GM and Chysler Bankruptcies

[Kevin]

Hi,
Actually, the aluminum/oil comparison is a lot closer than you imply. Consider that it was a new and cheap form of energy (electricity) that made aluminum cheap. Now consider oil by its uses. As a form of portable energy, it could be replaced by batteries, hydrogen fuel cells, or something yet undeveloped. As a raw material for the plastics industry, it can be replaced by any hydrocarbon (say, corn) if there's enough cheap energy to power the process. The same is true for lubricants. So, like aluminum, oil can be marginalized by cheap energy, possibly from a new source or a more efficient use of an existing source (or sources). That was the analogy that was skittering around my brain when I posted.

--Pete

Which is why I said it was still valid. But the difference is that aluminum was marginalized because supply was able to skyrocket (and actually demand skyrocketed too but with aluminum being something like 8% of the total weight of earth and the 3rd most abundant element on the planet the supply is huge). Also aluminum is 100% recyclable in that you can recycle it and it doesn't lose any of it's properties (and it takes about 5% of the energy to recycle it than it does to extract it). You do lose some usable quantity because the process produces dross (though you can get the aluminum out of that it's just difficult).

Oil as you just pointed out, will be marginalized because supply could run out, or demand could go away based on something we can't predict. It's not a fully invalid argument, but it's really still coming from the other side.

I was just following the time honored lounge tradition of nitpicking. :) I don't disagree with the parts of the analogy you mention, it still has a lot of strong correlation, but like I said it stuck out at me a bit because it's still an opposite type of deal.


@Kandrathe

Oil, considering its uses for complex hydrocarbons is really wasted as fuel. ....

I have no real disagreement with anything you state in this post either. Oil (and coal) was very easy to use for energy, and lubrication. It was found that many other things could be done with it as well. I would love to see us find better sources of energy and allow what oil we do use to be used for other things.

However, even if super uber energy source was discovered tomorrow it would still be YEARS before we were off oil because our entire infrastructure is still based on it so Jesters original point that oil companies are still going to be producing an increasingly expensive product for the foreseeable future. Demand will not vanish overnight and even if the companies know that it will be diminishing, they also know that supply will still diminish, especially without any push to try and increase it by tapping known reserves. Depending on those rates, they are still producing a product that is potentially increasing in value (if supply falls faster than demand falls).