Pricing Energy

I’ve been thinking a lot lately about the price and value of energy. Generally I am a strong believer in the rationality and self correction of markets. But thinking about what we pay for energy in different forms, as measured in dollars per BTU, one sometimes has to wonder about how markets determine value.

In this article at the Oil & Gas Evaluation Report, I ran across a pretty amazing table (below).

The difference of values between natural gas and petroleum is pretty hard to explain on a $/MMBTU basis. Much harder to explain would be the difference in price between fuel  and beer. I know at least most beers taste better than fuel ethanol for instance, and the processes for getting that flavor is more complex than simple fermentation. But deep water oil drilling and petroleum refining aren’t cheap or easy either.

The amazing thing about these figures really is how little we play for energy. I wonder how long that can really last.



Leave a comment

Filed under Economic Policy, Energy Policy, Fundamental Perspectives

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s