> This is correct in terms of economic theory; the problem is that it > isn't > forward-looking. As long as oil prices remain low, there's little > incentive > for the private sector to invest a lot of capital in alternative > sources, > especially in carbon-neutral alternative sources. By the time there is > sufficient incentive, it may be too late.
It is forward looking in that it is implicit that prices will not always remain low. Eventually, supply will run low enough to have a permanent effect on price. Price contains a good amount of information, beyond what it costs the consumer, and anyone with half a brain paying attention to those early signals will be researching suitable replacements; research is going on now. My own prediction is that we'll shift long before that, at least in the "first" world. > Last summer's high prices had no natural cause. They were created by > speculation, not by supply/demand issues--in fact, supply was up and > demand > was down. My understanding (and this is something that I've heard but > haven't researched) is that, with prices back down, already the ratio > of > efficient to inefficient vehicle sales has dropped, and people are > driving > more. Consumer memory appears to be very short. Speculation only works as long as you have an infinite supply of money or a buyer willing to pay a speculative price. The commodity markets worked as they were supposed to. They based a good deal of the price on the expectation of the artificially stimulated demand from the artificially elevated economies continuing. When those economies naturally went into reverse, lowering the expectation of demand, prices collapsed. > It just has to be smart enough to avoid foolishness like ethanol, > hydrogen, > and biodiesel. Good luck with that. Foolishness should be recognized as an alternative fuel, since our federal government seems to run exclusively on it. ************************************************************************* ** List info, subscription management, list rules, archives, privacy ** ** policy, calmness, a member map, and more at http://www.cguys.org/ ** *************************************************************************
