We have enough oil: The Fischer-Tropsch process

I have recently been reading Richard Muller's excellent book Physics for Future Presidents: The Science Behind the Headlines. It covers topics from terrorism, energy, food, radioactivity, to global warming, and does all that with an approach that gets the things you need to know across, without spending a lot of time in equations or difficult details. An excellent read not just for presidents, but for anyone who votes for presidents, as well.

The book relates a lot of facts that are not commonly understood, yet dictate what happens in the world. Did you know, for instance, that coal (just the fuel, not counting the power plant or any air cleanup) is about 20 times cheaper than oil, per unit of energy produced?

China is adding new power plants at a stupendous pace. Guess why most of those plants run on coal?

We also have coal available in substantially larger amounts than oil. And the important difference is, coal is readily available in many countries, such as the United States, that are currently paying Arabs through the nose for oil.

And there are ways to convert coal (as well as natural gas) into oil. It's called the Fischer-Tropsch process. However, the initial investment required to build the plants is so expensive that it only pays for itself if the price of oil is going to be at least $50 in the long run. (Those are probably 2007 dollars that Mr. Muller quotes.)

This has interesting consequences for the long term price of oil: it means that there's a long-term equilibrium price of about $50 per barrel. (... in 2007 dollars.)

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