I don't think government incentives or disincentives in themselves will be nearly as powerful an effect on supply and demand as popular demand to change fuels--this has already happened in plastics by making bioplastics a major alternative because of consumer demand. Consumer demand to change materials such as fuels and plastics is, in fact, behind much of the corporate sustainability "movement." This is less visible here in the US than in many other countries, such as European ones, and Japan.
I agree, Ann. When you factor in the carbon footprint you end up with a completely different story. At some point, government incentives and disincentives will likely distort the world of supply and demand. Also, there's the possibility one of the arternatives may hit a breakthrough that will give it a game-changing cost advantage.
Supply and demand, if that's all that was going on, would in fact work as you said regarding pricing. But that's not all that's going on with alternative fuels vs petroleum-based fuels. They don't exist in a vacuum, as so much modern so-called economics theory seems to assume. In fact, alternative fuels exist not only because petro-based fuel supplies were declining, but more importantly, because of the carbon footprint problem. That has not disappeared.
It's supply and demand, Ann. The less oil the world consumes, the lower the price. The boom in Asia, particularly China, is what drove up prices in the last decade.
During the Carter Administration, pressue on the American people to conserve energy worked. Add to that additional exploration powered by the high price of oil. And add to that a recession that supressed demand. Oil fell to $19 a barrell. Half of Texas went broke.
Recently, the Saudi's expressed concern that if the price of oil stays above $80 per barrell, the world will move to alternative energy sources. If we turn aggressively to alternative sources, the demnd for oil will go down, and likewise the cost of oil.
The nice thing about gas turbines is that they can run on many different fuels - even the exhaust from internal combustion engines. With the prevalence of fried foods this is a good use of used cooking oils. Heck, the airline could serve chicken fried steak, french fries, and deep fried Oreo's and run a fuel line from the fryer (through a filter) down to the engines...
Ann, I hope we run into the problem of used cooking oil becoming scarce. That will mean we're making full use out of a material that had previously gone to waste. The funny thing is, once alternative fuels become widely used, the cost of oil will likely go down, making it attractive all over again.
Although I didn't see any lifecycle analysis (LCA) figures for the fuel KLM is using, if it has an overall lower carbon footprint than petro-based fuel, then it's greener. You can find more details about the fuel at its manufacturer's website: http://www.dynamicfuelsllc.com/
Rob, if you mean that it's a limited resource, well sure, so are all fuels or energy sources. OTOH, there's a lot of it going to waste right now that could be used for fuel. And the McDonald's story shows how a closed-loop system would work if more restaurant chains participated in their own reuse strategies: http://www.designnews.com/author.asp?section_id=1392&doc_id=257392
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