In the comments section of my "A Brief Defense of Suburbia" post, Jody writes several times and mentions his fear/certainty that a continuously expanding suburbia will lead to the "depletion" of natural resources and available land. However, his concept of depletion is an economic myth that's used by various dooms-dayers to manipulate the masses.
The following explanation can be applied to almost any non-renewable resource, such as land, oil, or diamonds. (Renewable resources, such as trees and animals, will obviously never be depleted. Yes, animals can become extinct, but that's not because they're "used up".) I am not an economist, but I play one on TV. If you'll note the title of this blog, I'm not a master of anything, but the following views on depletion are economic and logical fact.
The myth of depletion is simple to state: if we don't force people to reduce their consumption of resource X, eventually all the X will be gone. This is false. It is true that if there is a finite supply of X that it can eventually be consumed, but it is not true that it is necessary to force people to reduce consumption in order to prevent depletion.
Consider oil. As the readily available supply of oil dwindles, the price of oil will start to increase due to free-market principles of supply and demand. This increase in price will have many effects.
1) People will use less oil, because it's more expensive. Thus the mere increase in price will reduce consumption all by itself, without any need for government coercion.
2) Suppliers will start hoarding. As prices rise, suppliers will observe that their oil will be more valuable in the future than it is today, and so they will begin to hoard their supply for the future (with each supplier making the determination of when to hold and when to sell based on their own costs). If too many start withholding, then others will start to sell as the price gets even higher. There is no need for cooperation between suppliers (and in fact cooperation cartels are always bad in free markets). Suppliers will act to ensure that they are able to reap the benefits of future scarcity, and thus there will always be some supply remaining to be had at some price.
3) New sources will become economically viable. There's lots of oil everywhere, but most of it is too hard to get to and isn't worth pumping. For example, there's far more oil under the ocean than there is under the dry land -- unfortunately, except for the parts of the ocean right near shore it's very expensive to utilize. However, as prices rise, sources of oil that aren't worth drilling now will suddenly become profitable, thereby increasing the available supply.
These three factors together will ensure that humanity will never "run out" of oil, or any other non-renewable resource. What about land? Good question. Apparently, there's more than 70 sextillion stars out there, I'll bet some of them have some nice real estate. Maybe even oil!
The problem with your argument is that you don't understand the finer points of oil depletion. You don't have to run out of oil to have chaos, you only have to reach peak production (extraction). Somewhere, a hundred years from now, someone will be pulling a couple of barrels a day out of the ground, so we will never completely run out. The issue is world peak production, since every year after that we will have 2% less oil, yet demand will increase, at least for a short period. And peak will happen this decade, although it is likely we will not be able to define the peak for sure until at least 3 years after it happens.
North Americans will have to learn to live a more austere lifestyle at the very least. The suburban way of life will likely implode. At the worst, we may not have enough food to go around, since our food production is totally dependent on cheap energy.
For more information, here are some links:
http://www.peakoil.net
http://www.globalpublicmedia.com/
http://www.dieoff.org/
http://www.kunstler.com
I'm afraid that you're wrong about the effects. Prices will rise, and this price increase will naturally lead to reduction of consumption and the development of alternative technologies, as well as open new sources of production.
If you don't buy my reasoning, I'll fall back on authority and tell you that I've run this post past a few economists, including Steven at Econopundit, and they agree that I'm correct.
Your theory that as prices go up, demand will slow is incorrect.
"Even as gasoline prices begin to creep upward some time in the not-too-distant future we won't curtail our driving until real supply shortages absolutely force the issue." - Winston Smith
What happened in the US will happen to the globe. Production will decrease.
"In the country with the most open exploration and production environment in the world, and the country with the easiest access to the most advanced technology, virtually unlimited capital expense could not reverse this decline in oil production capacity." - J Mork
You assume there is an alternative energy supply. Sure there are other natural resources, but there are no alternatives to oil as an energy supply. Start reading the sites listed by Barry to educate yourself.
"The Auto Age is going to hit a rapid deceleration. But it will not be graceful, gradual or planned." - Winston Smith
"Economist serves no function in society except to protect the ruling elites from public scrutiny while they loot the planet." - Jay Hanson
Thanks for the condescension, but I'm quite familiar with the issue; the entire point of this post is that I disagree with these doomsday predictions you've listed. The reasons I've given are rock solid, and I challenge you to refute any one of them.
Your quote from John Mork is entirely out of context. Go read "A review of mature United States hydrocarbon producing basins and a look into the future of New Zealand hydrocarbon production" and see the quote in context. Mork is talking about maintaining existing production levels within a given petroleum basin, and not addressing the exploitation of new deposits.
Yes, gasoline is relatively inelastic, but not entirely so, and it certainly does respond to price pressure on the scale of years. Cars today are more efficient than cars were 10 and 20 years ago, and cars 10 years from now will be more efficient still. People won't need to drive less to consume less.
Suppliers will hoard as soon as they think that the future value of their oil exceeds its present value at the market price.
There is absolutely no reason to believe that the economy will treat oil scarcity any differently than it treats any other scarcity. Prices will rise, demand will shift over time.
Regarding Michael's comments about economists, I present the following information. I would have said this myself, but I'm generally lazy and there are others who say it better, like David Fleming:
"There are four ways in which the principles of market economics do not apply in this case. The first arises from the fact that the price of oil today has virtually no influence on the rate at which it is discovered. In market economics, the rules of supply and demand hold good: if the price of something goes up, this gives a signal to someone to produce more of it; new producers will pile into the market until the price settles down again. In the oil market, price does not have this effect. In the early days, the best and biggest fields were quickly found, and were very cheap to pump. This fuel was very profitable; so the world's resources were prospected urgently and rapidly and, with the help of digital seismic technology, discovery of oil grew to a peak at about 1965.
This means that most of the oil we are using was discovered more than 40 years ago. But that period of immense discoveries is over. There is no conceivable increase in prices which will bring it back. As we use up more of the fields which were discovered in the past, it is becoming more difficult to sustain the growth of production. Soon it, too, will decline."
more:
http://greatchange.org/othervoices.html
My question for Michael and the economists is "When the price of gas gets to over $5 a gallon over the period of a couple of years, what cheaper alternative fuels will replace it on the scale we are operating at now? Who will buy all the homes that are located in the suburbs and are being almost abandoned because no one can commute economically? How will Wal-Mart move garden hoses, work boots and laundry soap across the country, especially as it becomes more expensive to maintain the infrastructure? Will homes soon be heated with wood as natural gas depletes along with the oil, and if so, will there be a tree left standing in 30 years?"
Perhaps as you say the price of oil *will* rise and that will reduce consumption, but don't forget that our current economy is *based* on consumption. Without cheap energy the economy implodes. What good is the reasoning of an economist at that point?
Most people in the world already pay $5 per gallon, actually. But they don't have the technological know-how to innovate like America does. I don't know what form that innovation will take, but I guarantee you that a little blip like oil scarcity isn't going to slow us down that much.
If I could tell you how technology will solve the problem, I wouldn't. I'd keep it to myself, start a company, and be a billionaire.
Check out this post on Winds of Change that talks about the price of "unconventional oil" dropping.
I am unsure if it is mentioned anywhere on your site, but oil production fuels more than our automobiles. Unfortunately, the process of distilling oil into gasoline creates many "cheap" byproducts.
The ammonia in fertilizer comes from natural gas. Most pesticides and herbicides are petroleum based. Plastics are largely based on hydro-carbons. The list goes on and on, but there is currently no acceptable one stop shopping options available to replace oil.
Please correct me if I am wrong, but you seem to suggest that science will pull some magic before the big scare and save the day? Unfortunately, the alternatives they have offered so far are merely energy carriers and not producers, such as oil. I am not suggesting that the billions of dollars spent on electric cars was wasted, but a lot of people made a lot of money on that pursuit. More efficient electric motors were one such result. The hydrogen economy is another such sham.
I am unaware of where these mysterious deep sea oil reserves are, but they may exist. I do agree with your economic analysis to some point. However; at the current rate of exhaustion there are some issues that concern me. As easily recoverable oil is depleted, where will the infrastructure come from if we can't pay for them now? As prices rise, there is less money left to pay for updating our solar, wind and other renewable source economy. These resources are hardly comparable to oil in any aspect, but they may be the only things that may help the future of mankind remain "civilized".
Most of us that believe in Peak Oil are not crazed conspiracy theorists, but ask me about the alien bases on the moon sometime. We are generally just concerned citizens, who do actually understand basic economics. The problem is so multi-faceted, that it becomes so bothering.
I for one, am skeptical that either scenario is accurate. Without oil, our population cannot maintain our current excesses. We will adjust, some people will die due to starvation and disease. Our population must maintain equilibrium or else. I don't foresee our extinction from this and I don't see a future where we are all sitting around holding hands and singing like it didn't happen. Somewhere in the middle is most likely where our future lies.
However I am a born pessimist that sees the oil glass as half-empty. But then it has never been when will we run out of oil, but when will we run out of cheap oil. Trust me, I don't take this position lightly. I do hope I am wrong. Can you say the same about where you stand on this issue?
Unfortunately, you only argue the economics of this issue, of which I agree to some extent. Please do yourself a favor and read more on this important topic. You seem like an intelligent man.
BF: No need to be so condescending. I've read quite a bit about it. I agree that oil will get more and more expensive as the reserves get harder to tap, but technology will also keep improving and reduce these future costs. Eventually our civilization will be weaned from oil gradually and smoothly.
I know that hydrogen, ethanol, and so forth are energy sinks. Wind and hydro are pretty much maximized already (even in places where wind is profitable it can take 20 years before the energy costs of erecting the windmills are paid back). The future is space-based solar, fusion, and fission.
As for replacing the other products oil gives us, synthetic plastics already exist, and so forth. We'll find substitutes.
It's amazing what a leg up oil gave our civilization though. Without it it would have taken much longer to get as advanced as we have, if we ever could have. I wonder how long it would take to leap from steam to fission with only hydro in between?
"but technology will also keep improving"
Could that not also be a myth?
Wasn't Newton an alchemist? How'd that work out for him?
Chris: I don't see what alchemy has to do with anything, other than as an example of something we've since improved upon.
I do think technological improvement will start to flatten eventually, that's a good point. My point about the "myth of depletion" is that as stuff depletes we'll get a graceful failure of the system that will allow us to develop alternatives over time, as is economically profitable. There won't be a sudden cliff we fall off of.
A question for Chris/Barry/ABliss:
--Are you familiar with Thomas Gold's alternative theory of petroleum deposit formation (without going into too many details, he claims that it may be a continuously renewing resource welling up from deep in the earth's interior and therefore is not a "fossil" of past life). You can google this, but the best resource is his own book The Deep Hot Biosphere.
Now, a couple of questions for Michael:
1) Why should we assume that the failure of the system will necessarily be "graceful?"
2) When it requires more energy to pump oil out of the ground than the oil itself provides (due to its more exotic or difficult placement), why would a rational (i.e. profit-making) organization be motivated to do so?
To understand the serious implications of the coming oil shortages read this article:
"EATING FOSSIL FUELS"
by Dale Allen Pfeiffer
"http://www.fromthewilderness.com/free/ww3/100303_eating_oil.html"
Excerpt:
+------------------------------------------------+
In the 1950s and 1960s, agriculture underwent a drastic transformation commonly referred to as the Green Revolution. The Green Revolution resulted in the industrialization of agriculture. Part of the advance resulted from new hybrid food plants, leading to more productive food crops. Between 1950 and 1984, as the Green Revolution transformed agriculture around the globe, world grain production increased by 250%.4 That is a tremendous increase in the amount of food energy available for human consumption. This additional energy did not come from an increase in incipient sunlight, nor did it result from introducing agriculture to new vistas of land. The energy for the Green Revolution was provided by fossil fuels in the form of fertilizers (natural gas), pesticides (oil), and hydrocarbon fueled irrigation.
[snip]
In a very real sense, we are literally eating fossil fuels. However, due to the laws of thermodynamics, there is not a direct correspondence between energy inflow and outflow in agriculture. Along the way, there is a marked energy loss. Between 1945 and 1994, energy input to agriculture increased 4-fold while crop yields only increased 3-fold.11 Since then, energy input has continued to increase without a corresponding increase in crop yield. We have reached the point of marginal returns. Yet, due to soil degradation, increased demands of pest management and increasing energy costs for irrigation (all of which is examined below), modern agriculture must continue increasing its energy expenditures simply to maintain current crop yields. The Green Revolution is becoming bankrupt.
[snip]
The current peaking of global oil production (and subsequent decline of production), along with the peak of North American natural gas production will very likely precipitate this agricultural crisis much sooner than expected. Quite possibly, a U.S. population reduction of one-third will not be effective for sustainability; the necessary reduction might be in excess of one-half. And, for sustainability, global population will have to be reduced from the current 6.32 billion people to 2 billion-a reduction of 68% or over two-thirds. The end of this decade could see spiraling food prices without relief. And the coming decade could see massive starvation on a global level such as never experienced before by the human race.
+---------------------+
It's quite sobering.
Eric
Internation Peak Oil Meetup Day April 14th
http://oilawareness.meetup.com
Howard: 1) I didn't say you should assume the failure will be graceful! It can be inferred from everything I wrote in the post. I wouldn't expect you to assume anything, but I would expect you to read my arguments before entirely dismissing them and reducing my position to a mere assumption.
2) We use oil for lots more than generating electricity. Everything from tires to petroleum jelly are made from oil byproducts. But yes, once it takes more energy to pump oil than can be generated from it we'll stop using oil for energy.
Eric: People like Paul Ehrlich have been making doomsday predictions like that since the 1950s. They have never come true. They never will. The sky is not falling.
If you're really interested in learning about the Green Revolution, go there. There's a lot more involved than irrigation, pesticides, and fertilizer.
For additional refutation of the doomsayers, I recommend Jude Wanniski's "The Way The World Works." He's off base in his social liberalism. but his supply side ideas applied to the oil'problem' are astute.
BTW, why do none of your interlocutors mention the falling birth rate in the Western world and its effect on the prices/availability of *everything*?
CS: Good point about birth rates... we'll see if births drop in the 3rd world, too.
Your comments section sure attracts a rather odd crowd, what with all the resource-depletion doomsaying. I thought that sort of thing had gone out with leisure suits!
In any event, no miracle technology is necessary. We already know how to extract oil from tar sands and oil shale; the reason we don't do more of it is that doing so is more expensive than digging it out of the ground. If digging it out of the ground becomes more expensive due to depletion of readily-available oil in the ground, well, we'll pay the Canadians to make it out of tar sands. I predict that, soon enough, economies of scale and the R&D cycle will kick in, and the prices will start dropping again.
Oil depletion is irrelevant. It's the end of cheap oil that matters. There should never be a shortage of anything as long as the price is high enough. The 1970's shortages were caused by the government intervening and setting a celing on prices.
If gas were $1000 a gallon, do you really think there would be a shortage? Peak oil might be a myth, but cheap oil isn't. The U.S. certainly doesn't have much $2 barrel oil, but the middle east has enough to give us a good "hang over".
RJ: Quite right, cheap oil is the key. As long as technology keeps improving, the supply of cheap oil will keep increasing, as it has been doing for decades.
The real problem is food, and oil got us here.
People seem to have this hopeful onward and upward outlook based on previous experience with our civilization, sounding like Whig historians. We assume that we will soon have tokamac reactors and be juking around the stars at warp speed. (We are probably the only human civilization that has created for itself a "future" mythology about what we "think" we are going to do). There are so many technical hurdles to effective fusion or Cassimir energy generation that you can count it out for the forseeable future. Sorry folks. The real problem, albeit created by our hydrocarbon civilization, is food. Rather, uncontrolled population growth. This has lead to water and oil resource depletion problems, which will lead to agricultural problems by the way many in the world produce food. I did a recent analysis of arable land use, including pastureland and permanent cropland (meaning fruit, nut and timber trees) using a 1/7 food productivity rating for pasturelands per hectare and assuming equality between permanent and annual croplands (a big assumption). Using a WHO estimation of 2.0-2.5 acres per person per year of unaugmented agricutlural land (no ammonium nitrates or pesticides) for what is considered appropriate nutruitional standards, and assuming ideal distribution, ideal balance between local population and local arable land, ideal rainfall, etc. (all tacit assumptions), I estimated the number of people the planet could sustain. That came out to 2.1 billion, using the ideal ("unrealistic") data. That's about 2/3 overdrawn on our agricultural bank account. Can't use fishing as a fallback. Fishing only accounts for 5-15% of dietary intake, depending on locale and we have stressed many prime fishing areas to their limits already. The 2.1 billion figure uses actually 2/3 of the available land equivalents of annual cropland, employing a traditional 3-strip crop rotation technique. I was thinking about sustainability. So, what? Well, even if we do not make a breakthrough in cheap, abundant fusion energy soon so that we can use it to extract nitrogen from air for fertilizer, and have massive greenhouses of hydroponic plants grown under growlights, we are headed for disaster. Remember, in the next 20 years we are due to add another 2 billion souls to this planet. Rebuttals are welcome. I would sincerely like to be wrong.
MK: Then you get your wish, because you're wrong. Paul Ehrlich has been predicting similar scenarios for decades, and he's been wrong every time. Go read about Norman Borlaug and the Green Revolution for details.
Plus, population drops as wealth increases. We're probably pretty close to our maximum population right now, although we might peak closer to 8 billion before things start to taper off.
The US is generating food at less than half capacity thanks to agricultural subsidies (which impare food production around the world, in truth). Neither food nor oil are really limiting factors for continued growth. Energy generation is probably our biggest bottleneck, but core taps aren't too far in the future and those should be pretty effective once the economics of increasing oil prices push us harder in that direction.
MW: Thanks for the feedback. I will read up on Borlung et al. and get back to you when I have digested all the info (no pun intended). Hope these Green Revolution guys have a magical formula for topsoil.--MLK
MW: "population drops as wealth increases"... BTW, we are the wealthiest nation on the planet and the nation with the highest growth rate. Due to go from 365 million to 520 million within 15 years. You predict we will be broke by then? Sounds like a peak oil economist to me.--MLK
Borlaug, core taps and subsidies?
Granted, Dr. Borlaug has done some great things. I have colleagues that work in the plant biotech industry and I have cloned a gene or two in my time. The big boosts of earlier transgenic work were quite substantial, however there are some physiological limits to tinkering with transport proteins, fruiting body growth, leaf surface area, etc. that suggest the golden days are behind us. Ever do any molecular work? Any new cultivars are predicted to produce marginal increases in yield. Most are designed to grow in conjunction with herbicide application or in soils of increased salinity (due to over irrigation). There is some usefullness still for disease-resistant crops to be certain, however insect resistant crops are a no-go due to rapid selection (seen it myself). Even Borlaug states in an interview that, whereas previous global grain yields from the 1950s have been increased by 1.7 fold (from ca. 700 million to 1.9 billion tons annually), an additional 1 billion tons annually will be needed by 2025 to satisfy global needs. That's a might steep noting the expression and physiological barriers.
Core taps? We have not even drilled completely through the crust, much less into the moho, or the mantle, or the outer core, or inner core for that matter. Like to see that one with a coal steam drill.
Ag subsidies. Corn farmers around here produce at maximum. Don't know what they do in CA, but there are no unfarmed fields here in the Midwest. Subsidies here usually involve parsing out corn for inefficient ethanol production to make amended fuels. Controls the corn market price and gives farmers a separate market; also props up economically weak Midwestern states. Could you give me a reference for your half-maximal agricultural production rate quote? I would like to verify the source.
-MLK
K: I should have said "fertility drops as wealth increases"... much of our population growth is the result of immigration. Still, America has a higher fertility rate than Europe, and we're wealthier. Most demographers predict the world's population will eventually level off, but guessing that equilibrium point may be nothing more than rolling some dice.
K: Yeah, I'm sure there's a diminishing rate of return with GM foods.
As for core taps, the main difficulty is shoring up the shaft once it's drilled, and carbon nanotubes may help with that at the same time they're helping build a space elevator. Core taps are probably our best bet for cheap energy after oil, but there's still lots of oil left.
And yes, most farmers use all their fields, but much of it isn't for food. Take corn, like you said. Corn that isn't eaten is converted into corn syrup (thanks, again, to sugar tariffs) and made into candy. That same corn could be made into real food instead, if there were a demand for it. Ethanol is likewise a waste of food resources. Land in California is used to grow luxury foodstuffs (like wine) rather than staples because that's how the market is shaped. As demand for real food rises, those fields will be converted to other uses and luxuries will get more expensive. And so forth.
I pretty much pulled the "50%" out of the air; I heard it somewhere I trusted at the time, but I don't remember where, so I'll drop it. The point isn't that fields are wasting away, it's that they aren't producing food at their maximum capacity.
Plus, there's Africa, parts of which are remarkably fertile and under-utilized due to war. Africa could feed the world if there wasn't so much fighting (and if tariffs and subsidies didn't encourage illegal drug production).
If the rate of decine is 3% per year and we hit peak at 2005 then by 2015 we could be down by 30%. The time for alternative energy sources will have come to later for mass production purposes. To build a reactor takes 10 years etc
Economist can tell you what the standard model should do, but cannot predict something at this level. The economic model would just fall apart.
How many Economist have ever go their prediction right?
Also we are forgetting about the domino effect what about countries that are priced out due to the $100 oil price? They are critical for import/export trade of cheap goods etc and the support of the dollar.
Michael: You'reforgetting all the new sources of oil that become profitable once prices reach $100.
G'day Michael Williams
I am in general agreement with your economic orthodoxy that rising oil prices will stimulate developments of alternatives for oil various uses.
But that position does not successfully address the challenge of "Peak Oil & Gas" for a number of reasons.
1# I assume that you are aware of the economic pitfall that artificially setting the price of a commodity too low, as it adversely distorts the demand & supply. If the return to the producer is less than the cost of production there is little logic (the exception being to increase market share for some other high profit line that can offset losses) for them to maintain current production, let-alone increase what is a loss making enterprise. The closer a commodity is to being virtually free the less consumers will be concerned with stock management, prudent efficiencies, thus leading to increased wastage.
2# Any system has an optimal amount of flexibility / slack combined with responsiveness / ensitivity. The designers challenge for a robust reliable system is getting the balance of flexibility versus sensitivity correct. Too little flexibility raises the risk of the system suddenly failing. Too much flexibility and the systems esponsiveness deteriorates.
Too little sensitivity in a system and timely smooth responses of the system suffer.
Turning to the Oil & Gas market. You now have a system with NO slack.
The Saudi's the last swing producer (spare capacity that can be taken in and out as demand dictates) last month admitted they no-longer had any un-utilised capacity. On the sensitivity front you noted "gasoline is relatively inelastic, but not entirely so, and it certainly does respond to price pressure on the scale of years." There in is the whole problem of "Peak Oil" because responses is measured in years, 10 to 15 for any alternative solutions, but the market is on a knife-edge. Any (man-made) or natural disaster such as an earthquake in a major oil field, is going to set off a very nasty economic bump.
As the market-price of oil is failing to provide realistic price signals consistent with stock inventories (primarily because of US Policy interference or threats for producing nations, domestic consumption policies at odds with resource security and environmental concerns), alternatives are not gaining sufficient investment for timely results.
It is no surprise that Europe with it petrol taxes is a lot closer to a sustainable Hydrogen economy than the USA.
Living in Australia, North America's looming "Peak Oil" problems are only intellectually amusement. It all reminds me of one writer (who I would love the actual quote of) deriding markets ability to deliver efficiency after the 1930's crash said Adam Smith beloved "invisible hand" was arthritic.
Have fun folks, Rupert
PS: I have some webpages about this topic at;-
"http://www.geocities.com/RainForest/Canopy/2265/nonew-oil.htm"
C'ya Rupert.
Rupert: But as prices rise capacity will rise as well. Saudi Arabia may be the only place with unused production (I'll take your word for it), but that's only considering the current prices. As prices rise, other sources of oil will become economically viable, such as Canada's sand-oil fields.
Further, the hydrogen economy is a myth, since there's no source of natural hydrogen. Hydrogen as such is just a means of storing energy, and it has to be created by first investing energy into the system. Where does that initial energy come from? Fossil fuels.
G'day Michael
You wrote "prices rise, other sources of oil will become economically viable" TRUE.
"as prices rise capacity will rise as well" that is wishful thinking. Just because other reserves become viable it does not logical follow that production CAPACITY will increase in total. Given the technological / geological difficulties with many heavy-oil alternatives what is more likely is a long slow trickel. Unlike sinking more wells in a big oil field, many of these projects just won't scale that way. Think hard-rock mining operations.
Rising price will not fix the capacity problem. If your logic followed in other markets like diamonds supply wound't be the problem that it is!!
C'ya Rupert.
G'day Michael
You said "hydrogen economy is a myth" then Iceland must be a mythical country. As Iceland is well on their way to a Hydrogen Economy.
I am well aware that "Hydrogen is an Energy Transfer Medium NOT a Raw Energy Source." see my page on the subject www.geocities.com/RainForest/Canopy/2265/h2.htm for initial energy that would be geothermal, solar or tidal, or nuclear. But the USA is so far behind on all those fronts I doubt your society can pull the rabbit out of the hat in time.
Best of luck, Rupert
Not quite what this exchange is about, but here are some questions for you brainiacs:
Had the doomsdayers not been preaching their spiels, would oil-consuming societies be worse off today?
If they quit spieling now, will oil-consumers be that much worse off in the future?
Don't they serve their purpose?
Unfortunately this post on the impossibility of depletion is bogus.
First, economics is not a science. It is sociology with a few equations thrown in to make it seem like a science. I'm a physicist by training. Read The Death of Economics or Debunking Economics to learn about the theoretical and practical innacuracies of economics. Therefore economic arguments are bogus.
Two: familiar yourself with entropy and the EROI concept (energy returned on energy invested). Non-conventional sources will provide energy at much lower rates than we have relied on with oil that literally bubbles out of the ground.
Three: As energy prices increase, the economy will recess. That will provide less investment money just at the time that money is needed to develop these lower energy, lower EROI sources.
Basically, you don't know what you are talking about. You're just making it up. You should write a fiction book. I am a technologist, and in fact have made a sizeable fortune working at a technology company (QUALCOMM). You are completely wrong in your arguments. Sorry to burst your bubble.
Michael,
There are some logic and moral flaws in you assertion;-
"The myth of depletion is simple to state: if we don't force people to reduce their consumption of resource X, eventually all the X will be gone. This is false. It is true that if there is a finite supply of X that it can eventually be consumed, but it is not true that it is necessary to force people to reduce consumption in order to prevent depletion.
Consider oil. As the readily available supply of oil dwindles, the price of oil will start to increase due to free-market principles of supply and demand."
This elevates the ability to purchase to the status of a moral absolute. You talk a bit on this blog how your Christian faith informs your thinking. Try these few references;- Ezekiel 16; 49-50, Isaiah 5; 8-23, Jeremiah 22; 13-17, Matthew 19; 16-22 { about God's displeasure with a lack of concern for the poor }.
The USA has only 5% of the world population yet slurps up 25% of the world supply of cheap oil. Such excessive behaviour is contrary to the God's pronouncement of what is just. So Michael how is this dichotomy resolved consistent with your faith and assertions about "The myth of depletion"?
Shawn
TRE: Rather than go into a long explanation to demonstrate that I do in fact know all those things you mentioned (and that I'm an engineer myself, and quite well-versed in science) let's just wait and see. Or better yet, why don't you pick a date that oil will be depleted by? Let's see if you're right.
You put arguments in my mouth that I never made. I never said the price of oil wouldn't affect the economy. Or heck, I never said that the price of oil wouldn't ruin the world economy (although I don't think it will). All I said was that oil will never be depleted, and it never will be.
SG: The USA pays for the oil we use. That means we give money to the producers in exchange for their product. There's nothing immoral about that, unless you think trade is immoral. The real problem is that much of the world's oil is held by tyrannical dictators who don't work in the best interests of their people. In general, that's not America's fault, although we did contribute in some places. Which was bad, and should be rectified ASAP.
OK. I might have assumed arguments. But now, with clarification, I see that you aren't saying that much. There will always be oil. There is some oil we will never be able to get out of the ground. It won't be cost effective. But there is absolutely no guarantee that production will peak. Once it peaks, depletion economics sets in. That is the definition of depletion. The world is consuming greater amounts of oil each year, yet when production peaks, prices will start increasing. There are no alternatives right now. Tar sands, coal liquifaction, nuclear: none will provide the energy that is necessary to run the world. Look at the work of Richard Smalley, Nobel in Chemistry. The world has a BIG energy problem coming within the next twenty years. It is very very likely that production will peak at about 90 million barrels per day (best case), which implies 2007 or 2008 at current growth rates. It is likely that we will experience short-term production constraints even before then.
More generally, on a different topic, the US is an overextended empire that is addicted to cheap energy. Current account deficits, budget deficits, low savings rate, dependence on foreign capital, and dependence on foreign supplies of energy. When oil production cannot meet world consumption needs, the US is in big trouble. The irresponsible leadership of both democrats and republicans, and in particular the irresponsible fiscal leadership of Bush and his ill-executed war-for-oil in Iraq, will just make it worse.
Michael.
It is realy interesting how you don't answers folks' questions, rather only responding to what you wish they had miss-understood. In my case you wrote "SG: The USA pays for the oil we use. That means we give money to the producers in exchange for their product. There's nothing immoral about that, unless you think trade is immoral." I never said trade was immoral. That is not the point of those quotes if you actually read them. What they are talking about is abuse of advantage, disregarding impacts of a person or nations actions, to the disadvantage of the poor. Choosing to purchase more oil than is a fair share of the finite pie. AKA the sin of gluttony.
Your in Christ, Shawn
TRE: I think perhaps your politics are informing your science. And you may not be familiar with the recent advances extracting oil from tar sands, such as in Canada, which has more oil sitting around on its beaches than Saudi Arabia. Plus there's always deep sea drilling, which is expensive now but gets cheaper every day. There's more oil under the deep sea than we can possibly imagine.
Plus, nuclear power can't replace fossil fuels? Don't be absurd, of course it can. The only thing limiting nuclear power now are environmental regulations that make it incredibly expensive, but that's totally artificial.
As for future technology, core taps are the most likely next step, and they do hand-in-hand with deep sea drilling in a lot of ways.
Ehlich and his lot have been predicting doom for decades, and it hasn't happened yet. So, I suppose we'll just have to wait and see.
SG: The point of mentioning trade is that it completely undermines your "fair share" argument. First off, there's no such thing as a "fair share" of oil anyway -- people own it, and no one who doesn't own it is entitled to use it. The Bible is pretty big on the concept of private property. Secondly, when you buy something from someone at a price you both agree to, no one is getting taken advantage of. Even if there were a "fair share" issue, if someone chooses to sell you their oil then you can hardly be accused of "taking" more than your "fair share".
The people abusing their position of advantage are the dictators who keep most of the world subjugated. And yeah, I think we should work against them, as much as possible. I assume you're a big supporter of our invasion of Iraq?
Michael,
"Bible is pretty big on the concept of private property." Bible refernce please free of the context of the 'Year of Jubilee' assume you know what that is.
Then you can answer my orginal question, instead of trying to side step it.
Shawn
SG: Check out the 8th and 10th Commandments, assuming you know what they are.
The only question I see in your original comment is, "So Michael how is this dichotomy resolved consistent with your faith and assertions about "The myth of depletion"?" I've already explained how your question is groundless, because there is no conflict; Americans do not consume more than their "fair share" of oil.
You are absolutely wrong. I'm completely familiar with tar sands, as well as other sources of oil. Politics does not infect my science. Unfortunately, your free-market ideology does infect your ability to think about this.
Look at what exon has to say:
http://www.worldenergysource.com/articles/pdf/longwell_WE_v5n3.pdf
He tries to put a good spin on what is in fact a disaster in the works. We've used up half the worlds supply of cheap energy.
Also look at this report, which is a good summary of the issues:
http://www.rmst.co.il/Report_Danish.pdf
Your particular examples are red herrings. Tar sands will produce perhaps a couple million barells a day max. The EROI is not very good, and the costs will accelerate because of the need to use natural gas (also in depletion) to fuel the process.
The worlds only shale oil project was shut down. Reason: not tecnically feasible.
Provide evidence of underwater reserves. I think you are unfamliar with the physics and geology of oil formation. Deep water oil is only likely to be found in certain limited locations. Please provide references to demonstrate why you think oil will be found in deep water that will make up for the rapidly depleting world supplies (US started depleting in 1970, Alasaka is depleting and would still be in depletion with ANWR, Australia is in depletion, the North Sea, Mexico is soon hitting depletion--all this doesn't mean they are out of oil, they are over the hump and each year produce less, and the production becomes more expensive).
You are simply ignoring both the physics and the eocnomics of this situation. There are no alternatives to cheap oil right now and none coming down the pike. Uranium is also in short supply and the price--if you have'nt noticed--is increasing just as fast as oil, if not faster.
The world will soon have less energy each year, and American, a country I love and that has been very good to me financially and personally, is the biggest pig at the trough and is lead by individuals who have no interest in doing anything other than maintaining and widening the trough for short-term gain.
It all boils down to one thing: selfishness.
And the US is in deep trouble regarding Natural Gas as well, as this article points out:
http://www.energypulse.net/centers/article/article_display.cfm?a_id=828
America is wasting energy and her citizens had better wake up to realize that our way of life--a greedy, materialistic, consumer way of life--will be in decline.
TRE: I'll take a look at those articles. Through it all, however, I fail to see how economics won't take care of the problem. As oil gets more expensive, alternatives get relatively cheaper. As technology improves, the supply of economically viable oil increases. I agree that there's nothing that can replace oil right now, but that won't always be the case, will it? Steven Den Beste has written a bit about some alternatives on the horizon, and he thinks core taps are the most likely successor to fossil fuels.
I guess we'll see.
Michael,
Still waiting for your private property verses free of a 'Year of Jubilee' context. All the Ten Commandments most of the old Testament and all of Jesus ministry in the New Testament minister are inside that context. Thus the 8th (not stealing) and 10th (not converting) {BTW what are your thoughts on the Advertising Industry manufacting covertness in the masses?} Commandments don't support your assertion that the "Bible is pretty big on the concept of private property" The Biblical concept of 'Property' under the Covenant Law is a very different animal to any 19th or 20th century concept of 'private property'. Find yourself a good Concordance that traces Hebrew words and do a search on the word that is translated 'steal'. (Having once thought as you do, I suspect it will prove a uncomfortable Bible study.)
Your 'Free Trade' assertion "Secondly, when you buy something from someone at a price you both agree to, no one is getting taken advantage of." while the two parties to the trade may-not be at a disadvantage, that doesn't hold true for third parties external to that trade. Sodom got rich by being a trading nation, God did not condemn it because of Sodom's trading prowess but rather because it "had arrogance, abundant food, careless ease but she did not help the poor and needy" Ezekiel 16 v 49.
There is the question you have still not answered. Or to put another spin on it look at 'oil depletion' from angle of good Stewardship, Luke 16 should help.
Shawn
SG: I don't think you understand what the Year of Jubilee is. Every 50 years all Israelite slaves were set free and all land that had been sold reverted to its original owner, under Moses'/Joshua's original division. The only real effects were to outlaw permanent cross-generational chattel slavery of Hebrews, and to preserve the original land divisions by making "sales" into leases. All other private property was unaffected, and the 8th and 10th commandments served as pretty strong protection, don't you think?
I'm looking at steal in Strong's, and the definition looks pretty much exactly like what anyone would expect.
So I'm not sure what else you might be referring to, but it doesn't make me feel particularly uncomfortable.As for trade, no other country in the world helps the poor and needy more than America. We give more foreign aid than the rest of the world combined (for whatever good that does), and Americans give more money to charity than any other nation.
I think your whole position is bogus, and your condescending attitude makes it hard to take you seriously.
On energy: economics is a subset of ecology, which is a subset of physics. We are moving from the age of energy to the age of entropy. Or from low-entropy to high-entropy. Our growth based economic system is contingent on cheap energy. As energy prices increase, the ponzi scheme that is globalization and modern free-market economics will lose its base. Therefore I see major economic and social problems starting soon and continuing through the rest of he century. The 20th century was the age of oil growth. Right now, it looks like the 21st will be the age of oil depletion.
Time will tell. But in the mean time, I've moved significant amounts of money into energy funds and commodity funds. Prices of energy are going up, as they did again today, and everything else will go up in turn.
Americas contributions to the world: on a per capita basis, which is a more reasonable estimate, or a GDP basis, American's contributions are pretty poor compared to those of other countries.
Not per capita:
http://www.nationmaster.com/graph-T/eco_eco_aid_don_cap
Nor per GDP:
http://www.nationmaster.com/graph-T/eco_eco_aid_don_gdp
We pay a lot of dollars because we have a lot of people and have a large economy. But in GDP and per-capita terms, the US is a pretty pathetic contributor to world problems. It's sort of like Joe Mechanic giving $100 to a cause, and Bill Gates $1000. Bill Gates contribution is much appreciated, but you can't say that Bill is trying very hard in relative terms. It's a drop in the bucket.
TRE: Yes, we're no doubt doomed.
As for absolute vs. relative giving, you can't forget to include the cost and value of our non-monetary contributions, such as our military deployments around the world. How much have we done for Europe over the past 50 years just by preventing Germany from invading France a few more times? And there are many other similar things, aside from military. Plus, as I indicated with my link, I think the vast majority of direct foreign aid promotes evil in the world, not good.
Michael,
Yes I'm often tachless, sorry that you find me "condescending", not the intention. But have you ever sat back and looked at your blog? The "Strongs" link was strange as it is quite cut back from the hardcopy I have here. Anyway I didn't suggest just looking up definitions, but studying the verses and contexts. Do a study on Usury while your at.
Shawn
I suggest looking at Matt Simmons latest presentation.
http://www.simmonsco-intl.com/files/SPE%202004%20Annual%20Conference%20(B&W).pdf
I never said we were doomed. You bring that up because you are unable to respond to the fact and issues I raise. The entire gist of this thread, that depletion is a myth, is either false or misleading. Depletion is real and is coming soon to a gas station near you. It is irresponsible and immoral to make statements on topics when you are clearly lacking in proper analysis and facts.
Regarding Americas funding overseas: First you boast that America is the biggest funder. Then when it is pointed out otherwise (in per capita or GNP terms), you change the subject by pointing out how evil funding is and how wonderful the US military is for the rest of the world.
You are simply unable to discuss or argue issues without changing the topic.
Good overview of how America has become a debtor nation since 1980. The 1980s, of course, were the start of "morning in America" in which Ronald Reagan promised everyone a free ride to the future (built on high levels of debt). That free ride mentality has become ingrained in the culture and is now fully entrenched in George W Bush, Tom Delay, and their crony-capitalism--what I call the "spend and send the bill to the kids" politicians.
http://www.morganstanley.com/GEFdata/digests/20040927-mon.html#anchor0
Time for people to wake up to the damage their politicans are doing. Republicans are no better than Democrats, and in fact the Republicans spend money just as fast--they just send the bill to the grandkids. Great family values.
TRE: Oh brother, whatever. I've been responding to your arguments pretty directly and trying to explain my own. If it makes you feel better about your position to treat me like an idiot then I suppose that's up to you. Anyway, there isn't much more to say on the matter.
It's true, however, that Republicans spend too much money. However, deficit spending isn't as bad as most people make it out to be, and sometimes it's very good indeed.
You've not responded at all. You simply shift in order to look good.
1. Depletion is a fact. We are approaching it. It will a major impact on all economic systems. Particularly systems highly leveraged on debt.
2. The US economy is highly leveraged. The government and individuals are borrowing significant amounts of money from foreigners in order to maintain a consumeristic materialistic lifestyle.
The references I provided above highlight thee two issues very clearly. The highly leveraged economy of the US will be deeply affected by rising energy costs.
Finally, deficit spending, or Keynesianism, otherwise as demand side economics, is appropriate when it puts people to work. Or when investing in the future. This is not what is happening. What is happening now is immoral. It is sad to see someone such as yourself attempting to justify immorality.
More on oil problems: End of the Age of Oil, by David Goodstein, a physicist at Cal Tech:
http://www.energybulletin.net/2311.html
People should read this and start considering whether the irresponsible behavior of our politicans after Jimmy Carter is warranted. SUVs values will soon end. The only question is whether we will downsize our values appropriately or hit the wall, driving full speed in our SUVs, head on.
Depletion is not a myth. We are living it right now. Hold on. It will be a rough ride.