Thursday, August 10, 2006

Oil prices squidge demand into coal

here (and yes, squidge is technical moneyish term in wide use around the world).
If you only look at the money, this is a no-brainer. However, the externalities of coal aren't included e.g. cost of CO2 emmited to turn coal into liquid fuel, cost of CO2 from the liquid fuel, cost of desulfurisation/denitrification during manufacture (i think there is a sulfur emmissions market in the US but I've not heard about one in China/India) and disposal of the waste streams.

If the costs of the fuel aren't fully accounted for, of course they freakin' look cheap. What we need here is some price guidance that lets us know what the tradeoffs are. Don't hold your breath waiting for that though.

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