[ExI] some numbers on synfuels, just for the US

[Kelly Anderson]

On Thu, Oct 10, 2013 at 5:37 AM, Eugen Leitl <eugen at leitl.org> wrote:

>
> (Exercise to the reader: identify the number of assumptions made,
> implicit or otherwise)
>

Yes this article made a HUGE number of assumptions. The first assumption
which I think is wrong is that oil prices would stay high. The petroleum
industry has shown in the past that every time they have significant
competition, they simply drop the price for a while to starve that
competition out. They have the ability to do this as an oligopoly (OPEC
being part of that) and they could very easily outlast a highly leveraged
synfuel company.

If the government were itself the large synfuel company, then they might be
able to outlast the oil conglomerate... but then you would have the
inefficiencies associated with it being a government operation. I suppose
the government could just hold the price of oil high enough with taxation
to make sure the synfuel giants succeeded, but that seems unlikely EXCEPT
in the case where the large oil giants also become the synfuel giants.

So if a company like Sasol expanded large enough to become a major threat
to the oil industry, they would simply be crushed. It wouldn't take long.
They seem to be taking a grow slow approach to it now, not over leveraging,
which is probably wise. Don't want to show up on the oil industry's enemies
list too soon.

If they are successful, then maybe there will be a similar Exxon plant or
Shell plant someday.

The article did have a number of other assumptions as well. Some may be
good, some bad. It's hard to say. I don't really get his point about energy
efficient and electric cars. Just adding up demand I suppose. He seems to
throw that out at the end.

Every smart energy person I've ever heard talks about deemphasising which
energy source is most important in the future. Now, oil for transportation
and coal for electricity have much more of a percentage than anything
likely will have in the future unless something like space based solar
turns out to be so cheap that you just don't do anything else. That would
indeed be frightening for all of our energy supply to come from off planet.
That's a very high tech bet.

-Kelly
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