Re: Fischer-Tropsch News Item

On Feb 8, 12:00 am, Fred J. McCall <fjmcc...@xxxxxxxxx> wrote:
What positive externalities?  Government subsidized fuel?

The argument that was being presented was

1) there is a way to produce oil/fuel at $16 per barrel (equivalent)
2) However, if a private company was to build that plant, the Saudis
would drop the price to below $16
3) the company would go bankrupt/lose money
4) thus no company will build the plant, as they don't want to lose
money
5) The government should thus build the plant, Saudis will drop price
to $8 per barrel
6) this has costs (government loses $8 per barrel)
7) and benefits (Americans get oil for ~$30 cheaper per barrel)
8) costs exceed benefits, thus the government should step in
9) Also, there may have been a suggestion to charge a tax to pay for
it

My point was that the above analysis is invalid.

Firstly, the Saudis aren't going to drop the price in response to a
single plant. Thus the first plant would make money. Assuming that
the method is actually practical, then businesses would keep building
them until the price was dropped to say $20 per barrel equivalent.

This argument doesn't invalidate an argument that 1) is also false ...
that there is no such economical process.

I think we are actually in agreement that there is no such process and
also that the government shouldn't build those plants.

I was just pointing out another flaw with the analysis.

Also, even if the analysis was true (i.e. due to economies of scale, 1
plant would completely meet demand), it still wouldn't be a reason for
government to step in, as there are other ways to fund such projects.
.

Relevant Pages

  • Re: Fischer-Tropsch News Item
    ... :> Then it's not economically viable for government, ... :>:The problem isn't that such a plant would not produce real value. ... :But the price of oil goes down to $10 a barrel or something like this. ... This isn't magic; it's basic economics. ...
    (sci.space.policy)
  • Re: I cant believe this market
    ... lubow is nuts.....oil prices are not a war tax by our government. ... oil price is high from criminal speculators trading the same barrel of ... oil over and over at least 12 times a day.......yes, ... 300 dollars a barrel by now...... ...
    (misc.invest.stocks)
  • Re: OT: The Oil Market - Whats Really Going On Here?
    ... ever rising price of a barrel of oil which has now topped a record ... high of $135.00 a barrel. ... Boone Pickens says it's a simple case of supply and demand - there is ...
    (rec.gambling.poker)
  • Re: Food excess in Britain
    ... so when should I plant them, and should I use proper seed potatoes or ... is it sufficient to let some everyday cooking potatoes sprout, ... Plant the spuds down the bottom in just 4" of soil. ... Then, as it grows up, keep adding more soil, to just under the leaves, until the barrel is full. ...
    (uk.legal)
  • Re: OT: The Oil Market - Whats Really Going On Here?
    ... ever rising price of a barrel of oil which has now topped a record ... high of $135.00 a barrel. ... Boone Pickens says it's a simple case of supply and demand - there is ... will not hesitate to "game" the market and screw consumers. ...
    (rec.gambling.poker)