Tiger In the Tank

New at Reason: Ron Bailey looks for the world's vanishing oil supply.

Comments

[Larry]

I still think scientists should be equipped with an EPA (Erroneous Prediction Average).

[Warren]

I'm an electrical engineer. I have never worked for an oil company. I have been posting on H&R since it first showed up on Reason.com

I would like to request that the above poster make some minor modification to his screen name to avoid confusion with myself

Thank You
The wise and wonderful

[Fred]

Anyone interested in the future of oil reserves must click on this site. Oil may not be made of squished dinosaurs.
http://www.news.cornell.edu/releases/Feb97/Gold2AAAS.lb.html

[Fred]

That should read ..."may not be made of squished dinosaurs after all." I didn't mean to make it sound like I was putting a prohibition on squishing dinosaurs for their oil. Mmmmm...dinosaur oil.

[Jean Bart]

Memo to America:

Build some nuclear power plants.

Jean Bart

[Shannon Love]

The entire concept of "natural resources" is a politically dangerous one. The very concept of "natural resources" evolved as a means of rationalizing wars and colonization.

"Natural" resources don't exist. All resources come into being through human knowledge and action. All resources are really "artificial resources." Every "natural resource" is in fact just the most immediately cheapest means of accomplishing a specific task.

Politicians of all stripes like the idea of "natural resources" since it conveys a since of inevitability. It rationalizes particular government actions as being wholly unavoidable since the existence of the resource lays outside the human domain. How can you justify war, colonization, rationing or centralized economic control unless you portray these actions as unavoidable?

"Natural resources" is a concept whose heart we need to drive a stake through.

[Jean Bart]

Shannon Love,

Humans are part of nature; there is nothing 'artificial' about their actions in nature. You are working on the same dichotomy (probably unknowingly) that environmental insane people like "Earth First!" does, who want to: "Go back to the paleolithic!"

[JD]

Didn't we just have this discussion last week? (Brady and Coarsetad, please listen.) To recap, even assuming that oil supplies do "run out" any time in the remotely near future...

1. Oil starts getting scarcer and harder to find. It takes more effort to find it, so the price goes up. (This encourages more exploration, which adds a negative feedback element to the shortage.)

2. Because oil prices are higher, other sources of energy become relatively cheaper. This encourages use of them instead, which in turn encourages more R&D for them, which will in turn drive their prices down.

3. As oil becomes scarcer and the cost of production continues to rise, eventually it becomes more efficient to use other energy sources. At this point, conversion to other sources will become widespread. Eventually, 99% of people will be off the oil habit, long before we've extracted every last drop from the earth.

Is this so outrageous? Am I suggesting something totally off the wall here? You can look at history for examples of other energy sources. We don't use wood or peat moss or whale oil as major energy sources any more, but the world didn't run out of any of them. The ultimate goal of our thoughts and actions regarding energy policy should be to improve human lives. Oil sitting in the ground forever unused is not improving anyone's life, unless maybe you get a warm fuzzy feeling from it, and it's hard to cook your dinner with just a warm fuzzy feeling. You want people to stop using oil? Give them a reason to do it. We don't _have_ to wait for oil shortages, but if you can't give people a cost-effective reason to switch, don't hold your breath.

[Jean Bart]

JD,

Just qoute the "robber baron" in the play "Other People's Money" when he is discussing whips for carraiges. 🙂

[Don]

"The idea that free markets and conservation of natural resources cannot coexist is a disheartening idea."

Free markets are all about resource allocation. Frankly, anything but a free market is the wrong answer.

[Don]

"Just because we can continue to use oil doesn't mean we should. I don't find anything wrong with exploring and advocating new, cleaner, more efficient fuels and machinery. Why wait for wells to dry out to technologically evolve?"

The problem is when you use governments to force technological evolution.

Let the market decide.

[Brady]

JD,

Listen up. We don't have to run out to find something better. This is the same logic that would say, "normal televisions are just fine, what the hell would we want to use plasma screens for?" "My Pentium II runs fine, why would I want a P4?"

Are there alternatives in existence today that would rival oil as an energy source? Probably not production ready for the masses, but there are quite a few promising signs.

Example:
http://www.bpsolar.com/

I don't think BP entered the market for a fuzzy. I'm pretty sure it is called profit.

[Brady]

Oh, and for the record I never suggested the market should not decide. Hence my link to bpsolar, which represents a business case for alternative energy.

Considering my father and father-in-law are oil company executives in TX, I'm definitely not suggesting the government put their grubby hands into the matter.

[Shannon Love]

Jean Bart,

The concept of "natural" means something that exist prior to and independent of human action. It connotes something beyond human control, something timeless and immutable.

Translated into politics, something natural is something in which the political system has no choice in relation too. "Natural" behaviors are conceived as ones in which no amount of state coercion can alter. No government claims to able to control the weather. Likewise, "natural" resources cannot be created, altered or affected in any way. The political entity cannot choose another course of action in respect to the resource.

Currently, most people conceptualize "natural resources" as huge bins of matter just more or less sitting their "naturally" i.e. without any human intervention. The bins are labeled oil, iron, agricultural land etc. We use the resources by scooping out what we need like flour. The bins, though very large, have a finite fixed size. If on person takes out a scoop it is means another person cannot use it. Eventually, we will keep scooping until we suddenly strike the bottom of the bin and the resource runs out.

This concept easily justifies government power. Since the bin is fixed and finite, when one person takes from the bin another person is denied use of that scoop full. The government must intervene to fairly ration the contents of the bin. The government must also wisely see to the point when bin will be empty and try to head off the crises caused by the sudden disappearance of the resource.

But if we think of every resource as being "artificial" the case for government action weakens considerably. If humans created a resource in the first place they can just create another one. No need for wars or rationing just more R&D.

[Jean Bart]

Shannon,

"The concept of 'natural' means something that exist prior to and independent of human action. It connotes something beyond human control, something timeless and immutable."

Humans are part of nature; therefore what they do is natural. As natural as beavers building dams or bees making beehives.

[joe]

JD (and Ron too, I guess),

Both of you predict a transition away from oil that will occur based on oil becoming more expensive. Further, you both breezily assume that this transition will be smooth and pain free. Not, "It's going to suck, but we'll manage." You both assume that companies will see it coming, make investments in response to their projections, and bring about glorious new energy alternatives just in time, without making a dent in economic growth.

Now, I know I'm just an ignorant liberal who can't even make change when someone hands me an evil dollar bill for a soy shake down at the co-op, but...

Why are you so sanguine about the effects of rising oil prices resulting from shortage, but so quick to predict economic meltdown if similar price increases result from regulation or taxation of petroleum products? $4.00/gallon is $4.00/gallon is $4.00/gallon, and the backstory won't make a difference to consumers' pocketbooks.

[Jean Bart]

joe,

The lesson of the 1970s crisis is that it will not be a catastrophe; firms and governments adjusted, and "oil power" has no been neutered.

[joe]

I agree, JB. The technology is there to make transition from oil painless.

[Maurkov]

This issue brings out the doomie in me.

While Mr. Bailey has put together a fine feel-good piece, I still don't feel good. "But we've heard it all before" isn't a sound rebuttal. The Saudis have heard of Hubbert, so it seems disjointed to quote "They have so much oil, why would they bother looking for more?" while denying that "markets are so myopic that they cannot foresee future supply trends; that markets won't realize when a resource is running out." The Scientific American article addressed the question of reserves-- There are incentives for inflating estimates and few for being conservative or even honest. Without address this structural problem, it is isn't clear how to interpret industry figures on reserves.

People look at alternate energy sources and assume that they will be adopted when the rising price of oil makes them economically competitive. Unfortunately, a portion of the alternate's price is computed using today's energy costs. For example, using completely fabricated numbers, when oil is $30/barrel, an equivalent amount (in BTU) of ethanol is $50. But making ethanol requires diesel fuel (for tractors) and natural gas (converted to ammonia fertilizer). When oil hits $50, the cost of ethanol will have climbed to $65. Adding to the gloom, once you consider aquifer depletion, it's not clear that ethanol is a renewable resource (oops, this is Reason; you don't care). Actually, it's not even clear whether ethanol is a net energy source or sink. For the same number of BTU's, energy can be recouped more efficiently from oil because if its higher burn temperature.

While improving technology provides marginal gains, there is a fundamental question about energy quality. At some point it takes more energy to extract a resource than can be recouped consuming it. There may be trillions of barrels of oil left, but when there is a net loss of energy, there is little point in extracting it.

The bad news is that transitioning away from oil will be hard. From coal to oil was easy because oil is better than coal for almost every application. None of the oil alternatives are as good, so only consistently high prices will force change. High energy prices will be disruptive because energy is an input to every other product in our economy. I predict quite a few oil shocks before we've transitioned significantly. The good news is that $100/barrel will eventually make folks less squeamish about nuclear power, and we can start building thorium breeder reactors. That should keep us going long enough to develop space based solar power and a free energy utopia.

[joe]

I'd also like to note the disparate levels of credibility given to the respected Scientific American magazine and the hired gun consultant for energy companies.

[Jason Ligon]

joe:

Sorry about that problem with the soy shake. Sounds rough. 🙂

A few points:

1) Of course companies will know about the scarcity of their product, and of course they will make investments. That is all they do.

2) You are asking why it is better to have high prices only when we have to than to have high prices when we don't have to. Is it a trick question?

3) If the government imposes additional taxation on oil, what makes you think the revenue wouldn't go to pork? Even if you have confidence in the government's ability to tax efficiently (whatever that means), then only spend that money on new technologies, you have the government choosing a set of technologies instead of the market choosing the technologies. What if someone comes up with a way to go 200 miles on a gallon of gas, for example?

Finally, you really don't think that people will notice the difference between a 75% tax on oil and oil that costs 75% more due to scarcity? By the time scarcity drives oil up that much on average, people will have been undergoing incremental incentives to demand different technologies for years. Seeing a bill from Texaco that says: "Charge for gas: $20.00 Taxes: $20.00 Total: $40.00" does not have the same effect.

[Jason Ligon]

"I agree, JB. The technology is there to make transition from oil painless."

How so? Why isn't anyone competing against oil, then? Why does the government itself use oil?

The alternatives are not very good, and top down planning is not the way to reach a desirable end state. It excludes competition from the process based on the hubris of today's technocrats.

[joe]

"1) Of course companies will know about the scarcity of their product, and of course they will make investments. That is all they do."

Yes, just as they saw seat belt and emissions regulations coming, shifting some R&D money around, and kept America's auto industry running fine.

"2) You are asking why it is better to have high prices only when we have to than to have high prices when we don't have to."

No, I'm asking why higher prices from cause A are treated differently from higher prices from cause B. According to the author, higher prices from scarcity can be foreseen and planned around (sorta - he contradicts himself) but higher prices from regulation cannot.

"3) If the government imposes additional taxation on oil, what makes you think the revenue wouldn't go to pork? Even if you have confidence in the government's ability to tax efficiently (whatever that means), then only spend that money on new technologies, you have the government choosing a set of technologies instead of the market choosing the technologies."

Completely irrelevant. Bailey posits a situation in which all of the spending necessary to create the new energy technologies will be done by the private sector.

"Finally, you really don't think that people will notice the difference between a 75% tax on oil and oil that costs 75% more due to scarcity? By the time scarcity drives oil up that much on average, people will have been undergoing incremental incentives to demand different technologies for years." Regulations create incremental incentives as well. Look at how the Clean Air Act got implemented.

[mojo jojo]

None of these predictions seem to take into account the fact that "dry" wells aren't really dry. Only about 10% of an "oil pocket" is siphoned off with todays technology. The rest is still there it is just not economically feasible to extract it at this time. Who knows what new tech will pop up that makes it easy to harvest this "dead" resource.

[joe]

"Why isn't anyone competing against oil, then?"

1. They are, with a growing share every year.

2. Oil subsidies, including the socialization of externalities.

3. Sunken costs, infrastructure advantage (gas stations, for example), inertia, vested interests.

"The alternatives are not very good, and top down planning is not the way to reach a desirable end state. It excludes competition from the process based on the hubris of today's technocrats." My question referred specifically to private industry's response to rising prices. Prices rise (from taxation, or regulation, or scarcity, or oil embargoes, or whatever) and good old Yankee ingenuity comes up with ways to get by without the expensive product. 100 mpg cars would be a good example.

Oh, and as for your question about the public's reaction to a 75% increase from taxes vs. a 75% increase from scarcity: this isn't about feelings. This is about the impact of price increases on the economy. The only possible way I can a see a difference is that the public would be able to exert some control over the tax-driven price increase, but none at all over the scarcity-driven increase.

[thoreau]

Joe-

I think your point was too subtle, concerning the price increase. So let me make the same point:

It is predicted by some around here that a technological change caused by increasing oil prices will be rather painless, or at least not too painful or disruptive, if caused by scarcity.

Joe asks whether people would predict massive economic disruption if a similar price increase resulted from taxation.

Now, in order to make this point sink in, let me make the obligatory disclaimers: Taxes are evil, taxes are theft, liberals are evil, taxes are always wrong, George Bush is a great leader, taxes are wrong, taxes are evil, etc. etc.

With that out of the way, the question remains, would this evil, evil, heinous, predatory oil tax cause massive economic disruption. If so, why wouldn't an increase in the price of oil due to scarcity also cause massive economic disruption?

I might add that I am not endorsing a gasoline tax, repeat, not endorsing a gasoline tax. However, I do believe it is possible for economic upheavals to arise from sources other than the government. The private sector does not guarantee universally good economic results, it simply tends to produce better results than any other system. So please don't accuse me of endorsing a gasoline tax. I just happen to think that Joe raises a good point: Let's not be so cheerful about "Oh, don't worry, rising oil prices will cause a painless adjustment." Some economic adjustments, even those arising from natural phenomena in the market, can be quite painful. Just ask anybody who worked at a dotcom that went bust after the market naturally corrected inflated stock prices. Doesn't mean the government would have been any better, but it does mean that the market is not always painless.

Or, to put it another way, the free market is the worst possible system, except for all the others.

[Jason Ligon]

"Yes, just as they saw seat belt and emissions regulations coming, shifting some R&D money around, and kept America's auto industry running fine."

I am certain that industry can adapt and survive to many natural disasters and many man made ones as well. I don't know that it follows that we should create more man made ones on the grounds that the last time we did it, we didn't destroy an industry. We did alter the shape of automotive design, but I'm not at all certain we did so in a net positive way. Regulations created the demand for SUVs. I know, I know, all we need is GOOD regulations that have neutral outcomes, right?

[Jason Ligon]

My point is that market forces have more insight than regulators. Better to let 300 million consumers decide every time they make a purchase than a bunch of activists in DC doing so once and for everybody.

An implemented government strategy is necessarily short sighted for that reason, and any 'softening of the blow' is an illusion because the government created a scare when none was warranted, and pocketed the money.

[Jason Ligon]

"The only possible way I can a see a difference is that the public would be able to exert some control over the tax-driven price increase, but none at all over the scarcity-driven increase."

People won't tolerate it, because there would be no way to spin it as "Bill Gates owes you free gas". Everyone would pay, and you'd never be able to hold on to your tax level, which should tell you that you are making a fuss about nothing.

[Ken]

The Stone Age didn't end because we ran out of stone, the Oil Age may end for a reason other than running out of oil.

[Eat at Veggie Hut]

So, what about this soy shake? Is it organic? MMMMM, organic soy shake! Make my a carob with wheat grass and serve it to go please.

[Mark Fox]

Another factor to consider re tax cost v. scarcity cost: The tax cost can be avoided, either through black market mechanisms or relocating to a lower-cost place. Scarcity costs are unavoidable everywhere.

[Rick Barton]

Kenneth Deffeyes, (cited in Ron's piece) wrote:

conservation and alternative energy sources... will not be enacted in time to evade a short-term catastrophe

Note the tell tale sign of poison in the Deffeyes concoction!: "...will not be enacted in time..."

Well sure, if we have to depend on something that has to be "enacted" i.e. a law or government program, there will all most certainly be a catastrophe, (although not in the "short term", as Ron points out) but hopefully the profit motive and the market will be allowed to function and based on the results of history it is quite likely that the word; "catastrophe" will not be applicable.

It's much more likely that a catastrophe will ensue as a; result of government action as it did in the 70s with energy price controls.

Unless the three petro-products companies that Energy Investor at 11:33 AM said drastically reduce their reserve estimates was to somehow trump all the macro data that Ron cites, there is no crisis at all and certainly no reason for the government to "do" something, although there are many levels of taxation which it could undo to make petro based products cheaper and living standards higher. This is a much bigger deal to the Americans who are less affluent than it is to those who are more.

[Rick Barton]

Maurkov:
"None of the oil alternatives are as good, so only consistently high prices will force change."

Not just "high prices", but rather it's the; prospect of high prices that spurs the market, which is why a smooth transition seems like a good bet; when ever in the future that may be.

[Rick Barton]

joe,

"note the disparate levels of credibility given to the respected Scientific American magazine and the hired gun consultant for energy companies."

OK, but Ron's point that:Scientific American is now highly political is valid; remember the quite unscientific way they treated The Skeptical Environmentalist and the author, Bj?rn Lomborg

http://www.lomborg.com/books.htm

[MALAK]

Keep driving those SUV's folks. Eventually you will make it profitable for Alberta to ramp up porduction in the oil sands. Once that occurs, Canada becomes more powerful than OPEC. Combine that with our eventual market dominance in fresh water and I think my daughter's prosperity is a certainty. Hee-hee-hee . . . can't wait.

[Critic]

"Oil crisis mongers make the mistake of thinking that markets are so myopic that they cannot foresee future supply trends; that markets won't realize when a resource is running out."

That same myopia does not apply to regulators and politicians, evidently, who peer into the future on a daily basis to justify their energy policy du jour.

[Douglas Fletcher]

So what are you going to do, make all say EH?

[Energy Investor]

While I agree that the Peak Oil doomsayers are probably wrong, let me point out that in the last couple of months, we've seen at least three petro-products companies drastically reduce their reserve estimates: RDShell, Pengrowth, and today, El Paso. What's up with that?

[MALAK]

No, we actually like Americans just the way they are. We will demand a Timmy's drive-through on every interstate, however.

[Brady]

Just because we can continue to use oil doesn't mean we should. I don't find anything wrong with exploring and advocating new, cleaner, more efficient fuels and machinery. Why wait for wells to dry out to technologically evolve?

[Coarsetad]

Hydrocarbons have a multitude of uses beyond just energy. Sucking the wells dry before we move on other energy sources, also means a world where plastics, synthetic fibers, many medicines, and other "everyday things" will become expensive to produce or no longer exist.

The idea that free markets and conservation of natural resources cannot coexist is a disheartening idea.

[Warren]

Wow- I saw this stuff in Barnes and Noble last night. Bring back the Club of Rome!!

Its amazing how stuff like this sells. My company once employed an economist who made a lot of money and sold a lot of articles primarily because he was always predicting doom. We used to say that he accurately predicted 10 of the last 3 recessions. This reminds me of him.

I used to work for a large oil company, and I will tell you that the low prices of the last 2 decades have put tons of plans on the shelf for new oil drilling and exploration. Almost every company has rooms full of projects ready to go if the price of oil starts going up.

To the question of proved reserves - there has evolved a pretty conservative definition of proved reserves, and that number is a lot lower than what people really think is down there. BP made it pretty clear that they think the same amount is still down there, but that the current proved amount is less. Also, in certain ways, proved reserves depends on price. Reserves go up as you make investments in enhanced oil recovery, etc., and no one is making many such investments at these price levels.

Finally, it is not that surprising the US peaked in the 1970's, because in the 1970's all the most encouraging new oil frontiers were put off limits (much of the california coast, the ANWR, all of the atlantic coast). If we had these 1970's exploration and drilling restrictions in the 50's instead of the 70's we would have peaked in the 50's, since much of the growth in US production since the 50's was offshore and in Alaska, all areas now verboten.

[Coarsetad]

Oh hell, lets just burn it up as fast as we can. Releasing millions of years worth of carbon into the atmosphere over the span of just a few decades will do wonders for my dreams of a citrus grove in colorado.

It think its quite sad, Liberaterianism works great for so many issues, but I cant help but to feel that when it topic turns to natural resources or environmentalism, I feel like am at Wal-mart during christmas time. "Give it to me now, give it to me cheap, or I'll trample your ass."

[Mark Fox]

joe: Harmless? No. Obviously a rise in price of anything upon which so many depend will cause some suffering and difficulty. If it happens as a result of scarcity, then at least that harm isn't malicious or intentional. Unless one's concept of god requires them to be punished...

And Don already took up my point that taxes are a distortion in the market, and thus an inefficiency. Tell me again how taxation helps anyone other than the payee?

[Coarsetad]

Taxes are only a distortion in the market when "services" generated from that taxation are not applied towards the actual taxpayer. (ie, gas tax going to pay for education)
Gasoline taxes going towards building roads actually helps the taxpayer because they get better roads and therefore better fuel efficiency.
(If taxes werent used to build roads we would be guzzling tons more gas on conjested dirt paths, gas might cost 40cents a gallon but the average car would probally get about 5mpg)

Of course, some beleive that purpose of taxes is to fund things for which there is no market (The more liberal view). I personally think we should use this only as a last resort.

[the other side]

"I'm skeptical of industry shills whose scientific arguments are too convenient for their funders, and I'm especially skeptical of ideological web journalist who take those shills at their word, while playing the world-weary cynic towards all sources on the other side of the issue."

Substitute "alarmist scientists on the government teat" for "industry shills" and "regulatory-crazed government" for "funders", and we pretty much have both sides of the argument.

[joe]

Well I'm glad you presented that other side.

Because nobody else here had done so.

"Obviously a rise in price of anything upon which so many depend will cause some suffering and difficulty" Yes, obviously.

[thoreau]

Heresy on the way:

I'm not sure whether I believe the estimates of global warming, but I'm not sure whether I believe the skeptics either. As a physicist, I feel that this is a problem I should be able to get a handle on with a little thought. I suppose that I could try to read all the literature, but diving into the literature is a perilous exercise without a little expert guidance.

So, I'm going to commit heresy: Instead of answering this question for myself with ideology ("Global warming is a notion propagated by people who hate capitalism, therefore global warming is false!") I plan, some time this year, to sit down for a couple days and do some calculations. I know I can't replicate decades' worth of climate change research in a few days. But we physicists pride ourselves on our ability to look at a problem and come up with some rough estimates in short order. Something along the lines of "Well, if we ignore all the details and make the most optimistic assumptions then the answer can't be any bigger than this. On the other hand, if we ignore all the details and make the most pessimistic assumptions, the answer can't be any smaller than this."

This is how we usually begin a research project. The hard part of the project, the part that has occupied decades worth of climate research, is the part where you try to make realistic assumptions, as opposed to optimistic or pessimistic, and you pay attention to details. It's hard because without good data you might not even know what a realistic assumption would be in the first place.

Once I've done this, I'll post my conclusions to this forum. One of three things will happen:

a) The answers will suggest that global warming is a very plausible and disturbing phenomenon. The handful of left-leaning types here will applaud my moral honesty. Everybody else will lampoon me as being a lefty. (Come to think of it, since I'm going to approach this without ideology, I fully expect to be lampooned already.)

b) The answers will suggest that global warming is probably not real, and should be regarded with skepticism. Most posters here will applaud me for my courage in defying the scientific establishment and tell all their friends "A very good physicist whom I know has come out with calculations debunking global warming." A handful of left-leaning posters will say "So, you're going to take a couple of days' worth of thought over the scientific consensus?"

c) The answers will be ambiguous. I'll remain skeptical but open-minded. The left-leaning posters will chide me for being skeptical of the scientific establishment. Everybody else will encourage me to return to my ideological roots.

Here's what I fear will not happen: People will deviate from their pre-conceived notions after being confronted with plausible calculations.

[the other side]

"Here's what I fear will not happen: People will deviate from their pre-conceived notions after being confronted with plausible calculations."

Laudable as your undertaking is, each and every one of us has to examine the evidence and reach a conclusion. You can't do the work for us, even if you want to.

[thoreau]

the other side-

I don't expect anybody to post "Hey, thoreau said so, it must be true." And I'm not doing it to persuade other people. If I were already convinced then I'd be less inclined to do calculations. But there's a lot at stake here. Either there's a global environmental crisis looming, or else a lot of people are trying to shackle business with nonsense regulations. Either way, a lot is at stake. So I want to persuade myself one way or another.

I don't expect an incredulous reception. But I hope I'll get something a little more open-minded than "Nonsense! The entire scientific establishment has accepted this result!" or "Nonsense! Doomsayers used to say that we were heading into an ice age. You're just another doomsayer!"

I guess I'll be testing two hypotheses:

1) Global warming--tested via calculations
2) Whether a site devoted to "free minds and free markets" has any open minds--tested by posting data.

We'll know some time this year.

[the other side]

thoreau,

Actually, that was more of a reminder to the viewing audience that no one else can do their thinking for them.

With the wealth of data out there, do you really think you can pull it off before the end of the year?

[Mark Fox]

thoreau: I admire your dedication.

I customarily rely on a follow-the-money shorcut. If warming (or oil reserves) is a problem with a solution, some entrepreneur is working on it already. The level of subsidy in the process influences my assessment, as I also rely upon the notion that government is somewhat more stupid than the individuals it is composed of.

Let me know when you offer shares in thoreau climatology, LLC. I'll need a place to put my Bush 04 winnings.

joe: So why do you want to hurt me with tax-inflated $4 gasoline? I paid for my share of your tunnel. 🙂

[thoreau]

With the wealth of data out there, do you really think you can pull it off before the end of the year?

We know how much energy the sun puts out. Some of it is absorbed, the rest is scattered or radiated back into space. It's easy to estimate approximately how much energy a large sphere must be radiating if you know its temperature. The total amount radiated must equal the total amount absorbed in steady state. And although the global temperature fluctuates throughout the year, what we're looking for is a long-term deviation from steady state, not a short-term.

It's easy to figure out how much extra energy a given amount of carbon dioxide will absorb. It's easy to figure out how much that absorption will increase the temperature of the CO2.

This is what we physicists call "back of the envelope" calculations. If there's enough energy in all this to cause a significant global temperature increase then I'll be willing to believe the detailed studies of the past few decades. If there isn't enough energy in all this to cause a significant temperature increase, then either the studies are wrong or there's a subtle but powerful feedback mechanism.

The basic question is whether anthropogenic CO2 can absorb enough energy to potentially cause significant climate change. That's easy to model. The hard part is in accounting for all of the many processes that happen in the atmosphere. Just because the energy is there doesn't mean it's doing what they predict. But if the energy isn't there, then barring some very subtle yet powerful feedback mechanism there's simply no way for their predictions to be right.

So I don't have the ability to prove anybody's predictions right with a couple days of work. But I do have the ability to either say "Yep, it's plausible" or "Nope, just not enough energy there, unless they show me some subtle feedback mechanism to amplify it."

[the other side]

Because you know, regardless of the results of your analysis, someone will say "Ahh, thoreau obviously failed to take x, y and z into consideration."

[thoreau]

If there's enough energy being absorbed to yield warming, then x, y, and z could indeed mitigate warming. I can't rule that out. But if there isn't enough energy being absorbed, then x, y, and z can be dismissed unless they amount to a powerful yet subtle amplification mechanism.

[the other side]

Then please keep us posted. I'm interested in hearing your results.

[Mark Fox]

Q: Why are you so sanguine about the effects of rising oil prices resulting from shortage, but so quick to predict economic meltdown if similar price increases result from regulation or taxation of petroleum products? -joe

A: Obviously a rise in price of anything upon which so many depend will cause some suffering and difficulty. If it happens as a result of scarcity, then at least that harm isn't malicious or intentional. -me

Extra Credit: The time value of money says that the tax cost paid before scarcity cost has greater present value. Taxes today hurt more than scarcity tomorrow.

[joe]

"joe: So why do you want to hurt me with tax-inflated $4 gasoline?" I'm not advocating for that, just noting the diparate treatment."

"I paid for my share of your tunnel. :)" Massachusetts is a $1 billion/year net donor when it comes to federal taxes, even at the height of the Big Dig. You most certainly did not pay for the tunnel. That (and a lot of stuff in the lesser states) was paid for by us liberal parasites, who aren't nearly as ruggedly individualistic as those in red states like Iowa, Nebraska, Mississippi, and Alaska. 😉

[joe]

"The time value of money says that the tax cost paid before scarcity cost has greater present value. Taxes today hurt more than scarcity tomorrow."

Only of the annual cost was the same. If a $10/year tax starting now kept your energy prices from increasing by $200/year starting in 20 years, you come out way ahead.

[Douglas Fletcher]

If you do, they'll all go out of business -- people will be afraid they're serving Lassie-burgers.

[Douglas Fletcher]

I personally want to take this occasion to thank the nation of Canada for producing those wonderfully crisp lager beers.

Salute!

[Mark Fox]

joe: True. (Depending, of course on our assumed rate of return) Can we trust that the state will actually use that ten bucks as promised, to ease the effect of future likely (but not certain) scarcity?

I think the absurdist extension would be: Enact a general excise to force the public to save into a reserve fund insuring against future cost increases in everything. Or something like that...

And, thanks for the tunnel, then. I can hardly wait to get out there and be stuck in it.

[John Hensley]

How many people would buy a magazine emblazoned with the headline "ENERGY SUPPLIES STABLE"?

[MALAK]

No Lassie burgers, just doughnuts, and the BEST coffee on the North American continent!!!

[joe]

"OK, but Ron's point that:Scientific American is now highly political is valid; remember the quite unscientific way they treated The Skeptical Environmentalist and the author, Bj?rn Lomborg"

I've got you skeptical environmentalist right here, buddy. I'm skeptical of industry shills whose scientific arguments are too convenient for their funders, and I'm especially skeptical of ideological web journalist who take those shills at their word, while playing the world-weary cynic towards all sources on the other side of the issue.

My beef is not with Bailey's skepticism towards Sci Am.

[Don]

"Another factor to consider re tax cost v. scarcity cost: The tax cost can be avoided, either through black market mechanisms or relocating to a lower-cost place. Scarcity costs are unavoidable everywhere."

Yes, hurting the taxed economies relative to the untaxed economies. Another reason to outsource production to developing nations. And another reason for more protectionist policy . . .

[Don]

"Why are you so sanguine about the effects of rising oil prices resulting from shortage, but so quick to predict economic meltdown if similar price increases result from regulation or taxation of petroleum products? $4.00/gallon is $4.00/gallon is $4.00/gallon, and the backstory won't make a difference to consumers' pocketbooks."

$4/gallon WILL hurt my pocketbook, assuming I had to pay that tomorrow . . . which a government tax enacted today would be saying. Sure, it wouldn't end Western Civilization. It just wouldn't be a good thing.

Running short on oil wouldn't be a good thing. Just because the market can deal with it doesn't mean that the government should simulate an oil shortage.

[Don]

"Some economic adjustments, even those arising from natural phenomena in the market, can be quite painful. Just ask anybody who worked at a dotcom that went bust after the market naturally corrected inflated stock prices."

Natural phenomena? Try: "malinvestment resulting from the feds loose monetary policy."

[joe]

So no one wants to defend Baily's claim that the impacts of oil scarcity will be harmless? And no one wants to argue that higher prices from taxes would have a different impact than higher prices from scarcity?

[Don]

Joe: "Only of the annual cost was the same. If a $10/year tax starting now kept your energy prices from increasing by $200/year starting in 20 years, you come out way ahead."

Mark: "True. (Depending, of course on our assumed rate of return) Can we trust that the state will actually use that ten bucks as promised, to ease the effect of future likely (but not certain) scarcity?"

In California, the state uses money gained via gas taxes for, uh, whatever purpose it wants. So, why would we believe Joe and expect the money we pay in taxes to be well spent, and save us money later? And, even assuming that the state does the best it can with the money, spending it in an attempt to make as much return on energy as possible (and not using it to explore typical leftist feelgood projects, etc.), why would we expect the state to make the right decisions? Joe still doesn't grasp the failings of the command economy.

[Don]

joe: "So no one wants to defend Baily's claim that the impacts of oil scarcity will be harmless? And no one wants to argue that higher prices from taxes would have a different impact than higher prices from scarcity?"

The exact impact isn't known, because we don't know what technology will arrive in the future. Oil scarcity won't be the catastrophy some think, but it may not be painless. The difference in increasing taxes, or any other central control "solution" is that the government can't possibly know the future, and can't provide the solutions. Hell, central planning can't cover the here-and-now, let alone the distant future.

[Don]

"Taxes are only a distortion in the market when "services" generated from that taxation are not applied towards the actual taxpayer. (ie, gas tax going to pay for education)"

False. Taxes are still a distortion, as your subsequent comments show (although you imply that the distortion is positive, but you are doing a lot of assuming in doing so).

[Don]

"It think its quite sad, Liberaterianism works great for so many issues, but I cant help but to feel that when it topic turns to natural resources or environmentalism, I feel like am at Wal-mart during christmas time. "Give it to me now, give it to me cheap, or I'll trample your ass."

Capitalism is ALL ABOUT resource allocation; and it does this much better than central planning. You have it backwards.

[joe]

"Can we trust that the state will actually use that ten bucks as promised, to ease the effect of future likely (but not certain) scarcity?"

Maybe not, it depends on what it's being spent on. In other words, it's a question to be answered emperically. But by Bailey's line of the thought, it is the price increase itself that will bring about the solution.

My point thoroughout the thread has been that the mechanism that's going to save our oil-dependent asses when scarcity comes is the incrase in prices, which will make investment in the technology needed economically worthwhile. That's the "don't worry, be happy, trust the companies" position on resource depletion; if it ever happens, it will be ok, because the price will go through the roof and...

[Don]

"Maybe not, it depends on what it's being spent on. In other words, it's a question to be answered emperically. But by Bailey's line of the thought, it is the price increase itself that will bring about the solution."

But in the case of a government tax, the government will be basically punishing the use of one resource relative to other resources, based upon the government's predictions ("we are running out of oil, we should invest more in solar!"). Why should we trust the governments prediction that "we are running out of oil", and "we should use solar"?

If you let the market decide, we then oil is going up for a REAL reson, and the market decision to go with solar (if that's the market decision) will be the best one -- based upon the decision and calculations of consumers and producers trying to optimize their situation.

[Nuclear Now]

*We* are running out of oil.

The world isn't running out of oil, but America *is* running out of oil.

We in this country should invest in clean and inexpensive nuclear power. This power can be used to fuel electric and hydrogen powered cars.

Terrorism is funded with oil money. It's time that Americans stopped funding terrorism and starting keeping their hard-earned dollars at home.