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Seven years after the first commercially available hybrid hit the streets (2000 Insight), the market has made it up to nearly 1 on 50 vehicles sold. This is a technology that is based on existing infrastructure, and relies on no special accomodations at all. I hope you are right, and that high-yield biomass hydrogen displaces fossil fuels really quickly, but I am not going to dump the oil stocks today based on that premise. paulcrocker

You are so right. What most people fail to factor into their enthusiasm for substitution or conservation, or a breakthrough is the scale of the energy business and the rate of penetration that a new breakthrough or policy would take to make a measurable impact.

If you look at the energy outlook of Exxon and that of BP, the contrast is interesting.

BP assumes double the penetration rate of alternate that Exxon has. Yet by 2030 the difference in the answer of one to the answer of the other is 1 percentage point.

In other words, even if you are an optimist, alternates, especially, solar and wind -- the so called renewables (not factoring the hydropower) will represent less than 2% of the total energy pie by 2030. And this is with assumed accelerated development.

Anyone who has been involved in the implementation of big projects like I have in Exxon's Baton Rouge refinery, it takes a lot of time to bring complicated engineering processes to the field.

Any breakthrough, would need to be scaled up. And even if the processes is ramped up in many places you have the problem of the bottleneck that will be the skill set needed to build the new design, produce it and operate it.

Believe me, Exxon has thought this thing through for the longer term, and even out to 2050, hydrocarbons are going to represent still the overwhelming contributor to satisfying the energy supply equation.

What people don't really understand is that even if the U.S. went fully to hybrid, the dip in demand would be temporary. There are today 400 million Chinese consumers capable of owning a car. But the gov't is restricting the production of automobiles.

But it is now ramping up that production. By the year 2009, China will be producing more vehicles, than the U.S. ... and then it will exceed it, until it is estimated to reach 20 million cars per years. In other words, by the year 2020 China could theoretically have more vehicles on the roda than the U.S. has today.

And this is China which has a per capita consumption of about 1 barrel of oil per person. When China gets to the level of say, Mexico, that has 3 barrels of oil per person, demand in China will be 3 times higher than it is today.

So when these Chinese consumer drop their bikes, and move into their new vehicles, watch out!

And we have not factor India. This is another sleeping giant. There energy penetration is even worse than China. But India is expected to exceed China in population by the mid 21st Century. India jsut a few years ago had 3 million vehicles. I suppose that today it has at least double that and growing. So there is a lot of growth left for the future in that country.

And of course, we have the rest of developing Asia -- Indonesia, Malaysia, Thailand, Korea, etc.

And of course, we have Russia and all of Eastern Europe that has still enourmous room to grow before they can reach the standard of living of the West.

In fact, energy demand growth, even at these higher prices is expected to continue to grow at a faster rate than it grew in the decade of the 90's.... imagine!!!

That is why I chuckle at all of those predictions of gloom and doom about oil company stocks and profits having peaked -- nonsense. Maybe they will peak for a year or two, or even three, but they will resume again.

People making these predictions live on a superficial plane and have not analyzed in depth the energy industry.

Do you think a successful company like Exxon, with returns superior to the rest of its competitors does not know how to work the economics of alternate energies, and that of ethanol, for example?

And why would we want to "force" people to go to alternates when they are not economic?

Why don't we let the market do the job, if government would but stop interfering and placing a "no trespassing sign" in most areas that could show fruitful exploration results?

Did Steve Jobs, or Bill Gates, or Mike Dell, and all the innovators of the recent decade, received gov't subsidies to build their enterprises and products they are currently selling? And how about Google, or Yahoo, or ebay?

Why do we continue insisting that government is the right channel for sorting and assigning capital in the energy sector?

Look at what is happening with the ethanol mandates invented by government.

Here we have a program that under the guise of "energy independence" is costing taxpayers billions, and is producing no such independence. The damn thing uses more energy than the energy it gives back as a fuel.

And we want these same brilliant bureaucrats to direct our energy future?

We have spent close to $500 billion in our Energy Department in the last 25 years or so -- what has come out of there that is useful for us to use today?,

Back in the 70's we had another disastrous energy program that was going to help the consumer keep prices low. Our bureaucrats in Washington came up with a "small refinery" program that proved to be disastrous and inefficient.

Now we have the ethanol program as another example of bureaucratic and political stupidity.

What makes us think that things in Washington have changed? I

n fact, now that we have the Democrats in power, I cringe just to think what other greater stupidies are going to come out of their think tanks, especially since they are not industry-friendly, and want to redress social disparities, and stick it to the "bad, greedy, unconciounably profiteering, oil companies"

So hang on to your Exxon stock, it will do well ...alternates, maybe will make a greater impact by the time my great grandchildren get to be grandparents... and Exxon will be fully participating at the time in them.

Madame Butterfly
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