Maybe we can create diesel fuel for $50 per barrel! All that is needed is sugar cane and “bugs that excrete petrol.” From the Times Online (London):
“Ten years ago I could never have imagined I’d be doing this,” says Greg Pal, 33, a former software executive, as he squints into the late afternoon Californian sun. “I mean, this is essentially agriculture, right? But the people I talk to – especially the ones coming out of business school – this is the one hot area everyone wants to get into.”
He means bugs. To be more precise: the genetic alteration of bugs – very, very small ones – so that when they feed on agricultural waste such as woodchips or wheat straw, they do something extraordinary. They excrete crude oil.
Notice that no government directives or subsidies are required.
Hat tip to Arnold Kling who also notes that we actually throw up a barrier to this kind of entepreneurial activity by putting a substantial tariff on Brazilian sugar cane.