Rawnoc discusses Big Oil vs alternative energy competition

One thing people realize is that while Big Oil is of course not threatened by a potential producer of energy that replaces less than 1% of the oil market.....

Big Oil fears three things:

(1) It's the under supply by a tiny percentage in the first place that keeps oil where it is. If there was a mere say 5% more energy in the world available right now, the price of oil would get absolutely crushed. Oil is what is referred to as an inelastic good. Meaning that the percentage change in price goes up many times for each percentage in lack of supply. So while some may think that a 1/2 of 1% wouldn't make a dent, they are wrong 1/2 of 1% of new supply could affect oil prices by 10% or more which is a monster amount of $$$ to big boil. Add up lots of alternative energy threats, and it gets bigger so Big Oil does have a motivation to feel threatened......and buy them out. :)

(2) A large portion of oil prices is perception. As more alternative energy sources become public, the panic subsides, and oil prices get cheaper than they'd be if not for these sources. Some of them like algae biofuel don't even make a tiny fraction of a dent, but the perception that they might makes oil cheaper than it would otherwise be, giving Big Oil a reason to feel threatened.

(3) Tax breaks. The more money from government in the form of tax breaks and grants that goes to alternative fuel projects, the less that's available for them. That's probably why Big Oil takes over and starts their own these tiny (to them) green clean energy projects. They likely pay for themselves many fold in publicity which leads to more favorable terms with government....and tax breaks/grants.

Raw