$94 oil? Still sorta cheap..

Somebody forgot to mention that:

- crude oil, natural gas or coal is an input to some (many?) of the 'alternative' fuels.

- most of them don't scale well, particularly not to the volumes we use (currently..)

- the current infrastructure was built for and around oil; if you need to build an infrastructure for an alternative, you're going to have to factor that into the cost too

There's always the possibility of dramatic breakthroughs, but oil is still amazingly useful and relatively cheap, as Matt Simmons would be quick to point out.

Wall Street Journal: Biofuel Costs Hurt Effort To Curb Oil Price.

Quotes:

Rising costs of biofuels and other alternative energies are making them less viable as substitutes for crude oil, a development that could frustrate efforts to bring oil prices down in the years ahead.

A few years ago, many energy economists predicted that higher oil prices would ensure the success of alternative energies such as biodiesel or wind power by making them more financially attractive. In many cases, though, the opposite has occurred: Even as crude-oil prices approach $100 a barrel, some alternatives look less attractive than in the past.

One reason: Energy demand is now so intense that supplies of just about every kind of fuel are in short supply, driving up prices of the raw materials involved in making many alternative energies. Some biofuels also rely on agricultural commodities that already are facing higher demand as foodstuffs, a situation which drives up prices further.

The problem is most acute for crop-based alternative fuels, like ethanol and biodiesel, though it has also proved true to some degree for solar power, nuclear power and other competing energy sources.

Biodiesel, a fuel made from farm crops like soybean oil and palm oil, was in some cases supposed to be economically competitive with crude-oil prices as low as $50 a barrel, according to analysts who studied the industry.

But a sharp rise in the price of biodiesel raw materials -- including a more than 90% jump in palm-oil prices over the past three years -- has dramatically altered the economics of the industry. M.R. Chandran, former head of the Malaysian Palm Oil Association, says crude oil would now have to be as much as $130 a barrel before palm-oil-based biodiesel is competitive.