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Clean Diesel from Coal
Technology Review ^ | April 19, 2006 | By Kevin Bullis

Posted on 04/19/2006 5:56:25 AM PDT by aculeus

As the cost of oil soars and worries over the U.S. dependence on foreign petroleum escalate, coal is becoming an increasingly attractive alternative as a feedstock to make a range of fuels. Now chemists have invented a new catalytic process that could increase the yield of a clean form of diesel made from coal.

The method, described in the current issue of the journal Science, uses a pair of catalysts to improve the yield of diesel fuel from Fischer-Tropsch (F-T) synthesis, a nearly century-old chemical technique for reacting carbon monoxide and hydrogen to make hydrocarbons. The mixture of gases is produced by heating coal. Although Germany used the process during World War II to convert coal to fuel for its military vehicles, F-T synthesis has generally been too expensive to compete with oil.

Part of the problem with the F-T process is that it produces a mixture of hydrocarbons -- many of which are not useful as fuel. But in the recent research, Alan Goldman, professor of chemistry and chemical biology at Rutgers University, and Maurice Brookhart, professor of chemistry at the University of North Carolina at Chapel Hill, use catalysts to convert these undesirable hydrocarbons into diesel. The catalysts work by rearranging the carbon atoms, transforming six-carbon atom hydrocarbons, for example, into two- and ten-carbon atom hydrocarbons. The ten-carbon version can power diesel engines. The first catalyst removes hydrogen atoms, which allows the second catalyst to rearrange the carbon atoms. Then the first catalyst restores the hydrogen, to form fuel.

Diesel fuel produced in this way has several potential advantages. Ordinary diesel contains molecules, called aromatics, that, when combusted, produce particulates, Goldman says. But the diesel formed by the new catalysts does not include aromatics, so it burns much cleaner, overcoming one of the major objections to diesel fuel. This could lead to more vehicles using diesel engines, which are about 30 percent more efficient than gasoline engines.

But the biggest advantage may be that the United States has huge amounts of coal: "We have as much energy in coal as the rest of the world has in oil. That's enough to last us the next hundred years or so," Goldman says. Thus, a more efficient, and so less expensive method of converting coal to diesel could significantly cut U.S. dependence on foreign oil, and do so for a long time.

"When I saw this I thought it was really a terrific contribution that could be very important," says Richard Schrock, professor of chemistry at MIT, who won the Nobel Prize in Chemistry in 2005, with two other scientists, for discovering the type of catalyst used in the second step. Combining two catalysts this way "is pretty rare," he says. "You can't just throw any two things together and expect to get the results you anticipated."

According to Robert Grubbs, professor of chemistry at Caltech, who shared the Nobel prize with Schrock, "The key is finding catalyst systems that are compatible, and will operate at the temperatures where you can do both processes together."

At this time, the new catalytic method is still a proof-of-concept, and not ready for commercial use. For example, the second catalyst tends to break down. But Schrock says this problem should be solvable: "It's theoretically possible that this could become practical. I e-mailed Alan Goldman and said, 'Look, we've got a lot of catalysts, and I can think of some things that might be thermally more stable.' So I'm going to send him some catalysts, and he's going to try them out."

It also might be possible to make catalysts that use products from the first reaction to regenerate themselves. "Then the catalyst wouldn't die, and you could in fact keep the reaction going," says Schrock.


TOPICS: Extended News
KEYWORDS: coal; diesel; energy; oil
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1 posted on 04/19/2006 5:56:28 AM PDT by aculeus
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To: aculeus

According to the Governors of WV and MT, the break-even point for coal gasification is $43/bbl.


2 posted on 04/19/2006 6:00:48 AM PDT by Roccus
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To: aculeus

I believe during the latter part of WWII, the german luftwaffe planes were flown with a fuel derived from coal.


3 posted on 04/19/2006 6:02:22 AM PDT by IrishMike (Dry Powder is a plus)
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To: aculeus

IIRC, Shell Oil is involved in a joint venture with PA and some other entities, building a gasification plant in PA right now.


4 posted on 04/19/2006 6:03:34 AM PDT by Roccus
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To: IrishMike
You are correct. Also, kerosene always came from coal, but it wasn't broken down the way they are talking about now.

The trick is to protect their capital investment from falling oil prices. How? Sell vast quantities into the futures market. This is what they are doing with wind power generated electricity.
5 posted on 04/19/2006 6:09:10 AM PDT by SampleMan
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To: Roccus

Lots of energy sources in this price range, but require large investments. Few will take this risk when the arab cost of production is $4-5. (which means they can drop the price under your cost anytime they want) This difference is the reason that the arabs have played us on this global oil market since 1973. The only solution is to produce all of their oil and then get on to the alternatives.....which I think is what we are doing.


6 posted on 04/19/2006 6:10:21 AM PDT by cb
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To: aculeus

Long term contracts at a firm fixed price can redistribute the risk faced due to Arab, Mexican or Russian price arbitrage. Span the contract over about 7 years, and a potential arbitrager will suffer a great deal in the process.


7 posted on 04/19/2006 6:21:52 AM PDT by .cnI redruM (Watching the Left turn on Senator McCain amuses me somehow....)
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To: SampleMan
The trick is to protect their capital investment from falling oil prices. How? Sell vast quantities into the futures market

The problem is that a futures market for an untested fuel production system doesn't exist. Nobody is going to take the other side of the counterparty risk.

8 posted on 04/19/2006 6:25:27 AM PDT by Rodney King (No, we can't all just get along.)
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To: aculeus

bump


9 posted on 04/19/2006 6:25:28 AM PDT by techcor
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To: aculeus
having sat behind a diesel bus, there is nothing clean about diesel
10 posted on 04/19/2006 6:25:58 AM PDT by ConsentofGoverned (if a sucker is born every minute, what are the voters?)
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To: ConsentofGoverned
having sat behind a diesel bus, there is nothing clean about diesel

Europe is miles ahead of us in clean diesels.

11 posted on 04/19/2006 6:34:50 AM PDT by aculeus
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To: .cnI redruM; cb
Since you folk seem to be into the economics of oil, I've got a question. I read somewhere back during the crises of the 70's that the royalties that oil producing nations charge per bbl. are deducted, dollar for dollar from the tax bills of US oil companies. Is this true?
12 posted on 04/19/2006 6:41:26 AM PDT by Roccus
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To: cb

I think you got it just right.

Everything will take care of itself in the long run when the true cost of oil increases to the point that it makes various other alternatives feasible.

In the meantime though, we'll no doubt do everything we can to screw that up via politics.


13 posted on 04/19/2006 6:48:45 AM PDT by Pessimist
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To: cb
Few will take this risk when the arab cost of production is $4-5. (which means they can drop the price under your cost anytime they want)

Arab countries do not have the ability to produce enough oil to meet the worlds oil demand.

14 posted on 04/19/2006 6:56:13 AM PDT by thackney (life is fragile, handle with prayer)
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To: Roccus

No.


15 posted on 04/19/2006 6:57:43 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

T.Y.


16 posted on 04/19/2006 6:59:06 AM PDT by Roccus
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To: Roccus
Since you folk seem to be into the economics of oil, I've got a question. I read somewhere back during the crises of the 70's that the royalties that oil producing nations charge per bbl. are deducted, dollar for dollar from the tax bills of US oil companies. Is this true?<

All foreign taxes paid by US corporations including oil companies are deducted as credits from US taxes payable, dollar for dollar. The "royalties" paid by US oil companies were (during my working years) considered taxes by IRS and were therefore deducted from US taxes payable.

17 posted on 04/19/2006 7:04:22 AM PDT by aculeus
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To: aculeus

Back to Coal

Germany did it in WWII, we can do it now.

18 posted on 04/19/2006 7:27:17 AM PDT by Malsua
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To: thackney

PING! to #17


19 posted on 04/19/2006 7:34:01 AM PDT by Roccus
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To: aculeus

It was my understanding that during the reign of the Sha, Kissinger suggested to him that he raise the royalties on oil in order to help Iran to pay for arms from the US. Kissinger's thought was that since these would be deductible by the oil companies, their relationship with the administration would not be hurt, the arms industries would get a boost, the Sha would get his arms and the only one to get hurt would be the US drivers.


20 posted on 04/19/2006 7:40:37 AM PDT by Roccus
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To: Rodney King

Its not an untested product. Its oil. You are selling oil for delivery on a futures market. What does the buyer have to lose? They will only pay if there is product to take possession of?


21 posted on 04/19/2006 7:42:04 AM PDT by SampleMan
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To: cb

Another solution: render mideast oil supplies unusable. The resulting economic turmoil would insure rapid development of domestic sources through good ol' capitalistic greed leaving us stronger and the Arabs with nothing but sheep and camels to fight over as is the natural order of things.


22 posted on 04/19/2006 7:42:31 AM PDT by metalcor
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To: aculeus

Another question, when OPEC raises the price/bbl, are they raising the actual price, or are they raising the royalties (much as a 'severance tax')?


23 posted on 04/19/2006 7:47:31 AM PDT by Roccus
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To: aculeus; colorcountry

Big Red gets a new life...woo hoo!

24 posted on 04/19/2006 7:53:11 AM PDT by Utah Binger (Southern Utah, where the world comes to see America!)
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To: SampleMan
What does the buyer have to lose?

The short form is (of course): Money. If you have bought the future commodity, you have already paid your money. Your potential gain is that you have paid less for the commodity than the going price at that time.

Two things can go wrong. First, if the 'seller' of the future commodity (notionally, in this case, the exploiter/producer of a coal gas process) defaults, then you're out your money entirely (less whatever you can get back by suing the failed provider). Second, if the price falls then you may have bought your commodity at a higher price than prevails when the contract comes due. Thus, you still lose money, though not all of it. If the current producers decide to undercut the new method by selling their product at less than the futures price as a way of stifling competition, then you have made a bad choice to 'buy' the future commodity at coal-gas prices.
25 posted on 04/19/2006 7:55:28 AM PDT by Gorjus
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To: Roccus
Another question, when OPEC raises the price/bbl, are they raising the actual price

Yes.

26 posted on 04/19/2006 7:57:23 AM PDT by aculeus
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To: aculeus

Thanks, as you can tell, economics is not my strong suit.
}:^(


27 posted on 04/19/2006 8:01:35 AM PDT by Roccus
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To: ConsentofGoverned; dhuffman@awod.com
You could be behind my volkswagen and not know it was a diesel if not for my "yes, it's a diesel" license plate frame.

Paging Dr. Huffman, Dr. Huffman, diesel thread.

having sat behind a diesel bus, there is nothing clean about diesel

28 posted on 04/19/2006 8:05:26 AM PDT by Salo
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To: cb
It would almost be in our strategic interests to develop these technologies for the US military. Excess could be sold on the open market. This would do two things, it would secure a war time energy supply, and it would pretty much nail the price at $35-$40 bbl. Price stability is a good thing.

This is about the only interference in the free market I think is appropriate for the fed government.
29 posted on 04/19/2006 8:06:11 AM PDT by Dead Dog
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To: aculeus
I grew up with Diesel engines. I have long thought the turbo charged 4 cylinder diesel engine is perfect for personal transportation. There are numerous ways to make clean burning fuel for them from renewable sources, including used cooking oil. The clean burning fuels do not belch black smoke. In fact, a diesel burning fuel made from cooking oil creates a smell like french fries cooking.

This discovery w/ coal is yet another source of fuel we can be self-dependent upon.

I can buy biodiesel in my part of the country for less than unleaded gas, but the choice of vehicles is still pretty narrow. Hopefully this will change soon.
30 posted on 04/19/2006 8:09:58 AM PDT by IamConservative (Who does not trust a man of principle? A man who has none.)
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To: Roccus
Another question, when OPEC raises the price/bbl, are they raising the actual price, or are they raising the royalties...

OPEC does not really set the price of oil. They set production quotas for their members. In general, assuming stable demand, More production = lower price. Less production = higher price.

31 posted on 04/19/2006 8:13:18 AM PDT by Ditto (People who fail to secure jobs as fenceposts go into journalism.)
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To: Gorjus

Of course I understand that futures is hedging and that buying a commodity at a future price can work against you.

But contracts for deliver on the futures market take many different structures and need not involve upfront payment. For example, growing up farming, we sold a portion of our future crop in the Spring for delivery the following Spring. We never collected a dime until we delivered. Failing to deliver, we were responsible to purchase commodity to deliver, at then current prices. This is how oil products are generally contracted. e.g. the airlines. If you had to pay 100% up front, it wouldn't be a futures market, it would be the current market with stockpiling/warehousing.

Why? The oil supplier is hedging against falling prices, the purchaser is hedging against rising prices. Both are willing to settle on something they can live with.

Wind generated power is being sold in this fashion now in order to back its capitalization costs. Users agree to pay a set amount (lock in) electrical rates for a given period. So far they are doing a booming business.


32 posted on 04/19/2006 8:13:27 AM PDT by SampleMan
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To: Gorjus

The example here would be to contract the coal-oil for delivery at $55 a barrel in a large enough quantity to recoup for your capitalization costs.

If oil goes below the profit threshold, you will go out of business, but the investors will at least break even. If oil holds or increases, you sell your non-contracted product at market prices.


33 posted on 04/19/2006 8:16:29 AM PDT by SampleMan
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To: ConsentofGoverned
having sat behind a diesel bus, there is nothing clean about diesel

Read the article.

34 posted on 04/19/2006 8:25:59 AM PDT by Moonman62 (Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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To: aculeus

I'm waiting for the turbo diesel hybrid, or just a plain turbo diesel would be good too.


35 posted on 04/19/2006 8:26:52 AM PDT by Moonman62 (Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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To: aculeus

Diesel bump


36 posted on 04/19/2006 8:31:10 AM PDT by roaddog727 (eludium PU36 explosive space modulator)
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To: Ditto

If I understand this right, then even OPEC is being held hostage by the former Dot Com day traders that have infested the commodities markets. Albeit an advantage to them (OPEC) presently.


37 posted on 04/19/2006 8:32:33 AM PDT by Roccus
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To: Moonman62
Just traded in my gas guzzling Lincoln for a Mercedes 300D to go with the Cummins powerd truck.

My back yard bio-diesel plant makes fuel at $1.00 a gallon....only downside is getting up at 4am to go ground the neighborhood to suck out waste vege oil from out back of restaurants.

38 posted on 04/19/2006 8:35:25 AM PDT by spokeshave (I'd rather go hunting with Dick Cheney than drive over a bridge with Ted Kennedy)
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To: Roccus
If I understand this right, then even OPEC is being held hostage by the former Dot Com day traders that have infested the commodities markets.

It's a market and those traders take their chances. OPEC could bankrupt them all in an instant if they decided for some reason to open the spigots.

IMHO, neither OPEC or the day traders are setting price right now. A very active global economy, especially in China and India, is driving oil demand to ever higher levels. That's basically 2 billion additional people who now have acquired a taste for oil.

39 posted on 04/19/2006 8:42:35 AM PDT by Ditto (People who fail to secure jobs as fenceposts go into journalism.)
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To: spokeshave

ground = around........need more coffee


40 posted on 04/19/2006 8:44:04 AM PDT by spokeshave (I'd rather go hunting with Dick Cheney than drive over a bridge with Ted Kennedy)
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To: spokeshave

How does that work??? I'd like to convert some of my cars to E85-E100... would a simple still work?


41 posted on 04/19/2006 8:56:49 AM PDT by Schwaeky ("Truth is not determined by a majority vote." Pope Benedict XVI)
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To: SampleMan
Its not an untested product. Its oil. You are selling oil for delivery on a futures market.

There are many different grades of oil.. different oil requires different forms of refining. Whoever is at the other end of the futures contract would need to know with good certainty the characteristics i.e. density, sulpher content, etc.

What does the buyer have to lose? They will only pay if there is product to take possession of?

Let's say this is a conventional oil and my above problem does not exist. The coal-to-oil produce enters into a futures contract to sell some amount, let's say 1 million barrels on 6/30/2010 to somebody who needs 1 million barrels on 6/30/2010. That somebody is going to use the oil to produce a chemical... this chemical venture is profitable for oil at $70/barrel, but rapidly loses profitability as oil goes above $70. The bank that is financing the chemical venture thus demands that in order to get the financing, the chemcial venture must lock in its oil cost at $70 or below in the futures market.

The chemical venture enters into the futures contract. On 6/30/2010, oil is $140 dollars a barrel. The coal-to-oil company can't deliver because hey, well, it was an untested product and we ran into production difficulties. Chemical company goes out of business, bank loses its loan.

Actually, this doesn't happen because the company doesn't enter into the futures contract with someone with questionable ability to deliver in the first place.

42 posted on 04/19/2006 8:58:29 AM PDT by Rodney King (No, we can't all just get along.)
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To: IamConservative
"a diesel burning fuel made from cooking oil creates a smell like french fries cooking."

McDonald's will invest in this kind of fuel, their business would skyrocket with the smell of french fries in the air all the time.
43 posted on 04/19/2006 8:58:50 AM PDT by oldcomputerguy
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To: SampleMan
The example here would be to contract the coal-oil for delivery at $55 a barrel in a large enough quantity to recoup for your capitalization costs.

Plus enough to recoup the cost of providing the oil itself. If it ends up costing you $52/bbl to provide the coal-gas oil once you're in production, you're only recouping your capitalization cost at $3/bbl.

And as a buyer, I have to take the chance that you'll default. Even if I don't have to pay the full price up front (and I realize it's a margin buy), I still stand to lose a substantial amount, especially in comparison to other ways I could have invested that money. So, the price has to be low enough to cover the buyer's risk that the seller will default, as well as the typical commodities risks.
44 posted on 04/19/2006 9:00:23 AM PDT by Gorjus
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To: SampleMan

I recognize that there are various ways to structure the futures contract. My over-simplified example lumped the costs that will truly be sunk (both broker fees, etc. and lost opportunity cost for the committed money) with the final cost. Still, the sunk costs will be significant, on a significant buy. I think we'd need more than laboratory studies before that becomes economically attractive.


45 posted on 04/19/2006 9:03:17 AM PDT by Gorjus
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To: aculeus

Oil is still sucked from the ground at $2 a barrel. Nothing comes close to competing with this. However, when easy oil is gone, these processes will be used, and oil will be in the vicinity of $200 a barrel. It is the modern thing to do in business to find fees for this and fees for that. Look at the telephone bill and all the little charges for taxes and other things they make; everything comes with charges and fuel for vehicles is no different. There will be fees for gasoline from coal that haven't yet been invented in legislatures and boardrooms. We will view $3 gasoline as the good old days, and pretty soon.


46 posted on 04/19/2006 9:06:47 AM PDT by RightWhale (Off touch and out of base)
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To: metalcor
Another solution: render mideast oil supplies unusable.

How? War? Thats a real possibility, given the Iran situation.

47 posted on 04/19/2006 9:20:54 AM PDT by Don Carlos (Why can't we all just get a long(neck)? (Hank Williams, Jr)))
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To: Roccus

I have no viable info on that.


48 posted on 04/19/2006 9:41:54 AM PDT by .cnI redruM (Watching the Left turn on Senator McCain amuses me somehow....)
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To: SampleMan; Roccus
According to the Governors of WV and MT, the break-even point for coal gasification is $43/bbl.

2 posted on 04/19/2006 9:00:48 AM EDT by Roccus

The example here would be to contract the coal-oil for delivery at $55 a barrel in a large enough quantity to recoup for your capitalization costs.

If oil goes below the profit threshold, you will go out of business, but the investors will at least break even. If oil holds or increases, you sell your non-contracted product at market prices.

The issue is the capital cost, and the risk which is associated with the economic factors of the investment. But that is not unique to petroleum products; any brick-and-mortar investment has some risk the hindsight will shot that it was put in the wrong place at the wrong time.

Selling oil futures is a way of spreading out the risk that petroleum prices will come back down, in exchange for assurance that it won't go further up. Let's say that half of the $43/bbl figure would go to the coal miner, and 40% of it would go into capital equipment, and 10% would go into labor. Since that was quoted as a break-even cost, you really need confidence the price will be 10% higher than that in order to be worthwhile.

But once you pour the cement and erect the steel, the price of petroleum would have to drop below the cost of the coal and the labor before it would be logical to shut down.


49 posted on 04/19/2006 10:59:17 AM PDT by conservatism_IS_compassion (The idea around which liberalism coheres is that NOTHING actually matters but PR.)
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To: Gorjus
I think that we are in agreement and the exact numbers aren't really that important to the argument.

The principle point is that OPEC has had a habit of purposely dropping prices to avoid alternative competition. The capital markets know this, and thus some inventive hedging is required to entice the market.

Again, wind power electricity is doing gangbusters business right now, as it is cheaper than fossil fuel at current prices. Established utilities are having great luck pricing it separately for future delivery contracts, despite the fact that it all flows into the same grid. The could just be taking additional profit right now, but instead, they are insuring their investment and building more.
50 posted on 04/19/2006 11:55:01 AM PDT by SampleMan
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