Thursday, October 28, 2010


I had no idea that biofuel production was so far advanced.  They know how to make advanced kinds of fuel out of sugar at competitive prices, and the technology keeps getting better.  In the next few years, there will be enough biofuel refineries around to start driving down the price of fuel.

Here is an important sentence:

Today's cellulosic ethanol is competitive with the petrol it is supposed to displace only when the price of crude oil reaches $120 a barrel.

$120 a barrel is about 50% more than current oil prices.  The potential availability of ethanol effectively puts an upper limit on long-term gas prices. If oil ever got above $120 a barrel and stayed there, then we would be able to use current technology to make enough ethanol out of weeds to replace it at that price.

This means that fears of 'peak oil' are completely unfounded.  We already have the technology to replace oil if we need to, and the technology keeps getting better.  Yes, it would take several years to start scaling up production.  But even in the worst-case projections, it would take decades to run out of oil.

This is bad news for electric cars.  If biofuel technology advances faster than battery technology, there will be little point in replacing the internal combustion engine.

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