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http://www.pbs.org/newshour/bb/environment/july-dec08/energytech_07-07.htmlVINOD KHOSLA, co-founder, Sun Microsystems: I was recently at a conference where one of the senior executives of a major national oil company from Saudi Arabia, Aramco, came up to me and said, "Be careful." It was almost a warning. He said, "Be careful, because if biofuels are successful, we will drop the price of oil."
True or not, it is clear that any serious move away from our depedence on oil requires that the price of fuel be high. So, should a minimum price be set for petroleum so that, first, alternatives to petroleum can compete sooner than later, and next, so that foreign suppliers cannot manipulate the energy markets at will?
I tend to think so for this reason: Eventually, the price of fuel will be legitimately high enough to allow for competition, but artificial price fluctuations like those seen today, and in particular, the price drop that we will see, will hinder alternatives to petroleum until the need is dire and immediate. In the interest of national securiity and world peace, it is best to avoid that situation and act now.
But, even if we agree that a price floor is a good idea, what would be the right number?
PAUL SOLMAN: At the time we interviewed Khosla -- March 2006 -- oil was approaching $70 a barrel. He proposed a tax to kick in if oil fell below $40. Today those numbers seem ridiculously cheap, a price floor even at $70 politically feasible as never before.
The price of crude hovered around $20 barrel for about twenty years - since the shortages of the seventies - and it hit a low of $10 in early 2000. So we have seen a 1400% increase in eight years.
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