One of the great motivators of the economic system we all believe in is cost or cost of alternatives. In every industry there is always an alternative, but most of the time it is costly from one perspective or another. One of the best industries to see it is oil energy. When the US started a war with Iran, oil prices increased and alternatives begin to show their face.

In an article by Heru Aspranto and Johan Purnomo of Reuters, the government is trying something to lower the price of gasoline. Indonesia is the world’s largest palm oil producer and exporter. It has large plantations devoted to growing palm trees and extracting the oil and it is used in many products in the grocery store.

The government has a B50 mandate which is gasoline sold in Indonesia should be a 50% palm-based diesel and 50% conventional diesel. This saves on the use of conventional diesel and should lower or keep prices lower for consumers. (in the midwest, bio fuel from corn is another example).

One of the beneficiaries of the change towards more biofuels is garages. Cars that use the fuel will go back to the carshop more often because the fuel filters need frequent cleaning because the biodiesel leaves more sediment than conventional fuel.

Indonesian President Pravowo Subianto said B50 is a big achievement, maybe we should go to B60.

Linking to dividend paying stocks, much of the innovation in the world happens when something is deemed expensive or a luxury good. How do you drive down the price? In the past it took years, for example the cost of pepper was expensive to Europeans, eventually spices came back to Europe in ships which flooded the market, drove down prices but made the pie bigger as middle income people began to use spices. High prices can equal innovation and competition.

There are more questions than answers, till the next time – to raising questions.