QandO

February 10, 2004

Our Friend OPEC
Posted by Jon Henke

OPEC is planning to cut oil production by 10%. Great. Gas prices will remain high.
...just one more reminder: OPEC is not our friend.

And...hey! Iraq - with whom we went to war to gain control over their oil, remember? - is a member of OPEC. Oops!

At any rate, cartels create unfavorable market conditions for consumers, and we're consumers. Even though it's another opportunity to mock the moonbats about their misguided "war for oil" nonsense, oil news like that is still depressing.

Fortunately, it may not always be depressing. The OPEC hike reminded me of this story. Remember that "Waste-to-Oil" process, in which turkey parts (for example) could be turned into oil? Well, it's progressing....

A full-scale plant is scheduled to go into operation later this month in Carthage, Mo. That $20 million plant will use the waste from a nearby turkey-processing plant owned by ConAgra Foods Inc., which formed a joint venture with Changing World to develop the technology.

Up to 200 tons a day of feathers, gristle, bones and fat will go in one end. Oil, similar to the stuff sold to heat homes, will come out the other.

The process is called "thermal depolymerization" - essentially heating the waste products in a low-oxygen environment so they break down into hydrocarbons without burning.

The concept has been around for decades, but no one has been able to do it cheaply enough to compete with drilling for oil.

Brian Appel, Changing World's chief executive officer, said the company's production costs were now $15 a barrel, not counting capital costs, compared with $5 to $13 a barrel for drilling for oil the old-fashioned way.

Appel said that, with the opening of additional plants, his costs would come down to near $5 a barrel.

It strikes me that this is another reason to support the spread of democracy in the Middle East. Since they have entire economies predicated on oil, there will be massive instability when that industry goes by the wayside. Economic freedom can soften that blow, even prepare for it.

Without oil, though, where would the leaders of Iran, Pakistan, and Saudi Arabia turn in order to maintain power? Selling arms? Conquering neighbors? Religious fanaticism?

That's another reason we needed to create that wedge of democracy in the Middle East. The potential futures without democracy are not pretty.

TrackBack