We saw this happen in 1986 when the price sank to $10 per barrel and ethanol refineries were being given away by state governments that had taken them for unpaid taxes. This is now happening because the price of oil has fallen from $150 to $35 in just a few months.

Thus, the ideal energy source must have an equivalent price below the lowest possible price of oil. According to the Financial Times, the Mideast price of oil is about $30 per barrel.

How do the alterative energy sources compare? Coal to liquids and oil shale have a cost equal to $100 per barrel of oil. Oil sands maybe $85. US ethanol costs about $65.Onshore wind costs $75.

We have a massive investment in fossil fuel infrastructure. Our challenge now is to convert this infrastructure to a new fuel. According to the IEA, about 80% of our energy base is fossil fuel. Changing electrical power plants from coal to something else would require years. To switch from oil, we have to change the production system from oil wells and refineries to something else, and change over countless gas stations and vehicles. Even if we have the right technology, do we have enough money?

We must have an energy source that needs the least amount of capital investment in its production system, one that can convert our existing diesel and gasoline engines and gas turbines to the new fuel.

Finally, even if we have the right system, do we have the time? How many years will be needed to change a large amount of our energy mix to a new system? The outlook is that over 20 years from now, in the year 2030, fossil fuels will still be over 2/3 of our energy. It seems that we do not anticipate a real solution to fossil fuels.

So the ideal alternative fuel solution, the answer to our energy problems would have at least these characteristics: (1) cheap variable cost, below $30 per barrel equivalent of oil, (2) predictable cost, (3) low capital cost for production facilities and delivery systems and other infrastructure, (4) provide a fuel that can be used in existing infrastructure, (5) and a fuel that can with be implemented rapidly implemented at a low cost. This would be the ideal alternative energy, the ideal alternative fuel, the real answer to our energy problems.