Rubbish conspiracy theory of the day

From Metro's readers' letters:

The In Focus feature about generating hydrogen gas from water using the Sun's energy quotes academics hailing the news as an important step towards ending our reliance on fossil fuels (Metro, Mon).

I fear that a more realistic prognosis of the future of hydrogen generation using solar power would be that some oil company is going to buy the patent to the technology and bury it so deep that we won't hear of it again until we've depleted all the fossil fuels and completely destroyed the environment.

Aliaksei Holik, Cardiff.

I've heard this one before and it doth not make sense.

1. Oil extraction and refining isn't that stupendously profitable. The ten biggest oil companies in the world have a market capitalisation of $1,500 billion, about three times that of Apple. They have to make huge and risky investments and spend a fortune on maintenance etc. Why would they bother with deep sea drilling if they own a patent which will produce oil-substitute products from sunlight and bacteria/water/fresh air/whatever?

2. The real big earners from oil are the countries which collect tax from motorists on the fuel - but even if cars ran off something else, these countries could get the same amount of revenue by taxing the substitute fuel or road-user charging - and the money from extraction licences. So if anybody is doing any buying and burying, it would have to be an organisation like OPEC.

3. Let's assume that the net present value of all OPEC's future oil revenues is £1 quadzillion. If a new technology threatened to wipe out that value, then OPEC would have to pay something approaching £1 qzn for it (if the patent holder did his sums and haggled properly). So let's say that OPEC have bought and buried some breakthrough patent for £0.5 qzn. What happens if another patent holder comes along with a different patent? The first £0.5 qzn is a sunk cost, and OPEC would, yet again, have to pay something approaching £1 qzn to buy and bury the next patent, and so on, once they have bought and buried the third patent, they will be deep in minus territory so it's not even worth starting. It's like paying a blackmailer a small amount of money, he'll just keep coming back for more.

4. From the point of view of OPEC, the same applies to oil (or gas) discoveries anywhere else in the world. The competition they face from oil in the USA, the North Sea, off the coast of Brazil, the Falklands etc. will put just as much of a dent in their earnings, and when oil is discovered in these places, oil companies are rushing to bid for the licence to extract it.

5. Motorists and oil companies may be fairly reckless as to oil running out or the environment being ruined (whether that is the case is a separate debate) but it is certainly not their stated intention to achieve this. When Lord Browne and Tony Hawyard had their appointments with the school careers officer, they didn't tell them that their personal ambition was to wreck the environment and deplete natural resources and wait for the careers officer to recommend that they apply for a job with an oil major as the best way of achieving it. I assume that they studied engineering, geology, organic chemistry or economics or something and then found that the best paid and most interesting jobs they could get were with oil majors.

6. UPDATE Blue Eyes in the comments points out that patents are usually only protected for twenty years, so OPEC would not only have to acquire the patent but also bind everybody involved in developing it into very long term confidentiality agreements, destroy all workings papers and results etc, which is nigh impossible nowadays.

So the way I see it, OPEC will be pretty miffed if and when somebody develops such an alternative technology, but in the long run, there is nothing they can do about it. Oil companies won't be too fussed, because we can safely assume that it would take ten or twenty years for people to replace their cars and lorries, which is roughly the same period over which they can amortise/use up/wind down their current investment in all the rigs, refineries, tanker ships etc. and invest in the new technology instead.

"Reduce rip-off mortgage fees, Darling tells banks"

Following The Goblin King's voluntary humiliation at OPEC, it appears to be The Badger's turn today.

King Canute must be turning in his grave...