The Federal government wants you to change your light bulbs in order to cut green house gas emissions. It's a practical idea, although the new, more efficient bulbs are pricey. If they throw in a personal installation from Malcolm Turnbull, we'll end it our full editorial support.
Until then, changing the lights in Australia's houses is not going to make oil suddenly more abundant. In a report released yesterday, Scottish Energy consulting firm Wood Mackenzie says, "The world's extra oil supply is likely to come from expensive and environmentally damaging unconventional sources within 15 year."
We took the time this morning to listen the video message from the firm's chief scientist Dr. Rhodri Thomas. We learned two things. It is painful to listen to someone use the phrase "unconventional hydrocarbons" nearly 40 times in five minutes. But more importantly, Canada's tar sands and Venezuela's heavy oil are not going to replace the cheap, light, sweet crude from Saudi Arabia now, anytime soon, or ever.
In the great economic game of substitution driven by rising prices, high oil prices will make other kinds of energy more economic. But they won't increase the energy returned on energy invested (EROEI). In other words, we'll get more energy from more fuel sources, we'll just have to pay more for to find it and be satisfied with getting less from it. Let the nuclear debate begin/continue.
Dan Denning
The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
