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Re: Diesel: Thick headed Americans - 04-02-2008, 01:39 PM

Here's the problem Deutsch. When we talk about alternative fuel sources, we typically think about how market conditions and infrastructure demands are right now. What we tend not to do is pencil-out what the ramifications are if an alternative fuel is adpoted en masse.

Case in pont - E85. Seems like a pretty innocuous fuel source when only a tiny slice of the world's vehicles are making use of it. However, now that E85 production is ramping up to meet surging demand, all sorts of negative side-effects are starting to surface - Namely food shortages, increased produce costs, deforestation and higher prices for E85.

As for Diesel. It looked attractive a year ago, and still looks relatively attractive for anybody willing to pencil out the efficiency table math. However, if Americans begin to adopt Diesels as exciting new product from VW, BMW and others become available, the value part of the equation will slowly evaporate as demand will cause prices to climb upwards. Its really a Catch 22.

Asking refineries to increase or change output for the good of humanity is futile. The petrochemical complex is going to do whatever is good for them, and that means selling their product at market price. And so long as demand is increasing, that price will go up. We don't get a break just because we say "Awwww c'mon."
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