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Feeling Fuelish

August 7, 2006

When one reads this story after shelling out $$ at the pump on the way to work, you start to feel downright fuelish.  Hopefully, I’m missing something in the big picture, but let me see if I have it right…

The big oil companies have been reporting record profits on the backs of consumers paying sky high gas and diesel prices for the last couple years.  What are they doing with all this money?  Obviously not keeping up the maintenance on their infrastructure….   Why should they?  Whenever a refinery, well/drill platform, or major pipeline is shut down, prices go up even more on supply concerns.  What does that mean for them?  It means that the supply they, and their competitors have in the market suddenly becomes even more valuable.   The only downside for the individual company is that the competition make a few more dollars in the near term, but since these supply disruptions seem to go around the industry, everyone except the consumer gets their turn.

A government imposed tax on windfall profits is not the answer.  Some real competition from viable fuel source alternatives driven from an industry outside the petroleum interests would be a good first step.  Biotech’s have the potential either through approaches such as Thermaldeploymerization (TDP) or through conversion to alcohol from feed crops.  The biggest issue with the alternatives so far is the ammount of energy expended to produce them vs the ammount available from the end product. 

Hopefully another industry will find a way to create a profitable alternative, so that real competition can be created.  Consider the monopoly distruption that the cable industry has had on the telcos.  What would it really take to see something similar emerge in the world energy market?

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2 Comments leave one →
  1. August 8, 2006 1:28 am

    Behavior always seems to come down to how people are measured and rewarded. Having analysts watch quarterly performance leads to behaviors that corrupt the natural balance of capitalism where strategic thought should take precedence over short term performance.

    In the established countries the corporations are reluctant to make capital investments in new technology, where emerging countries realize that there only hope is to obtain and leverage the latest they can get their hands on.

    Petroleum as an industry is not in the stage where it must be innovative. It thinks it is when is devises ways to drill sideways and inject steam into oil tar. But it has the same delivery and dispensing infrastructure that has basically existed since the early 1900s.

    They discovered, in the early seventies during the first oil crisis, that they could sell gasoline at a premium and get the customer to pump it themselves. That they didn’t have to check peoples oil and tires for them. Instead they built convenience stores to sell more stuff. When they can find a way to turn these stores into giant vending machines it will be complete.

    Good grief! I’ve fallen into a cynical rut!

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  1. Stop the insanity! « markitude

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