Paul Brown for The Climate News Network and reported in the Guardian gives us a different view on how fossil fuels should – or shouldn’t – be used.
When will we stop wasting fossil fuels by burning them?
Coal, gas and oil are used to make all sorts of everyday objects, but how we will make those things when fossil fuels run out?
The penny had to drop eventually – fossil fuels like coal might be more valuable if they were used to make medicines, chemicals and fertilisers rather than wasted by being burned.
While we know that fossil fuels are used to make all sorts of everyday objects such as plastics, carbon fibre, soap, aspirins, solvents and dyes, it has never occurred to most of us how we will make these things when the coal, gas and oil run out
To help concentrate minds on the potential waste of resources, the World Futures Council based in Munich, has attempted for the first time to put an economic price on burning fossil fuels rather than saving them for more “useful” applications.
The WFC’s Matthias Kroll claims the loss of this important natural resource runs into trillions of dollars a year but does not appear in economic calculations of the costs of generating energyIt should particularly be factored into the cost comparisons between renewables and fossil fuels otherwise a false impression is created, he argues.
Kroll’s report and his calculations in the rarified field of economics may seem difficult to grasp but he backs them up with figures about the volume of fossil fuels used for industry in a sophisticated economy – in this case, Germany.
Surprisingly, 13.5% of the crude oil in the country is not burned for energy but used to manufacture other products like chemicals. For natural gas it is 4.1% and hard coal 0.7%. Even that small percentage for coal is still 10,318 tonnes.
Although Kroll concedes that Germany, because it is an advanced country, uses a higher proportion of fossil fuels in manufacturing than most, he argues that developing countries will need these resources later for their own industries.
His point is that it is possible to protect the use of increasingly valuable fossil raw materials for the future by substituting these materials with renewables and we should take that into account when working out the full cost of energy production.
On his calculations when we burn fossil fuels rather than save them for more useful purposes we are incurring a loss worldwide of between $8.8bn and $9.3bn dollars a day.
It may be possible to argue with some of the report’s findings on costs. For example, sulphur is often extracted from oil before refining and would simply be a waste if not used for fertilisers. On the other hand many of the uses of fossil fuels are the primary reason for taking them out of the ground and as a raw material they already are more valuable than as diesel in the back of a lorry.
There will also be those who say fossil fuel reserves, particularly of coal, are so vast we can use them for whatever purpose we like. It is the same sort of argument that says we should not worry about the effect of climate change on future generations.
Energy in Demand - Sustainable Energy - Rod Janssen 
I’d have to see the calculations, but I am skeptical. In theory (according to Hotelling, writing decades ago) If there is a higher-value use for a finite resource, owners of that resource will withhold putting it on the market until the price is bid up accordingly. However, Hotelling’s model resource owner was somebody sitting on, effectively, a pile of gold already mined. Add in complications like the investment cycle, large labour forces that don’t take well to being laid off, and things get a bit more complicated. In the case of offshore oil, where the extraction and transport infrastructure has a limited life because of the harsh environment in which it operates, owners of resources already tapped don’t have the luxury of holding back on output, at least not for long.
In both Hotelling’s world and the actual one, though, the rate of interest matters. Future profits are discounted. In that regard, private owners of fossil-fuel resources are behaving rationally. The value of future non-energy uses in the future is still too distant, and the chance that substitutes will be found is too great, to merit holding back on production.
In the particular case of petroleum, it doesn’t make a lot of sense to look at a the 13.5% of a barrel of the crude oil in isolation. Crude is not a homogeneous commodity. While the naphtha that is produced through fractional distillation is useful in making non-energy goods, most of the rest of it (other than bitumen for roads) is not. Prices for naphtha would have to rise by a very large amount before producers think twice about holding back on development or extraction.