If the fuels were perfect substitutes, oil prices would thus tend to be about 6 times natural gas prices.
In fact, it's not far-fetched to imagine a perfect storm in which low-priced oil coincides with climbing natural gas prices just as a drought hits the Midwest, ravaging the corn crop.
According to Lucian Pugliaresi, president of the Energy Policy Research Foundation, a Washington-based group that analyzes oil economics, a "perfect storm" of events within the last five years--including political instability in Iraq, Venezuela and Nigeria--has undermined production expectations by as much as 3 million barrels per day.
Long before we run out of the cheapest shale oils that are now fueling the current American oil boom, and long before bio-engineers convince bacteria to excrete oil, hydrocarbon engineers will perfect cheap coal-to-liquids. (For a measured technical exploration of all this, see the National Academy of Sciences report.) The latter will unleash another boom.
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Coleman said that ethanol, while not perfect, is a much better option than oil, especially the types of extreme energy sources that oil companies are going after today.
But the worry is what one economist called "The Perfect Storm" scenario -- a jump in oil prices accompanied by declining stock prices and worsening economies overseas -- a scenario that's no longer so hard to imagine.
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In the current scenario, it makes perfect sense for the company to focus on the more profitable oil drilling, however, we see enough upside for natural gas price and a robust demand for the commodity going forward.
In the Gulf oil spill, two big lapses have combined into a perfect storm of irresponsibility.
Switching the peg to a basket of currencies that included, say, the euro and yen as well would give the Gulf states a bit more protection against oil-price swings, but it is hardly a perfect fit.
For opponents of offshore drilling, Deepwater Horizon remains a rallying cry the perfect example of just how wrong things can go when we try to extract the vast reserves of oil that lie under the ocean.
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