on journalists, I find it humorous that the news people keep showing a drum whenever they talk about a barrel of oil. A barrel is 42 gallons and is never stored in drums. Oil is moved by pipeline, ships, barges, and trucks but not by drum.
Bill Pflanz