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December 3, 2007

Is Oil Expensive?

-- by Dave Johnson

Some people think oil is expensive. Think about this. Companies pump water (pump energy usually comes from burning oil) out of the ground and put it into plastic bottles (made from oil) and truck it (trucks burn refined oil) to a port where they ship it (ships burn refined oil) across oceans to stores that people drive to (cars use refined oil). The cost of this water product is low enough that people drink it instead of tap water. (In fact, some of the companies actually put tap water into the plastic bottles, truck it and ship it, and sell that and people buy it instead of using their own tap water.)

Think about all the other uses of energy that we take for granted. That tap water is piped to your house, using huge pumps. Your hot water is heated with energy...

So think it through before you say that oil is expensive. It is extremely expensive to the environment (and foreign policy) but it is not expensive economically, or none of the above would be occurring.

Posted by Dave Johnson at December 3, 2007 9:29 AM

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Comments

I understand what you're saying, but the analogy isn't apt. Competition in the "water" supply business forces the price point down, not the relatively cheap cost of oil. Beer is brewed with energy that comes from the same sources and imported/transported...

Posted by: yeahwhatever [TypeKey Profile Page] at December 3, 2007 5:17 PM

I understand what you're saying, but the analogy isn't apt. Competition in the "water" supply business forces the price point down, not the relatively cheap cost of oil. Beer is brewed with energy that comes from the same sources and imported/transported...

Posted by: yeahwhatever [TypeKey Profile Page] at December 3, 2007 5:18 PM

Dave - this is a good lesson for you in what private enterpise can accomplish. What you just described is the miracle of free-markets. Or, anticipating your objection that about all of the government involvement in what you described, relatively free markets - not perfectly free.

Whenever some marketable good (education, health care, etc.) is determined to be too important to be left to the free market, the government interferes. Then, it gets all screwed up. If only education and health care were deemed unimportant. Then, it would be delivered with the same miraculous efficiency, low cost, and choice that we get with bottled water. That would be nice.

Posted by: Jay Muntz [TypeKey Profile Page] at December 4, 2007 8:55 PM

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