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I had hoped to give a provocative lecture on the economics of nuclear energy at the forthcoming international meeting of the International Association for Energy Economics in wonderful summer Stockholm, but on the basis of what might happen in North Africa and the Middle East in the coming months, I suspect that I will be asked by the conference directors to fall back on one of my oil market recitals.
The problem is that I have no new model. Several years ago a former student of mine at the University of Grenoble (France), who had ascended to better days, gratuitously informed me that a long paper of mine on natural gas was of little value because of the absence of a "model".
I'm not sure that he was correct, however it was hardly an accusation worth a great deal of reflection on my part, and so I dismissed it with a condescending smile on my face. I knew then, as I know now, that the real world oil and gas market games, if I can call them that, have very little to do with the formal economics and econometric models of the kind I had to suffer when a graduate student, and which on later occasions I wore out my patience and vocal chords when teaching at a dozen universities around the world.
In his survey of non-cooperative game theory, Professor David Kreps (1990) says that a good test of the usefulness of game theory is to compare the forecasting success of economists who use game theory with the achievements of those who abstain. This sort of thing might involve persons who approach the future of oil prices via models, as compared to those who use basic business acumen, or for that matter street-corner common sense.
As Professor Kreps makes clear, this would not be a very easy experiment to carry out, but where oil is concerned, I think that we can go at least part of the way. For many years -- if not decades -- I was a fanatic reader and teacher of the learned energy literature, and of the huge number of papers on oil that I examined in the mostly unread economics journals that collect dust and take up valuable space in academic libraries, I can only remember a few that I felt inclined to recommend to my students.
I received a question about my cavalier demeanour from several of the students in my course on oil and gas economics at the Asian Institute of Technology (Bangkok), to which I replied that if they were desperate to read the kind of pretentious analyses in the kind of learned journals they encountered in their academic backgrounds, or would encounter later in life, they would have to do so without my assistance. I might have added that any curiosity they may have about oil market and oil prices would be completely satisfied by the highly relevant lectures I was giving, and which I expected them to learn perfectly.
But on the other hand, going back 15 years, I probably mentioned that best paper that I encountered on oil was by Richard Teitelbaum in the business publication Fortune (1995). Four multi-millionaires, and later billionaires, were cited as going 'long' in oil properties. These were Philip Anschutz, Marvin Davis, Carl Icahn and Richard Rainwater. Of this cash-strong foursome, Mr Anschutz declined to be interviewed, however I was informed that he was the kind of investor who preferred to let his money do his talking, since it was an open secret that he had participated in several big-ticket shopping missions in the oil and gas markets.
The other gentlemen were very much up front as to why investors should take a bullish attitude toward oil. In fact the late Mr Davis supplied one of my favourite quotations on this subject: "You don't have to be a cockeyed genius to see this coming." Mr Rainwater was also explicit about his estimate of the oil future: "The increased global demand paints a picture for me that doesn't have any other outcome. The price of oil is going to have to come up."
The interesting thing about these investors is that all of them were cognizant of the demand for oil that would be forthcoming in China and India, and long before this matter was considered a worthy topic for mainstream energy economics publications, conferences and those drowsy academic seminars where amateurs do their songs-and-dances while clutching their lightweight 'scientific' contributions as if they were the gold to which an English economist once compared them. Everyone is now talking about China and its requirements, but few observers realize that India is also going to have a huge appetite for oil. Any decline in the Chinese demand will be more than compensated for by the increase in Indian consumption.
The interesting thing here is that the four gentlemen mentioned above increased their activities in the petroleum markets when the price of oil was zooming down, and even Sheikh Yamani was informing anyone who would listen that oil would soon be in the same situation as the stones that he seemed to think were so valuable during the Stone Age. For readers who have forgotten, he was expressing his curious belief that oil exporters should sell their oil for bargain-basement prices, because substitutes for oil would soon become widely available.
As in my lectures in Bangkok and Paris (2010), I now insist that the key to the present oil market is the behaviour of OPEC. I promote that controversial belief every chance that I get, because with or without a model, that is the way things are playing out in the oil market just now. This outlook has been questioned by many participants in the forums to which I contribute, which immediately leads me to suggest that they examine the dynamics of the oil market in 2009. In that year, with the international macro and financial markets on the verge of a total meltdown, OPEC was able to bring the oil price back from 32 dollars per barrel to almost 70. No conventional model would have predicted that.
In summer Stockholm, where the curse of electric deregulation will still be threatening many households, and ruining some, lecturers at the energy meeting mentioned earlier will likely be examining half-baked academic constructions -- or models as they are commonly called -- that might feature a development of oil prices whose moderation will shield the global macro economy from another rendezvous with the brink of ruin. I think that I will abstain from these fantasies, and suggest that you do the same.
(2011). Banks, Ferdinand E. Energy and Economic Theory: Singapore, London and New York: World Scientific.
(2011). A modern survey of world oil: realities and delusions. To be published by UNESCO (Paris).
(2010). Oil and economics theory: some chronological and mathematical aspects. Lecture given in Uppsala and Paris.
(2006). Logic and the oil future. 'Energy Sources'.
(2000). Energy Economics: A Modern Introduction. Boston and Dordrecht: Kluwer Academic.
(1990). Kreps, David M. Game Theory and Economic Modelling. Oxford: Clarendon Press.
(1995). Teitelbaum, RichardS. 'Your last big play in oil'. Fortune (October 30).
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Your articles are always an interesting and provocative read Fred and this one is no exception. The investors to which you refer are engaging in the age old investment practice that when everyone rushes for the exit in a selling panic they go in and pick up what the idiots leave behind. It is a technique I have used to great effect and made alot of money doing so. Right now everyone is rushing out of Uranium stocks and I have been picking up the bargains right left and centre. Oh how I do love panic selling.
I remember the days of our dear Shake Ya Money - I always liked him. He has the best name of any one in the oil business. To a great extent the dumping of cheap oil has had the desired effect of pushing out the development of alternatives so, for now, the world appears to be dependent on the stuff. But that, I propose, is an illusion.
While it will not be an easy task, substitution of oil is not a technically mind boggling task. What stops it of course is that it is Governments that are hooked on oil and the nice tax rake off from it. Cars can run easily on methane and coal gas so there are plenty of fuels that can be used instead of oil. Electricity (the generation of which is almost exclusively NOT by oil) can easily be used to drive trains which is already the case in many countries (except North America which still insists on using diesel engines).
But it is all a game and has nothing to do with models or theories and alot to do with keeping those whose power depends on oil in power. That is what it is really all about.
There are many alternatives to oil. Sheikh Yamani knew it in the 70's and it is just as true today as it was then.
Good article Fred.
Malcolm Rawlingson 3.26.11
Fred, Good timing on the nuclear power lecture. Despite all the developments at Fukushima Japan is not going to give up on nuclear power. It will make a few improvements to its power plants and carry on building as before. It can't afford not to.
Ferdinand E. Banks 3.27.11
As a result of the business in Japan the bird brains and know-nothings are out in force. The highest energy bureaucrat in Sweden has just published an article saying that this country can get all of its energy from renewables. He has a PhD in technical physics to back up this judgement. but that is OK with me.
Rest assured that there is no need to worry. The TV audience will ALWAYS put its standard of living before renewable energy nonsense, although it may take them a little time for them to get the energy message. THAT IS 100% CERTAIN!. In the period before they wise up though, some income is going to be lost, but we can't help that, even though we also are going to lose a few dollars.
About this article. It is small beer as compared to Tam's article on oil.
John K. Sutherland 3.29.11
Malcom, I did the same too; bought as others sold. China, India, South Korea and France, maybe even Sweden (!, Fred?) might see the hysteria for what it is; let things calm down and then continue doing what they do well, in nuclear. Even Japan. I can't help but think that Germany is about to go down the toilet with their 'greens'.
Don Hirschberg 3.30.11
Malcolm wrote, “…in the age old investment practice that when everyone rushes for the exit in a selling panic they go in and pick up what the idiots leave behind.”
Every stock trade looks pretty much the same, panic or not. A seller and a buyer. The number of shares sold equals the number of shares bought. I.e. number of shares = a constant. Nothing is “left behind.”
Be assured that when you are dealing in a listed stock you are not competing with idiots else all the non-idiots would be rich. I wish you and John continued successful investing.
Ferdinand E. Banks 3.30.11
Funny isn't it how a country as well educated as Germany loses its grip from time to time. At this point in time they can't understand the difference between a nuclear plant located next to the ocean at Sendai, and one located next to the Black Forest in the middle of Germany.
Jim Beyer 3.30.11
I think an important aspect of any such model is how quickly/economically can current oil users displace their oil use by other means. As Malcolm indicated, it is technically feasible to replace gasoline use with NG or electricity (PHEVs). For the U.S. about 2/3rds of our oil is used for transportation and 2/3rds of THAT (so close to half of all our oil use) is used for gasoline.
For some reason, automakers are loath to embrace NG. They claim it is too costly, but I think a bigger issue is that NG and electricity cannot be easily assessed with road taxes. They really have to get off of this. For a vehicle using 600 gallons of gasoline per annum, that's $1800 per year at $3 gas, but $3000 per year at $5 gas. The latter level would be high enough to justify NG storage for vehicles. PHEVs would make more sense too.
Ferdinand E. Banks 3.31.11
Jim, I think that PHEVs make sense too, but where is the electricity going to come from? I like the Amory Lovins idea of wind supplying it, but suppose the wind refuses to blow.
Don Hirschberg 3.31.11
Professor, you have hit a nerve. I suffer because I cannot reconcile the Germans (nor the Japanese for that matter) with their education vs humanity. Hitler was accepted by maybe the most educated and sophisticated people on earth. All were at least nominal if not religious Christians, including Roman Catholic Hitler always in a state of grace.
When I was a child I seldom saw my father except at the dinner table because he was chairman of the draft board which was as a second (unpaid) job. But I saw the statistical data for US and our enemies. Japan had a higher literacy rate than the US; ethnic Russian had the highest IQs among our inductees (blue bloods from tsarist USSR no doubt), Iowa the only state with total literacy.
Not being able to reconcile current German attitude with nuclear energy is less disturbing than how Europeans, not just Germans, dealt with humanity issues in WWII. Such as railroad records seem to show that in all the countries Nazi Germany occupied the local citizens were quite willing to round up, supply and schedule for shipment Jews and Gypsies with no questions asked.
Few of us comprehend how recent Germany is. Germany as a nation dates from 1871 in Paris. This is when my grand parents were born.
Statisticians seem to measure “education“in terms of years of Schooling.” I am convinced this is specious.
Jim Beyer 3.31.11
A better question would be: Where do the reasonably priced batteries come from? The electricity can come from lots of places, nuclear power, coal, solar, wind. The point is that it broadens our options versus oil, which is concentrated in relatively few countries at this point.
To displace a gallon of gasoline, you need about 10-12 kW-hrs of electricity, depending on the charge efficiency, engine efficiency, etc. You could probably get that on most days with a 2 kWatt solar PV array costing maybe $4K-$5K. Now is that worth it? I dunno.
The panels last a long time, 20-30 years. Say it "generates"/displaces 6000 gallons of gasoline over its lifetime. Would I rather pay that money out to put something on my roof versus sending it to an oil producer that probably resides overseas? I think I would.
Don Hirschberg 3.31.11
When I see pictures on TV of the troubled Japanese reactors I don't see any plumes as we saw early on. If the heat being removed is not making steam where is the heat going? Seems unlikley that they are only taking away sensible heat - only to exchange it with a seawater? What's going on?
Don Hirschberg 3.31.11
Interesting numbers Jim. Thanks. On the other hand suppose we buy 40,000 Kwh from the grid instead of buying solar panels and use 20 kWh per day. That gives us 2,000 days of charging whether the sun shines or not.
Seems we would want to be able to charge from the grid even if we had 2 kW panels. Several days, or more, in a row of cloudy weather are possible most anywhere. But having more panel capacity would seem wasteful of capital.
The overall efficiency of either scheme is in the same ball park. I said gasoline at 6#/gal, 20,000 BTU/# and e= about 25% for my engine. If we say charge/discharge e is 85% and motor e is 96 % we get 11 kW/ gal gasoline equiv.as did you (i.e.10-12). If we take from the present grid our e= .34 x .95 x.85 x .95 = .26. Close enough that I cannot tell the winner from my crude numbers.
Jim Beyer 4.1.11
I don't disagree with your numbers, and the grid is less expensive than Solar PV, definitely. The point I was making (I guess) is that gasoline is so expensive, that even Solar PV is competitive with it. [This is ignoring the added cost of the PHEV -- I realize that].
So if gasoline is already so expensive now, and there are myriad reasons (depletion, politics, etc.) to move away from it, then why don't we? A concerted effort is needed to make PHEVs common enough to be market viable w.r.t. cost. That is beginning to take place now.
Bob Amorosi 4.1.11
Jim and Don,
Your last comments above point out the biggest single dilemmas facing consumers and governments/grid planners: decisions on what to buy and when to buy when considering a change in energy sources and energy consumption methods. Those dilemmas are in weighing the upfront costs to buy or build new equipment versus fuel and maintenance costs and their availability.
These dilemmas apply to PHEVs, new home appliances, solar PV or wind generators, and new large central power stations from nuclear, gas, coal or hydro sources. Of course there are many other issues that affect decisions too, like environmental impacts, NIMBYism, political issues, and whether the finances of the day can afford new choices to be made.
Please let this forum know if you guys know anyone who can accurately predict any of these costs into the distant future, and they would facilitate many easy answers to these dilemmas. In the absence of accurate cost predictions, the lowest risk answer to most of them is to diversify – by setting up a large mixture of sources and equipment over time.
This BTW is what is going on if you look around at what many governments/grid planners are doing now, and usually get heavily criticized for it because it appears they don’t know what they’re doing or are being reckless at the very least. Smart consumers who can afford to will also diversify their choices. And those consumers who cannot afford to diversify will typically wait indefinitely to make choices to keep them open, and wait until forced to make choices when equipment reaches end-of-life, or when maintaining their existing methods becomes unaffordable, or when a major financial incentives are provided to jump off the fence.
Don Hirschberg 4.1.11
We aren’t stuck with 200(?) million oil burning vehicles and coal-burners today because building them was stupid, venal, or was the result of poor policies. Not many years ago natural gas was projected to be so close to depletion that “wasting” it to generate electricity seemed to be immoral.
If we had crafted the most elegant energy policy based on the notion that gas production was about to go into decline and that we were faced with global cooling our model would have been a monstrosity. We didn’t make this very enlightened model. We made decisions based on economics of the time which meant making much of our electricity from coal because it cost the least and there really was no other option than to use petroleum for transportation.
Now we find the relative cost of fuels far different than the costs that gave us our present situation. It takes decades for this ship to answer the helm.
Ferdinand E. Banks 4.3.11
Don, charisma counts. It didn't surprise me at all that the beer drinkers in Germany sided with Hitler, but it did surprise me that the aristocrats didn't turn against him en masse.
Stupidity always surprises me, however, Why weren't the railway lines leading to Aushwitz bombed, and especially the railway bridges, and maybe a few other things having to do with that place. Among others, John McCloy was against it, and he was NOT a dumb man.
Speaking of dumb, some people have told me that the business in Libya is not about oil. Exactly how was it possible to mobilize a coalition of the willing and gullible to go there unless oil had something to do with it. The kind of massacre that they wanted to prevent may be taking place in Cote de Ivoire now, and the civilian-protection junkies are as quiet as they can be.
Don Hirschberg 4.3.11
Professor, it strikes me that the only possible way to have made conditions worse in the Sub Saharan former colonies of Belgium, France, Portugal and Italy was to have the Belgians, French, Portuguese and Italians leave. Since the end of apartheid South Africa has become the child rape/murder/crime capital of the world. Who will say it out loud?
Alas, these are the very places where birth rates (and child mortality), AIDS, population growth, crimes of moral turpitude, and need for electrification are greatest. It is also where average IQs are the lowest. Just made of search for Ivory Coast news and found far more than I can or want to read. I still have the heebeegeebies about my recent revisiting Rwanda data.
It is hard to even think up magic wand solutions.
Len Gould 4.4.11
Don: Though credible-sounding at first read, your superficial analysis of the problem in Africa is flawed, since you make no provision for a) the effects of tribalism exploited by socispathic political leaders for personal gain. b) the effects of competition among religions for "convert counts", again carried out by sociopathic church leadership.
Jim Beyer 4.4.11
Environmental issues aside, it appears that at least domestically (North America) natural gas will become more available due to the shale formation drilling compared with oil. At current prices of $100 per barrel for oil and $4.3 per MMBTU for natural gas, that's a per BTU value of about 4x. That is oil is about 4x more expensive than NG on a per BTU basis. This is based on a value of 5.8 MMBTU per barrel of oil.
I don't know at what level it would make sense to fuel vehicles with NG. It looks like at this level it already makes sense to heat homes with NG over fuel oil.
Bob Amorosi 4.4.11
Here in southern Ontario we have a wide network of NG piping to virtually all the major urban residential and industrial customers, so the default heating choice has always been to use NG for central heating and for hot water heaters for decades now. Electric heat is much more expensive and is only used where NG pipes are not close by, typically in rural or remote northern areas.
For vehicles our provincial and federal governments have provided sales tax rebates and grant incentives for many years now to install a dual-gasoline-NG conversion kits on any new or used vehicle purchased as long as the kits are installed within 6 months of vehicle purchase.
Some of the NG distributors sell and install the kits, developed for practically any passenger vehicle or commercial bus or truck. A typical passenger car kit costs close to $2500 last time I looked them up. Provincial sales tax rebates of $1000 plus a $500 federal grant lower the cost to only $1000 for the purchaser. However the conversion kits never gained much popularity due to the physically large NG tanks the kits use installed in the trunk. Hence only buses and commercial fleets of trucks have ever used them very much, but now that gasoline is climbing steadily, many consumers make take another look at them over time.
Ferdinand E. Banks 4.5.11
Jim, if you could pour natural gas into the gas tank of your Ferrari, the same way that you do gasoline, and speed off to Studio 54, the price of oil would soon be about where Milton Friedman thought it was going, or 5 dollars a barrel. But you cant. There is this business of putting together the infrastructure. And when the infrastructure is on line, the price of natural gas will increase because of the increased demand for it. That's economics.
"The Thermal Efficiency of GTL is considered low and is typically around 60% .... a typical GTL facility processing 1 BSCFD will product approximately 100,000 BPD of GTL products. Depending upon the technology employed the facility may include about 5-6 trains. The indicative capital cost for such a facility is estimated at around $ 2.5 Billion."
Considering that the GTL output doesn't need the comparable capacity $1.25 Billion refinery (outputs high-quality diesel directly), and a single 100,000 BPD facility at a $1.25 Billion additional cost will eliminate the installation of $2,500 conversion units on about 2,000,000 autos (assuming avg. use of 50 l/week or 13 gal / week) , a capital saving of $5 Billion in conversions alone is available by doing GTL rather than CNG.
Len Gould 4.5.11
Of course the problem is that the market is not configured so that the GTL plant builders can capture the conversion savings. Markets really suck sometimes.
Ferdinand E. Banks 4.8.11
Speaking of pouring something into your gasoline tank, what is the price of a liter of gasoline at your local station? When the fools decided to call Colonel Qaddafi delusional, the price of oil was under 90 dollars. It just reached 110. Will it ever fall again?
My congratulations to Susan and Hilary, Barrack Hussain, Sarko, and the other boys and girls who decided to threaten the Colonel instead of talking to him. We'll be paying for that mistake for a long time.
Bob Amorosi 4.8.11
Fred, here in southern Ontario Canada the price of gasoline has hit the same level as it did at its peak in the summer of 2008, in area of $1.30 per liter. At that time it then began falling as the world's economies crashed into a global recession.
During that recession many blamed the oil price spike then as the primary cause of the recession. Today we all know it was only a contributing factor since the main cause was toxic debt in the banking system, especially in the US where it was loaded with sub-prime mortgages going into default.
This time the oil price spike hasn’t shown any signs of an accompanying recession, but you can bet your bottom dollar it's dampening economic growth both in Canada and the US. People everywhere are feeling the pain in their wallets at the gas pumps. Besides perhaps driving their cars a lot less, they are curtailing their discretionary spending on other consumer goods knowing their disposable income to spend on other things is shrinking as oil prices climb. Inflation is also starting to rear its ugly head as the higher costs of transportation are beginning to creep into price hikes for everything from airplane tickets to food.
I personally think oil prices are likely to stay permanently above $100 a barrel until the next deep recession, probably years away from now.
Malcolm Rawlingson 4.11.11
Don, Regarding your post above with respect to Uranium stocks. Clearly you have little experience with the stock market or the psychology that drives it and that makes me sad for you.
Every stock trade looks pretty much the same, panic or not. A seller and a buyer. The number of shares sold equals the number of shares bought. I.e. number of shares = a constant. Nothing is “left behind.”
Nothing wrong with your logic Don - except that using it no-one would make any money. Not even Warren Buffet. The stock market however is not logical. Emotion not logic is what rules.
Stock prices reflect supply and demand. The events at Fukushima did not change the supply imbalance of Uranium however, many chose to sell their positions (probably not idiots but very poor decision makers) on the cheap so that those who understand what is really going on can buy them at a nice discount. What they "leave behind" when they are running out the door is low priced assets to be collected by the likes of me and John Sutherland.
In 2008 Cameco shares plummeted to just over $14 Cdn. as a result of the banking crisis. Since (as far as I could tell) the banking crisis did not stop the consumption of Uranium (did not change the demand) I bought all the way up to about $24. A month or so before the Japanese earthquake Cameco hit $42. At that point I sold off about half the position making between 100% and 300% profit. So when the price dropped down again to around $24 that represents a buying opportunity for the following reasons. You can challenge them if you like.
1. Cameco is still sitting on the worlds largest reserves of high grade Uranium ore. 2. Cameco still has about a billion dollars cash to exploit those reserves and find more. 3. There remains a 25% shortfall between mined Uranium and consumed Uranium 4. There are 60 reactors under construction that have no choice but to use Uranium 5. The agreement to use weapons grade Uranium from Russian warheads ends in 2013. 6. Only about 20 reactors of the 442 currently operating have stopped consuming Uranium (Some in Japan and some in Germany). The rest are still operating. 7. Cigar Lake the worlds richest (read lowest cost) Uranium deposit is coming on stream next year.
Neither Fukushima nor the banking crisis changed any of the above one iota.
When the Russians stop shipping enriched Uranium to the US the shortage of Uranium will become very evident and as with all commodities in short supply the price will go up. Unless someone perfects the thorium cycle in the next 2 years the only fuel those multi billion dollar machines will burn is Uranium - they have no choice.
But don't take my word for it Don. Come back in 2 years time and I'll show you how the math worked out.There are other Uranium companies out there of course. Uranium One, Uranium Participation Corp but none the size of Cameco.
By the way - Warren Buffet is buying railroads and coal mines right now because everyone thinks coal is on the way out. Mr. Buffet is not an idiot - but those selling their coal and railroad shares for low prices are.
Anyway, should you decide to join John and myself, you should use a 20% trailing stop to protect your capital and lock in your gains.
Malcolm Rawlingson 4.11.11
Fred, Agree that when demand for natural gas increases the price will go up except that there is a lot more natural gas than there appears to be oil.
It is as easy to fill up with natural gas as it is to fill up with gasoline. It takes about the same amount of time. Natural gas infrastructure already exists in most urban areas and is the fuel of choice for heating and far cheaper than electricity.
Also natural gas needs far less conditioning than oil to convert it into useful fuel - mostly removing sulphur compounds - so no expensive oil refineries required.
Delivery is also cheap since it travels directly from the wellhead via undergorund pipelines directly to the end user. Using home fuelling appliances you can even refuel at home from your own natural gas supply line.
So while there is no doubt increasing demand will cause prices to increase it will still be a cheap fuel for years to come.
I expect that natural gas will be the key competitor for nuclear energy. Natural gas power plants can be built quickly with far less capital cost and they can be run automatically with almost zero staff. Provided gas supplies remain plentiful the price should stay relatively low.
Some estimates I have seen recently put the shale and coal bed methane reserves of the US alone at 2 quadrillion cubic feet. If those estimates are even half right we'll be running out of oil long before we run out of gas.
Don Hirschberg 4.12.11
Malcolm: Gee, only now I learn that I have been doing this stock business all wrong. I have been in the stock market continuously since 1954. The last pay check I received was in January of 1976 with no buyout or continuing health insurance, etc. attached. We have been living on dividends, capital gains and interest ever since, plus of course SS in later years. All I had started with was some accrued army pay whilst in Korean repelling the Chinese hordes.
Oh, by the way, I never mentioned Uranium stocks.
wade stone 7.18.12
jim, ferdinand is right. filling your gas tank with natural gas is possible and done just like using gasoline. and about the continuous price increase of oil, well we cant do anything about that anymore. it's like the law of supply and demand. prices go up when supply goes down and demand goes up. sad but true.