1) the oil industry will find new sources of supply, (already happening);
No it isn't happening. Or not in the necessary volumes anyway.
2) other investors will see the inevitability long term of higher oil prices, and invest in alternative fuels, (already happening);
What do you have in mind? Biofuels? They are creating more problems than they are solving and are just riding a big fat wave of subsidies.
3) unforseen scientific breakthroughs that cause paradigm shifts can often happen when a need is so clearly seen (thus the saying that "necessity is the mother of invention")--it's happened many times before;
True, but you cannot reliably rely on that
and 4) consumers of a good or service that is increasing in price will change their behavior, note just one example of which there are hundreds more over the world.
And yet demand is still growing in the USA, and barely stabilising in Europe... In the long run, we're all dead. John Maynard Keynes
2) other investors will see the inevitability long term of higher oil prices, and invest in alternative fuels, (already happening); What do you have in mind? Biofuels? They are creating more problems than they are solving and are just riding a big fat wave of subsidies.
BTW, total world bio-power (measured by net primary production through photosynthesis) is only 75 TW -- less than 6 times what people now consume. Biofuel advocates, beware.
but really it's the combination of the four above that will solve this over time.
But perhaps the most exciting thing about oil in the $55 to $65 range is that it opens up a whole slew of investment alternatives - from tar sands to wind power to fuel cell cars - that weren't feasible when fossil fuels were cheap.
Which is abundant in its elemental form and can readily be dug out of the ground. Oh, no, wait... it can't.
Our best source of new energy is to cut consumption via technology. there is essentially nothing but stubborness preventing the USA from getting fleet mileage up to 40 MPG from current 20ish. Doing that alone knocks about 5 MMBD gasoline demand out.
tar sands Similar issues. See the link in my diary.
diesel fuel-hybridµ Now that's a real solution. But that's on the demand side, not the supply side. *biofuels Not sustainable, and not physically doable on a large scale. Again, it will be a niche for the smart money following subsidies, but it will create knowck on effects in other ag. commodity markets very quickly. In the long run, we're all dead. John Maynard Keynes
*biofuels
Just like Europeans will liquefy russian gas to replace diesel... Something to watch: I once read that modern variants of FT process, require huge amounts of cobalt for catalysts, and already-planned gas liquefaction facilities around the world would account for 5% of cobalt production for about 10 years. So if it ramps up, we should see another commodity under pressure. Pierre
