Sunday, February 05, 2006

Economy of Terror

My fellow blogger Woland, makes an important observation: construction of fusion reactors is stalling because that would collapse oil economies, as fusion reactors do not consume as much oil compared to pressurized or Boiling Water Nuclear Reactors, which in turn account for 2/3 of all oil consumption. Then, he concludes that oil-based economies as well as sponsorship of terror will deteriorate. I agree with the former, but want to argue against the later.

1. Oil Barons will still be selling oil, even if not as much as before, because other sectors of economy will still need oil (cars?) and fusion reactors will not replace existing ones that fast.

2. Even if the money river starts to dry out, oil Barons are still filthy reach. They made investments of many billions of dollars into western economies, and that money is still a very big pile, and delivering profit.

3. No matter how much economy will suffer, leaders of terrorist states will always put financing of terror as a priority. Which means that if there will be any money at all (and in any economy there is always at least some money) it will go south.

4. Eventually Western world will start sending money to those failing economies. Not enough to revive the economy, especially given the corruption, but more then enough to take some more western lives.

5. Financing terror is not *that* expensive. For example, Iran is spending in the order of several 100 million dollars a year on support of various external terrorist organizations. Even for a failing economy this sum is not out of rich.

In short, it will make a dent. It will not make any difference.


Irina Tsukerman said...

Bush was talking about using alcohol-based fuel instead of oil. I wonder how realistic that possibility is.

Woland said...

In your first paragraph you made a mistake: fission nor fusion reactors do not use oil at all. Introducing fusion reactor would make conventional coal and oil burning power plants obsolete, first of all by operation costs. This will cause conventional power plants to disappear all over the globe in a matter of decade, or two. It will not cut the oil consumption immediately, but just a notion of this technology coming out, will cause havoc in the oil market.
Making the electricity dirt cheap, it will be possible to replace oil as a fuel for transportation too, for instance producing hydrogen would be economically wise.

On political side, he will be a very important change. Not being oil Dependant, western governments would not be such an easy target for political and economical blackmail. The importance of this step cannot be underestimated. Lacking the oil whip, oil barons will have to be much more careful, since oil will not protect them anymore.

The reason that terror is adopted by these governments, is that supporting terror is many times cheaper compared to a conventional army, nut never the less effective, with the benefit of denial ability. So they still will be able to support terror, but at much smaller scale.

Yury Puzis said...

Irina: I wonder myself. It depends on what technology comes first to the finish line of "primary replacement for oil". Maybe electricity? Seems like hybrid cars are making it a possibility.

Woland: sure, let it be none at all. You right, political independence from oil barons will shake the ground. But, the old guardy of politicians will not let go that easy. Their political careers rest upon that. I wonder what will happen to russia in that light of this. They will keep consuming oil internaly, since it is cheaper for them. But the government and economy will collapse as fast as in, say, Iran.

Irina Tsukerman said...

Electricity, so far, is very expensive and not very efficient. That's why hybrid cars are so so low coming into the mainstream.

Woland said...

Irina, the efficiency of an internal combustion engine is about 12-15%, while the efficiency of an electric motor is about 80-85%, which makes it one of the most efficient engines today. However there is yet no effective way to store and transport electric energy. Here come hybrid engines. The reason that they are so slow coming into mainstream, is that these machines are very complex, built using new technology and therefore relatively expensive.
For example: Toyota Prius (about 21000$ in US) with hybrid engine travels 22.4-26 Km on one litre of petrol, or about 4-4.5 litres for 100Km, and they did it without hampering the performance. I don't know how about US, but in Israel fuel prices of 5.6 NIS/litre (4.6 $/gallon) make you think.

Y.P. unlike Iran, Russia is a participant in this program, and they have the industrial and financial capacity to survive this change.

Woland said...

BTW, Toyota Prius is quite successful car. If I'm not mistaken, over 100000 were sold worldwide.

Irina Tsukerman said...

That's what I meant.