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Julio Campos

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Not only environmental damages should be considered, but also the not accounted environmental costs of oil production.

For some years now new energy sources has been researched to face the eventual depletion of our fossil fuels reserves. Those researches had leaded to two different options; 1- energy crops and 2-non- crops sources, such as hydrogen and recently microalgae.
Growing crops allows to produce a almost clean fuel that can compete with fossil fuels prices but implies in two major problems. The need to choose between using the land to produce fuel sources or food and the need to use even larger agricultural areas as the demand increases, implying in a crescent environmental impact.
Trying to find a different option is the second research. These options lead to cleaner fuels and considerably small environmental impact. These options however are today confronted to a major drawback due to the lack of proper technology which leads them to be are more expensive than oil fuel what makes those technologies less interesting for research investors, reducing it’s development rate.
However on the economic side there are a few factors that are not being considered as they should. One is the environmental benefits of these new sources that are not being considered in the price calculation. The other factor can be considered even more important seems to have escaped from researches attention. It is the fact that the comparison of fossil fuel prices and clean fuel prices cannot be made as it have been made.
The fossil fuel prices are a result of oil extraction and refining while the clean fuels prices are calculated considering the production, harvesting and processing, and here lies the problem. We get fossil sources for free. Clean fuels sources, on the other hand, are not free, they need to be produced and this production implies in extra costs. So comparing a free energy source with a costly energy source generates a distortion in the final prices, which results in a more expensive product.

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  • Sep 28 2012: The Romans were reluctant to mine resources in the core areas of their empire because they wanted to have reserves in case the outlying provinces would be overrun by their enemies. They understood that having a reserve is worth something in itself. So yes, we should consider depletion of resource reserves as a cost when mining. What formula would be best to use is still up for grabs, but obviously it should encourage recycling and make mining exponentially more expensive as a reserve runs out.
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    Sep 28 2012: So... now what's stopping us?... Bad governance.

    PS, I've always heard hemp was the most energy efficient bio fuel product, and it grows many places typical food would not. I believe Brazil decriminallized marijuana, so industrial hemp production could be another big step in providing renewable fuel.
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    Sep 28 2012: I agree. The fact that, in the end, most oil lands are not owned by people who "discovered oil" anymore, so to the modern corporation, or government, the oil land, produces "free oil" right now. This makes competition virtually impossible, as ultimately, the oil company, or government can produce oil at cost plus 1 penny per gallon, and for them, it is still "free money"... Thus, as green technology gets more interesting, the oil compnanies "discover" that they can afford to lower prices... Suddenly the new technology is a bit more expensive, the big consumer rush never occurs, and slowly oil prices rise, until the next legitimate competitor establishes a foothold.

    However... There is one very interesting thing about this problem, as long as we have invented the next generation of technology, before we run out of oil... and, provided we can burn all the oil we have, without destroying the environment. Everything oil companies, and world governments are doing in regards to oil... Makes perfect sense. We have a free resource, ride it till the wheels fall off.

    It's only if the practice of burning all of our oil will destroy the human species... that we have a problem. In fact, if we won't destroy the environment with oil... Why wouldn't we want a market incentive, to be competing with virtually free products? The energy market has made incredible strides behind the scenes, in large part, because they have to get insanely more efficient to compete with oil literally sitting under enough pressure to burst out of the ground towards the hose.

    What is really disturbing about this problem however, is that in the last decade, world universities, have actually found technology that will be cheaper than oil. It's that much more efficient... Tesla's AC motor, on 2 wheels, with solar concentrators providing the power. The sun, is literally free energy, and if we get efficient, there's more than enough of it. http://www.zenithsolar.com/ http://litmotors.com/