Thursday, October 23, 2008
Oil Prices Dropping (Just As AAEA Said They Would)
Our energy expert associates and friends insisted to us that the price of oil would never go down. This after we have told them on two or three other occassions that the price would go down. It always has and always will until the last drop is burned in the last internal combustion engine. In the current situation it is a combination of a pending election, sluggish economy and reduction in demand due to high gasoline prices. Regardless, it has killed technological proposals (again).
AAEA opposes expanded offshore drilling but we support coal-to-liquids (CTLs). CTLs need oil to be above roughly $100 a barrel in order to be cost competitive with crude. The price of a barrel of light crude oil for delivery in December is about $67 per barrel, down from $145 in July. Other hydrocarbon fuels will mirror this drop. Expect prices to go back up for the summer 2009 driving season. At least the renewables tax extensions passed, even if they were included in that horrible Wall Street 'bailout' bill. Let the market work.