Wall Street Journal.
January 27, 2005
By Peter Huber and Mark Mills
The price of oil remains high only because the cost of oil remains so low. We remain dependent on oil from the Mideast not because the planet is running out of buried hydrocarbons, but because extracting oil from the deserts of the Persian Gulf is so easy and cheap that it’s risky to invest capital to extract somewhat more stubborn oil from far larger deposits in Alberta.
But that doesn’t mean that alternatives such as vegetable oil derived Ethanol are the best choice either…. there is concern :
If food and feed crop prices are weak and oil prices are high, commodities will go to fuel producers. For example, vegetable oils trading on European markets on any given day may end up in either supermarkets or service stations.
The risk is that economic pressures to clear land for expanding sugarcane production in the Brazilian cerrado and Amazon basin and for palm oil plantations in countries such as Indonesia and Malaysia will pose a major new threat to plant and animal diversity. In the absence of governmental constraints, the rising price of oil could quickly become the leading threat to biodiversity.
With oil prices now high enough to stimulate potentially massive investments in fuel crop production, the world farm economy â€” already struggling to feed 6.5 billion people â€” will face far greater demands.