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Originally Posted by haas

The alternative energy mandate is great on paper, Unfortunately, the situation is far too complex to be solved via alternative energy "plug-and-play" as is commonly believed. We really don't have any ready-to-scale alternatives that share oil's energy density, energy portability and high energy return on energy invested (EROEI).

Even if we did have alternatives that shared the characteristics of oil, we won't be motivated to invest in them on the massive scale necessary until it's too late. To illustrate this point: as of June 2007 a barrel of oil costs about $140. The amount of energy contained in that barrel of oil would cost between $150-$350* dollars to derive from alternative sources of energy. The market won't signal energy companies to begin aggressively pursuing alternative sources of energy until oil reaches the $150-$250 range and stays there for several years.

This does not even account for the amount of money it would take to locate and refine the raw materials necessary for a large scale conversion or the retrofitting of the world's $50 trillion plus economy to run on these alternatives.

Once we do finally begin aggressively pursuing these alternatives, there will be a 25-to-50 year lag time between the initial heavy-duty research into these alternatives and their wide-scale industrial implementation. However, in order to finance an aggressive implementation of alternative energies, we need a tremendous amount of investment capital - in addition to affordable energy and raw materials - that we absolutely will not have once oil prices are permanently lodged in the $200-$300 per barrel neighborhood.

While we need 25-to-50 years to retrofit our economy to run on alternative sources of energy, we may only get 12-to-18 months once oil production peaks. Within a short time of global oil production hitting its peak, it will become impossible to dismiss the decline in supply as a merely transitory event. Once this occurs, traders on Wall Street will quickly bid the price up to, and possibly over, the $200 per barrel range as they realize the world is now in an era of permanent oil scarcity.

With oil at or above $200 per barrel, gasoline will reach $10 per gallon, assumming it is even available. This will cause a rapid breakdown of trucking industries and transportation networks which have all been built and financed under the assumption fuel prices would remain low. Importation and distribution of food, medicine, and consumer goods will grind to a halt as trucking and shipping companies go bankrupt en masse.

Moving out into the woods is looking better every day.