by radon » Wed 30 Nov 2011, 05:13:26
$this->bbcode_second_pass_quote('', '[')b]Fossil fuel products extracted at a positive EROEI are primary energy sources for the industrial economy, not products. I shudder to think of the "certain circumstances" Under which it makes sense to burn two barrels of perfectly good oil in one country to generate electricity to produce 1 BOE of ethanol in another country.
Countries do do strange things with their oil barrels. A good chunk of Russia's exported barrels is converted into financial assets in the form of the Central Bank foreign currency reserves. These are mostly invested in the US dollars (Treasuries), and since 3-4 years ago in - euros; since very lately, some of them - in gold. Thus the oil barrels are getting converted into the US Treasuries, bunds, gilts.. Italian bonds? may be some Greek? This is not even paper, we cannot burn it to get heat and energy from it. Converting them into ethanol would be by far more energy efficient.
The CB reserves now stand at more than 0.5 trillion dollars. This is on top of the quasi-tax that Russia pays to the West in the form of the oil company owners' private "profits", which are duly repatriated to the Western countries and prop up economic activity there, all in the name of market efficiency. Wouldn't it be wiser to leave the barrels converted into financial "assets" in the ground for the use of future generations? But this would push today's oil price higher, wouldn't it.
Norway has an oil-financed sovereign wealth fund whose investment mandate is not very different, probably. MENA countries also have SWFs. One may wonder where those are invested in. (Russia also has one but since 2010 it is no longer financed by oil revenues, and has declined from circa 125b USD in 2008 to 25b USD now).
Now, we have a wheat glut this year (reported in another thread). The French are unable to sell their wheat as the Black Sea wheat (Russia's, Ukraine's, Kazakhstan's) is at 15% discount to theirs, and therefore preferred by the importers. As we have seen, cheap or free bread often does little good in the longer term.
Why not consider converting some of this wheat into ethanol? The oil barrels spent on growing this wheat is already sunk cost, so hopefully we can convert some wheat back into energy-intensive form (ethanol) and save a few oil barrels that we appear to have wasted this year on growing this wheat.