[GonzoGOP]

At present, algal fuel would cost about $8 a gallon. That same gallon would also require 350 gallons of water to produce

A couple of things. First the 350 gallons of water are used, but not used up. That is an important distinction. It is like saying farming uses land, but if you do it right the land remains usable for next years crop. Sure improper land and water use can screw it up. But a good farmer doesn't waste a resource. And that is what this is algae farming.

You grow the algae in water, strain it out an squeeze it to get out the lipids. Now the water is still there and ready for another batch of Algae.

As for the price I see that as defining the floor. If you can manufacture gasoline from a renewable source for $8 per gallon then that is the most that gasoline will cost. Unfortunately we have seen what $5.00 a gallon gas looks like. Pushing the price up to $8.00 would be economy and possibly society collapsing.

The ability to define a floor is important. It is the difference between Titanic and Costa Concordia. If the Middle East melts down and there is no place to get more oil we go all the way down. If the mullahs drop the bomb and we can manufacture oil it will be bad, but at some point the bad stops getting worse.

[Oldexpat]

Putting ponds in the desert..or anywhere is going to take a lot of water due to evaporation. The recovery rate is going to be really low. Right now the area they want to use to do this has zero extra water. It all goes to AZ and CA to support current AG and people.