"We will be able to make oil for $8 to $12 a barrel," says Paul Baskis, the inventor of the process.
Please note the future tense there. Right after the reporter got done listing the $50 million invested by individuals and government just to do the research. Further in the article you will read that the first plant cost $20 million to build. Next quote:
It will make 11 tons of minerals and 600 barrels of oil [a day]
600 barrels of oil which will sell on today's market for $30 a barrel for a total of $18,000 a day. At that rate it will take him three years just to cover the cost of building the facility. Not too bad so far. Final quote:
And it will be profitable, promises Appel. "We've done so much testing in Philadelphia, we already know the costs," he says. "This is our first-out plant, and we estimate we'll make oil at $15 a barrel. In three to five years, we'll drop that to $10, the same as a medium-size oil exploration and production company. And it will get cheaper from there."
That is where he exposes himself. You see the reporter should have asked why the costs will go down. Is that because turkey guts will get cheaper, or he will have written off the fixed costs, or is it because he is assuming that more people will adopt the technology and he will be able to spread the costs over multiple locations? I think he is only talking about the variable costs of turkey guts and keeping the lights at the factory on. He is not including the initial investments, or the reality of how much more his oil cost in terms of the opportunity cost of the natural gas he claims to pump back into the system. The real give away that they might be using rosy estimates was that the "authority" on how good an investment this is was the venture capitalist--you don't think he has an agenda, now do you? I love technology. I am very excited about things like this. I really believe that scientists will make drilling for oil a non-issue long before it runs out. But I am not so excited that I think it will happen tomorrow. I would guess that this guy has really discovered a spectacular process, but I would also guess that it is more costly than he lets on. All new technology tends to be. Will it get cheaper? You bet it will, but can the idea last long enough for the idea to get cheaper? How long will it take to get cheaper? Many great ideas fail for reasons unrelated to the greatness of the idea, let's hope that this is not true of turning turkey guts into oil.
Can someone with a chem engineering background comment on this? It reminds me of Segway, lots of flash, no substance. But, you never know...
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Its just a bunch of HydroCarbons. Hydrogen and Carbon. Rearranging the atoms just takes energy.
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