Left Behind: Oil Armageddon

Yesterday The New York Times Magazine plunged into peak oil hysteria: the belief not only that the planet's oil production is declining, which may or may not be true, but that the law of supply and demand is going out the window too. In the real world, gradually increasing prices are a signal encouraging consumers to conserve and entrepreneurs to invest in alternative sources of energy. On Planet Peak Oil, we wake up one morning and discover that the world's petroleum has disappeared overnight, in some ecological equivalent of the Rapture.

Steven "Freakonomics" Levitt thrashes the Times article here. The AP looks into getting energy from cow patties here. Guidelines for writing Left Behind fan fiction here.

Comments

[Akira MacKenzie]

I've often thought of writing a parody of Left Behind, the problem is, I can't bring myself to read that pile of fundy tripe even to lampoon it.

[drf]

Prof Hamilton talks about oil etc. here

econbrowser.com/archives/2005/07/how_to_talk_to.html

econbrowser.com/archives/2005/08/talk_of_recessi.html#more

actually, Prof Hamilton is HUGE in the field of Time Series Analysis.

[Johnny Clarke]

I think it would be amusing if we finally made contact with a highly-advanced, alien species and they had their own twisted religion...and decided to "convert" us. Well, it'd be amusing until they broke out the death rays 'n stuff.

[dhex]

the first left behind movie is ok, with decent production values. the second is horrible.

their other films, especially the corbin bernsen/mr. t one about putting god on trial at the UN (god wins by default) are generally good in that sunday afternoon matinee way.

[WSDave]

Maybe a spoof: "Right Behind: How big gay Al finally snags a boyfriend.". Or something like that....

[notfromtexas]

dhex,

does mr. t portray god in that one? just wonderin'

[Johnny Clarke]

Great...40 years later we're right back in the 70's. I'd imagine paul erlich will be releasing a new book soon and by God, this time the whole world is really, really going to face mass starvation within the next 10 (or 15 or 20) years!!! Hmm, except I think last time it was an ice age that was going to kill us, rather than global warming. Whatever. I'm buying me an XB Ford Falcon coupe and heading to the Australian outback, just to be safe.

[Herman]

So in the peak-oil future, only the bio-diesel and electric car hobbyists will have cars that can go anywhere. Well, and Ed Begley Jr., as long as he feels good about himself.

[dhex]

no, he's a freedom fighter for the lord, because the godless UN - aided by satan - has outlawed christianity because it threatens them and... stuff along those lines. after a while it's a bit much.

[Jennifer]

On Planet Peak Oil, we wake up one morning and discover that the world's petroleum has disappeared overnight, in some ecological equivalent of the Rapture.

No, we don't, but oil prices climb steadily higher and economic problems get worse and worse. (Cue analogy of frogs incapable of realizing that they'r being boiled to death.) It's quite possible that some genius will develop an invention or discovery that will make the whole issue moot, but betting our future on such a proposition is not such a good idea.

Akira--

Just this weekend I went to a book sale where the price was two bucks for an entire bag full of books. So I spent four dollars and made off with over 40 books, including a copy of "Left Behind," which I read yesterday and then threw out. (I was afraid that I might drop dead, and people looking through my stuff would find the book and think I was actually a fan.) The book really, really sucks, but I did find some unintentional humor when the authors talked about how Nicolae (the antichrist) was the most gifted, flawless public speaker the world has ever seen, and then on the VERY NEXT PAGE they had ol' Nicolae make a grammatically incorrect statement. (Singular verb when it was supposed to be plural.)

[Akira MacKenzie]

So I spent four dollars and made off with over 40 books, including a copy of "Left Behind," which I read yesterday and then threw out.

It was THAT quick a read?

[wellfellow]

I may sound like a broken record, but I just hope peak oil isn't as bad as peak copper and peak aluminum were! God help us all.

[Ironchef]

Can anyone tell me if I should read Freakonomics?

[Jennifer]

Akira--

I've always been a fast reader; I'd say it took me about three and a half hours, and that includes the time I'd spend making comments like "Are you fucking kidding me?" and "You've GOT to be fucking kidding me."

If I knew you might want to read it I'd've saved it for you, but I tossed it in the garbage and I think by now it has some old stir-fry sauce on it.

[Brian]

Peak oil doesn't mean we're running out of oil, it means we're running out of cheap oil. There's plenty at $60, 80, 100. But that Clinton era 90 cent gas is another thing to put on the 90s Nostalgia List. We've premised our economy, transportation system, housing, agriculture, a lot of stuff on cheap oil. So that's the problem.

[Jennifer]

I just hope peak oil isn't as bad as peak copper and peak aluminum were!

If you're talking about a material used in construction (of anything, not just buildings) finding a replacement isn't too big of a problem. But what can we find to replace our main source of energy? Oil is currently the most energy-efficient thing we've got (when you compare the ratio of how much energy we GET from oil, versus how much energy we had to spend to get it in the first place.)

Just to clarify: I'm not a total gloom-and-doom Peak Oiler; I don't believe we'll go back to the middle ages, and I'm sure we'll still have plenty of electricity (especially if we get more nuke plants online). The main problem is that our society is dependent on cheap and easy transportation, and while we will probably be able to eventually find a replacement for petroleum cars, the transition will be neither quick nor painless. Our theoretical grandchildren will likely grow up in a world as rich and comfortable as our own, but that doesn't do squat to help those of us here now.

[Jesse Walker]

I read the first half of the first book while waiting for my car to be repaired (and never got around to reading the second half), so yeah, it goes pretty quickly. My favorite part was the computer genius's quick work on the airplane, which was clearly written by someone who had never touched a computer in his life. (As I recall, the book kept using the word "download" to mean "upload.")

No, wait. My favorite part was when they kept using the word "monetarists" as a synonym for "bankers."

Or was it the constant references to "Jewish Nationalists"?

Anyway. Jennifer: As oil prices climb, entrepreneurs invest in alternatives. If the alternatives aren't good enough then consumers conserve more. The only bet on the future is being proposed by those who believe the government should choose which energy alternatives are worth investing in, push society's resources in those direction, and leave the rest of us hoping it's chosen wisely.

[drf]

Ironchef:

I didn't like Freakonomics. It was too superficial. I put it down as quickly as I picked it up.

Yes, it probably will introduce economic-style analysis, and it might convince those who say "economics is a useless major" (for undergrad, which major isn't "useless"?) that econ can be interesting, but it just didn't do anything for me.

Probably sitting down with Varian's micro book and Freakonomics and seeing what the actual economic theories would be worthwhile...

But I do not recomomend it. Or: don't expect anything intellectual. It is not. If you want entertainment, it might be okay.

cheers,
drf

[dhex]

i liked freakonomics because i tend to like anecdotes; and freakonomics is nothing but a compilation of anecdotes on his approach to problem solving. it's engaging in that sense; it makes a fine birthday gift to folks who are not interested in economics but very interested in problem solving.

[rox_publius]

i'm pulling for $100 oil. the increase in my gas charges down at the BP will be nothing in comparison to the appreciation on my city rowhome.

[Johnny Clarke]

I just thought of a bright side to the coming oil crisis. Everyone hates suburbia (except all the people who choose to live there, who we will ignore because their opinion obviously doesn't count). With the collapse of the privately owned vehicle as a way of life, everyone will be forced to live in tightly-knit, urban areas where everything's within walking distance. So there ya go, "smart growth" will prevail be default and the world will be a bright, happy, crime-free place. This truly is the best of all worlds.

[Jennifer]

Jesse--

The problem with the "economist" argument (for lack of a better term for the theory you described) is that is kind of assumes that the use of oil is a purely voluntary thing--can't afford it? Then just don't buy it! Unfortunately, for most people that's not true. Sure, you can choose to abolish your pleasure driving, but unless you live in one of the few cities with mass transport there's a minimum amount you NEED to get to your job and perform other necessities of life.

[Forgotten History Dep't]

The only bet on the future is being proposed by those who believe the government should choose which energy alternatives are worth investing in, push society's resources in those direction, and leave the rest of us hoping it's chosen wisely.

Incorrect.

It is no coincidence that the U.S. is spending more money in Iraq, rather than other troubled portions of our world. The honest explanation of expenditure here is: (1) a bet that the oil is running out; and (2) a bet that a complaisant Iraq will give the U.S. (as opposed to China, say) better treatment in doling out the dwindling supply. The stuff about WMDs and flytraps is bullshit.

When one argues that these (actually counterproductive) Iraq War expenditures should be re-deployed to alternative energy research, one is not proposing a new bet. Rather, one is merely saying that the extant bet should be placed on a different alternative.

[Jennifer]

Seriously, considering that China's and India's appetites for oil are growing so voraciously, what is so hard to believe about the idea that demand will soon outstrip supply?

A couple of weeks ago I had to fly in and out of Dulles Airport, and in one of those long, long tunnels you had to walk through to get from gate to airport entrance and vice-versa there were a bunch of backlit ads, all from Chevron, and all with statements like "We only discover one new barrel of oil for every two we use." When even the petro companies start urging conservation, chances are supplies aren't as unlimited as folks would like to believe.

[The Wine Commonsewer]

Thanks Jesse, for that succinct analysis.

Speaking as a victim of the unending gas lines of the 1970's (TWICE) I am more than willing to pay the freight to get the petro to run my car. The alternative to expensive gas is government mandated cheap gas that is only available on odd days to those with license plates that end in even numbers. And then you can only have five gallons.

Besides which, after adjusting for inflation, the highest gasoline prices ever were in 1981 and were over $3.00 per gallon (inflation adjusted).

[Jennifer]

By some estimates, there will be an average of two-percent
annual growth in global oil demand over the years ahead,
along with, conservatively, a three-percent natural decline
in production from existing reserves.That means by 2010 we
will need on the order of an additional 50 million barrels a
day.

--Dick Cheney, raging uber-hippie, 1999

[Jennifer]

By some estimates, there will be an average of two-percent annual growth in global oil demand over the years ahead, along with, conservatively, a three-percent natural decline in production from existing reserves.That means by 2010 we will need on the order of an additional 50 million barrels a day.

--Dick Cheney, CEO of Halliburton and apparent enviro-hippie, 1999

By the way, the 70s oil crisis was a completely different animal: there was still plenty of oil, it's just that the guys who had it didn't want to sell it to us.

[Jeff]

I'd like to add that I witness Jennifer's speed reading on a weekly basis and it sickens me.

Also, we're looking for a good stir-fry Left Behind recipe. Ironchef?

Lastly, the "voluntary" drop in usage will not come from work commuters, but by
1: Business flights. These are always the first to go when bottom lines need meeting. Plus in today's computer/email/teleconf world they are not required. They currently number in the millions.
2: Tourism. There are a lot zip codes and resorts where gas consumption by tourism out strips the populace at least 3 to 1 (Florida and D.C leap to mind). Cruise Ships also eat up a measurable quotient. Cheap Disneyfied tourism will vanish the very second it is not significantly profitable.

Also, does anyone know a good reference for the many alternative fuel/combustion sources and systems were "bought out" by big oil and GM in the 70s and 80s so as to not see daylight?

[E-Rock]

Jen - You seem to be assuming that there is no alternative to 100-million year old fossil oil. That's not the case, they just aren't cheap yet. There are several projects to produce oil from bacterial sources and one that is actually functional using organic farm wastes. With free feed material it outputs oil at a cost of about $80 a barrel. Not perfect, but at $100 or $120 a barrel it'll be a strong industry.

[Jesse Walker]

Jennifer: No, it recognizes that as consumers -- a category that includes large enterprises as well as individuals -- have to adjust their behavior, businesses will try to make a profit by making those adjustments possible.

FHD: To the extent that oil motivates our policy in Iraq, I think it has much more to do with U.S. companies hoping to make money selling the stuff than with any plan to make things easier for U.S. consumers. Similarly, government investments in energy alternatives generally have more to do with pork-barrel politics than sensible planning. That shouldn't be surprising, given that the whole point of the enterprise is to ignore the tool that makes such planning possible: market prices.

I agree that the Iraq war, like any enormous government expense, drains money that could be put to use more productively in the private sector. That's not an argument for shifting from one enormous government expense to another.

[fyodor]

what is so hard to believe about the idea that demand will soon outstrip supply?

I'm not sure what people mean by demanding "outstripping" supply, but if demand is going up and supply down, then the price goes up. Duh. And the market accomodates, cause that's what markets do. Well, free markets, anyway. If supply really is decreasing (and since fear-mongers have been so consistently wrong about such matters, I wouldn't put too much stock in their prediction, but I suppose it's possible), what to do? For the state, stay out of the way and let the market accomodate the new circumstances.

[Jeff]

Also,I'm going to trademark the name Petrocalypse.

[blah]

There is some great Chapter by Chapter Left Behind analysis at

slacktivist.typepad.com

A liberal xian blog, with great comment section too. There are tons of people reading his blog, he calls it Left Behind Fridays.

[smacky]

If I knew you might want to read it I'd've saved it for you, but I tossed it in the garbage and I think by now it has some old stir-fry sauce on it.

I prefer to toss my books in a light mustard glaze before eating them.

This might have already been asked or brought up(as I have not read the thread comments carefully), but hasn't anyone figured out how to make synthetic oil by now? It can't possibly be that difficult, given the advances in chemistry and materials sciences.

[rox_publius]

eh, when more of you folks are riding the bus, maybe they'll schedule them more than once every twenty minutes.

c'mmmmmmmmon $100 oil, baby.

[JDM]

"Also, does anyone know a good reference for the many alternative fuel/combustion sources and system were "bought out" by big oil and GM in the 70s and 80s so as to not see daylight?"

The only one I remember well was methane production via Big Foot and Yeti manure composting.

Along the same lines there was some promising research into harnessing the same energy sources used by Flying Saucers, but most of the leading researchers had their kidneys stolen in Las Vegas and were unable to continue their work.

[Jennifer]

Yes, guys, you're right about the fact that oil will still be available, albeit more expensive. That's the whole POINT. If oil runs $100 or $150 a barrel, that's great news for the oil companies and their stockholders, but bad luck for those who will find it hard to pay double or triple what they currently pay for gas. And everything else, once transportation costs go up. And while it won't result in armageddon (unless some government is stupid enough to fight wars over the last bits of the cheap stuff), it will seriously hurt our economy and send us into a depression.

Peak Oil does NOT say we're almost out of oil; it says we're seeing the end of CHEAP oil.

[smacky]

The only one I remember well was methane production via Big Foot and Yeti manure composting.

JDM,

Don't forget about El Chupacabra.

[fluffy]

The real problem with counting on entrepreneurship and the free market to solve the energy problem is that we have no reason to anticipate that the free market will actually be allowed to operate in this instance.

Even if someone were to develop an alternative technology that used a different fuel, I don't see any way in which they would be permitted to deploy it.

Can you imagine going through the process of getting permission to build hydrogen fueling stations in every little town in America? It would be litigated and "planned" into oblivion, because people would be convinced that such a fueling station wasn't "safe", despite the fact that gasoline fueling stations are already every ten feet.

The types of rapid market responses to technological innovation and logistical need that were common in the 19th and early 20th Centuries are simply impossible today. You still get rapid product deployment in response in demand in consumer electronics, because that doesn't require any actual infrastructure changes. But if you are expecting rapid change in fuel services and/or housing and/or rail-style transit, you're not going to see it - it will be NIMBYed into the ground.

[JonBuck]

Smacky:

Thermal Depolymerization:

http://en.wikipedia.org/wiki/Thermal_depolymerization

Turns high carbon waste into crude oil. And with oil prices the way they are, it's become competetive. Unfortunately there's only one plant as yet.

There's also Coal Gasification.

[E-Rock]

Smacky, here are two articles about a company CWT that is using turkey waste/guts to make fuel oil and diesel.

http://www.mindfully.org/Energy/2003/Anything-Into-Oil1may03.htm

http://www.fortune.com/fortune/smallbusiness/articles/0,15114,1018747,00.html

[smacky]

Is there something wrong with the Reason H&R server or are my comments finally being edited for content before being ok'ed for posting?

[The Wine Commonsewer]

Ewww, Dulles is an icky airport. What a boondoggle that thing is.

Chevron apparently can't do math. If we're using twice as much oil as were discovering wouldn't we be out by now? Yes I know what they meant.

I realize that oil is a finite resource but forecasts of imminent doom date back to 1874 when the Pennsylvania state geologist forecast that US oil supply would be gone in four years. All have been proven wrong, including the US Geological Survey in 1920 that estimated remaining oil worldwide at 60 billion barrels. By 1950 USGS had upped the estimate to 600 billion barrels. Today, oil shale alone will produce enough oil to provide 500 years worth of energy at current levels of consumption.

Just as science fiction writers fifty years ago couldn't foresee our intimate reliance on computers in our every day lives (and my favorite, that all cars would have air conditioning), we can't forecast exactly how our energy needs will be satisfied. But we can extrapolate from historical reality that as market forces work, alternative fuels and processes will emerge and eventually fossil fuels will become obsolete.

[JonBuck]

Jennifer has it exactly right.

[Jennifer]

we can extrapolate from historical reality that as market forces work, alternative fuels and processes will emerge and eventually fossil fuels will become obsolete.

Yes, they will. But there's no guarantee that the transition will be painless for us.

This whole thing got started with M. King Hubbert, who in the 1950s, when the US was the world's main oil producer, studied the rates of extraction, production and consumption of oil in the US, and predicted that our own supply of oil would peak around 1970. And he turned out to be right--even the Prudhoe Bay discovery in Alaska wasn't enough to help the US regain our former lead (though it certainly benefited the Alaskans).

[The Wine Commonsewer]

Smack, synthetic oil for car engines is available. It is more expensive but lasts longer and works better. Most are mineral oil based and are created in the lab. Other specialty oils are available for particular applications that are also synthetic and are engineered from veggies and prime rib. The guys in the lab coats mix and match to suit. Might be called genetic engineeering but is probably just molecular engineering.

[Mac Daddy Hoon]

Jennifer -

Why should the transition from oil-based energy sources to other based energy sources be more painful for the economy than the transitions from horse and buggy, to rail to private automobiles? Why not assume that future transitions will make us all better off, as historical transitions from less efficient to more efficient sources have done?

[Randolph Carter]

hmmm... If the turkey innards = oil technology posted by E-Rock becomes actionable, can we expect Soylent Black?

[Jennifer]

Why should the transition from oil-based energy sources to other based energy sources be more painful for the economy than the transitions from horse and buggy, to rail to private automobiles?

Because when people switched from horses to autos, they were taking advantage of this awesome new invention that let them get places more easily and cheaply than they could before. And, except for the very last horse holdouts, it was a voluntary switch.

Also, there wasn't a decade or two wherein horses were far too expensive for the average person to afford, but cars were, too.

When gas gets to be seven or eight bucks a gallon, the people who will be most hurt will be those who don't HAVE enough money to spend god-knows-how-much on electric cars or whatever new technology comes along. Even assuming it's available.

[M1EK]

"Jennifer: No, it recognizes that as consumers -- a category that includes large enterprises as well as individuals -- have to adjust their behavior, businesses will try to make a profit by making those adjustments possible."

Out in cul-de-sac land, how, exactly, do you intend on servicing the can't-afford-to-drive-any-more folks with mass transit? Some problems can't be wished away with economics; and the bad design of exurbia is one of them.

Oh, so you propose infill and redesign of those suburbs? Even when possible, how are you going to afford it when oil is expensive? We'd have had to do it when oil was cheap, and we didn't.

[Highway]

In the very short term, yes people are hurt significantly by rising transportation, mostly gasoline, prices. But in the longer term, there are many other changes people use to lower their costs. People will move closer to their jobs, jobs will move closer to people, people will change jobs, or people will get more fuel-efficient cars. There are many things that don't require a big technological breakthrough to happen. Energy in the form of gasoline for daily transport can be replaced by energy in the form of nuclear plants, if more people were to use plug-in hybrids. Telecommuting can be more widely used, especially as broadband rolls out farther and farther, and companies employ more computer technology.

Gasoline usage is inelastic to price spikes, say like gas companies raising the price 20 cents for Thanksgiving weekend, but when people can plan against trends they can mitigate the impact caused by rising gas prices by making life choices that reduce their gasoline costs.

[fyodor]

Jennifer,

But there's no guarantee that the transition will be painless for us.

Well...so? What is your point, anyway? What do you think we should DO? I fully agree that IF oil becomes more scarce (before it becomes obsolete), then some degree of "pain" is likely because the decrease of availability of a useful natural resource would be a limiting factor that could not be made up for entirely. But so what? What are we to make of this possibility (hardly a certainty)? What do you think we should do about it other than scare each other and wring our hands? I suppose IF one could have confidence in such predictions, then there might be some ethical value in conserving oil, although using oil has beneficial economic results, including for the poor, as well, so it's hardly clear that that would be the case. And that's IF one could have confidence in such predictions....

[Jennifer]

What the HELL is wrong with this server? Even hardcore Peak Oilers like me don't believe there's any such thing as Peak Bandwidth.

[JDM]

"Don't forget about El Chupacabra."

My cousin's dog once dragged a dead Chupacabra out of the woods in upstate New York, so to me it's not in the same category.

For the sake of argument, it could also have been a lost Jersey devil, I suppose. Or maybe a kangaroo.

[Stevo Darkly]

Hmm, except I think last time it was an ice age that was going to kill us, rather than global warming.

Oooh, M1EK hates it when you mention those two together. Because global warming has much more "legs" and a lot more support among the Scientific Community than global cooling ever did, which was much more a creature of the media alone.

(It may or may not be a coincidence that global warming is thought to have a political and policy remedy, and is therefore a source of government funding, whereas global cooling was just a Scary Idea that no gov't policy could forestall, as far as I can recall.)

[I Don't Even Think About Girls]

Similarly, government investments in energy alternatives generally have more to do with pork-barrel politics than sensible planning. That shouldn't be surprising, given that the whole point of the enterprise is to ignore the tool that makes such planning possible: market prices.

Unfortunately, energy (eg, oil) is crucial for national security. That is why oil needs to be treated differently than widgets or soy beans.

I may have a kinda different idea of how the US should guard its national security than the chickenhawks, but even I am not naive enuf to think that operation of free markets will safeguard US security as the oil runs out. If China or Russia or some Arab state did parlay a future energy advantage into a dominant political position, I don't think that would be good news for libertarians or markets. I think the US should be willing to spend *national defense* money now to help prevent such bad outcomes. Free markets important, but continuing US soverneighty even more important -- and I do think there is something of a real conflict between the 2 here.

[Jesse Walker]

M1EK: "I" don't have to "plan" anything, but I imagine that if the peak-oil predictions are accurate, the first responses will look a lot like the changes Highway described in his comment. Indeed, jobs have already been following people out to the suburbs for years.

[Herman]

c'mmmmmmmmon $100 oil, baby.
rox pub-
Ya know, I live in the burbs and I too hope for that. I think it's because I want many of the other burb people to move away and pack themselves tighter around Washington D.C.. Though I haven't really thought through my desire to be the sole, unemployed resident of a Ghost Suburb.

[Jennifer]

Fyodor (assuming this post goes through before you and nineteen others post in the interim)--

I have been making plans to hopefully cushion myself and my One True Love from the blow when it comes (and I've been making these plans all by my lonesome, since said OTL rolls his eyes whever I broach the subject with him). As for solving the problem for our whole country? I could give you a few blue-sky scenarios that would work fine in theory, assuming everyone in the government and everyone in society did exactly the right thing. But as for any real-world answers--nope. Nothing. I haven't a clue. I think we're fucked.

But so what? Are you seriously trying to say that if a problem seems insolvable, then it must not exist? Awesome! So then we have no problems with Islamic extremism, and no problems in getting out of Iraq, and no problems with our public schools, and no problems with government corruption. . . and since nobody has a clue about how to solve alcoholism, my loud obnoxious neighbor DOESN'T have a drinking problem, either.

Sorry about the snarkiness, but I've seen a few Peak Oil debunker sites (and you have no IDEA how much I'd like them to be true) that made the same argument you did--since nobody can figure out how to solve the Peak Oil problem, the problem must not exist. Yeah, and in the 1300s Europe didn't have a problem with a nasty plague that would wipe out one-third of its population, either.

[Sam]

"hmmm... If the turkey innards = oil technology posted by E-Rock becomes actionable, can we expect Soylent Black?" TPD has much teething to do. However, Biodiesel is now being made, often from Soybeans...which is not efficient in and of of itself, but the bean has many other uses (and a big ass lobby in DC) so it is convenient for now, and only a little bit more expensive than regular diesel.

[M1EK]

"when people can plan against trends they can mitigate the impact caused by rising gas prices by making life choices that reduce their gasoline costs."

IF their town has any urban living available (most don't) or IF their town hasn't effectively outlawed urban development via the zoning code (most have). Our zoning and tax policy over the last 50 years has so heavily discouraged 'smart' development that it's practically impossible for most people to find and/or afford.

[MikeP]

Probably sitting down with Varian's micro book and Freakonomics and seeing what the actual economic theories would be worthwhile...

i liked freakonomics because i tend to like anecdotes; and freakonomics is nothing but a compilation of anecdotes on his approach to problem solving. it's engaging in that sense; it makes a fine birthday gift to folks who are not interested in economics but very interested in problem solving.

I've only flipped through someone else's _Freakonomics_, but in hearing the media talking points when it came out, I couldn't help but think of David Friedman's _Hidden Order_.

Hidden Order is effectively Friedman's Price Theory rewritten for the noneconomist. It does go though the microeconomic theory that Freakonomics apparently doesn't. And then it goes into interesting and otherwise nonintuitive applications of economic theory to problems in all spheres of life.

I recommend it to those who want their anecdotes and a good education in basic price theory.

[smacky]

Is there any link you can provide to the AP cow poo-poo-poo fuel article that doesn't involve registration?

[The Wine Commonsewer]

Jennifer, Hubbard was only right from about 1975 to 1995 and those production figures matched his high end forecast. Production was actually higher than his realistic forecast numbers. His final predictions in 1980 were way off the mark and US production actually exceded his forecast by almost double in 2000.

I can't remember for sure but I think there is 1,500 billion barrels of oil just in the shale alone in Wyoming, Colorado, and Utah.

Like Mac, I see the changes coming as a positive rather than a disruption. Certainly, change is always a problem for some, like wheelwrights and buggy whip manufacturers, but over time people and institutions adapt and create.

[joe]

When your ideal scenario begins, "Energy prices become so expensive that...," you know you're in a tough spot.

[Stevo Darkly]

I dunno about Peak Oil, but we will definitely have Peak Sun in about 5 billion years. Someone needs to start planning for this now. For the children.

PS: Someone needs to go down to the reason server room and give the squirrel some CPR, pronto. It's taking forever just to post a dopey snark.

[fyodor]

Are you seriously trying to say that if a problem seems insolvable, then it must not exist?

No. I would say that the track record of chicken-littlers is so poor that I'm not going to take them real seriously now. And even IF there's some degree of truth to what they say (ie, if oil becomes less attainable before it becomes obsolete), I further doubt that this scarcity will be abrupt or incorrectable enough to cause anything severe or sudden enough to need to prepare for now. If I need to change jobs or move closer to my job, I will probably be able to just as easily when all this happens as I would now. How are you preparing for this, praytell?

[smacky]

PS: Someone needs to go down to the reason server room and give the squirrel some CPR, pronto. It's taking forever just to post a dopey snark.

I totally agree here. I mean, I barely have enough time as it is to make up stupid shit to say on here, much less wait around all day for some worthless rodent to post my remarks.

[Jeff]

If gas went to $30 a gallon tomorrow, NASCAR would have an alternative on the tracks withing a month.

[Jennifer]

the track record of chicken-littlers is so poor that I'm not going to take them real seriously now

For a thousand years, any Roman who said "the Empire is about to collapse!" would be rightfully dismissed as a crank. But then, one day, he turned out to be right.

TWC--

So the US still produces plenty of oil, enough to meet our own needs as well as those of the industrialized world? Then why the hell have our last umpteen presidents been sucking up to the Saudis?

And YES, we have shale oil and a bunch of other goodies. Let me repeat again: even Peak Oilers know we will NOT be running out of oil anytime soon. When Jesse's infant child and Joe's little toddler die of old age there will still be a lot of oil left in the world. We are NOT running out of oil--we are running out of CHEAP oil. The reason our country is so rich is because it's dirt cheap to go places, to make things, and to transport things to consumers. And the reason all that is so cheap is because of cheap oil. However, while we still have a lot of oil left, that oil will become a LOT more expensive. And so will everything else.

[hh]

economic laws are inherently flawed. they assume a world that progresses linearly when we really live in a world that progresses exponentially. at some point, the so called laws will either need to be updated or completely reinvented to account for exponential advancement in all aspects of human society and technology.

[smacky]

See!?!?!?!?!

[Highway]

M1EK, how come in your scenarios the only thing that can change over time is gas prices? Why couldn't that zoning in cities change? Why can't more urban living spaces be opened? Why must we stay with the 'bedroom community and CBD' model? Sure, that's favored now, but if other factors come along to make it untenable, people will definitely switch to other things. In fact, the only things standing in the way in your examples are Gateclosers and governments.

But abandoning the CBD model could work very well if gas prices were to raise the cost of vehicular travel. I'd imagine that a significant amount of work trips are suburb to suburb, not suburb to city. So people will migrate towards jobs and homes that are in closer suburbs. Some jobs might just move out to exurbs, faced with an exodus of valued workers.

Maybe we're talking about different time scales, but I'm already seeing people make changes in their consumption habits (try selling your used SUV to anyone right now), and it's only been a few months of rising gasoline prices. Over the longer term, there can and will be many more adjustments.

[fyodor]

Jennifer,

LOL! Is that the best you can do to cite the success of chicken-littlers? Did the Roman Empire collapse in one day? Do we have anything to learn from a prediction that took a thousand years to come true? How about all the zillions of gloomy predictions made by environmentalists and trendy media types, which is a little closer to the subject at hand? Maybe...you're making a self-deprecating joke?

Anyway, when I see some actual evidence that they're right, I'll certainly reconsider.

[MP]

If you missed this back in May, Peter Huber had a nice commentary in Forbes titled: 3$ Gas? We'll Shrug It Off.

[Randolph Carter]

I'm personally looking forward to to our post-oil, Mad Max Beyond the Thunderdome lifestyle. I'm a big guy, and in our current "knowledge" economy, I probably won't be too competitive. But in a "beat people over the head with sticks while wearing spiky football pads" economy, I'm confident that I could be a real success.

Also, I can get a little person friend and be like Master Blaster.

[bonkstaff]

we need quantum engines and tesla's classified documents and transcripts from his radio communication with off planet or hyperdimensional entities.

[Highway]

Jeff,

Actually, the energy concerns in the 1960's DID push Indy Cars (now split between IndyCar IRL and Champ Car) to abandon gasoline and switch to methanol usage for racing. That racing was MUCH more popular at the time than NASCAR was. IndyCar is now switching to ethanol for the 2006 season.

[MikeP]

We are NOT running out of oil--we are running out of CHEAP oil. The reason our country is so rich is because it's dirt cheap to go places, to make things, and to transport things to consumers.

Our country is so rich because of private property and freedom of innovation -- exactly the things that the "the government has to do something about oil getting expensive" crowd would be first to usurp.

At the height of inflation-adjusted fuel prices in 1981, transportation took 5% of the nation's household incomes. Now, as we approach that price again, it takes only 3%. We are simply richer now than we were then. Modulo the government staying out of the way, we will be richer in the future. It is very unlikely that the price of transportation energy -- petroleum, oil shale, biodiesel, ethanol, synthetic fuel, whatever else we come up with in the future -- will outstrip our general increase in wealth.

And certainly the last thing you want to do about it is have the government try to override market mechanisms in supply, demand, price, or innovation.

[joe]

Highway, we've abandoned the "bedroom community and CBS model." Now it's the "bedroom community and suburban office park" model. Which is too bad from the POV of energy efficiency - a radial system of rail can move a dispersed population into a center city quite efficiently.

The suburb to suburb model is actually the least energy efficient, because 1) there aren't enough highly population destinations and beginnings to allow economy of scale savings, such as rail systems or lots of ridesharing and 2) The % of people who live withing walking or biking distance of work is guaranteed to be particularly small.

BTW, "people will adjust" is not something to pass off with a waive of the hand. Drastic change is painful - how'd YOU like to be one of those people trying to sell the SUV? How'd you like to be a gardener in the sunbelt sprawl, putting a couple hundred miles on the truck each day?

[Jennifer]

Anyway, when I see some actual evidence that they're right, I'll certainly reconsider.

What would you consider evidence? For example, how expensive would oil have to get before you blame it on a shortage of oil, rather than the vagaries of geopolitics or bad government? What else would have to happen before you were convinced?

And that's a serious question, not a rhetorical one.

[Josh]

For a thousand years, any Roman who said "the Empire is about to collapse!" would be rightfully dismissed as a crank. But then, one day, he turned out to be right.

Paging Gaius Marius; one emergency dose of Gibbon stat

[fyodor]

how'd YOU like to be one of those people trying to sell the SUV?

I'd have thought lefties would think they'd deserve their fate! So let me say that from a libertarian POV, they DO deserve it! Not necessarily in a moral sense (on which libertarianism is mute anyway), but from a practical one. That is, if you plan wrong, you suffer for it.

Anyway, the suffering that would be caused from coerced centralized planning in the here & now pulls on my heart strings a lot more than someone who MIGHT suffer sometime in the future from having made the wrong automobile choice.

[fyodor]

Jennifer,

Well there's a bunch of reasons for gas being more expensive now. But I guess we'll have to read our tea leaves differently.

[wsdave]

You folks are way smarter than me, so tell me: If gas is $3 a gal. and oil is $65 a bar. now, does that mean that for gas to reach $9 a gal., oil would have to be $195 a bar.?

I ask because, for the amount that my family drives, gas would have to be $8-9 a gal. for me to even consider spending even $10,000 on an electric car (who's batteries need to be replaced in 8 years).

At the rate things are going, I don't see oil at $195 a bar. for at least a few years (say, 20 or so). Since Peak Oil is all the rage now, I think we have plenty of time to come up with a gas alternative (as in on-board fuel that you can drive cross-country with, vs. electric which ties you to the power grid.).

[Jennifer]

Fyodor--

I won't shed any tears for the SUV owners, but at the same time Joe makes a good point. ONE SUV owner who's SOL won't matter to our economy--millions will. "People can move to the cities"--yes, and they'll have a hell of a time affording it when prices go up (due to the larger number of people trying to live there) and they're still stuck with a mortgage on a suburban McMansion that they can't sell for any price.

Someone earlier asked why this was any different from when people switched from horses to autos--imagine that the economy changed so the horse-owners can't afford to even feed their horses, let alone save up for a car. And since they can't feed their horses they can't go to work and pay their other bills. When this happens to one person it's a personal tragedy. When it happens to a huge percentage of the population, it becomes a national problem. Even if my plans work out and I personally am quite comfortable, I'd just as soon NOT live through a revolution when a bunch of starving desperate people try something stupid.

And a revolution of the starving and the desperate is NOT likely to result in Libertopia.

[Jennifer]

Fyodor-

I didn't ask why you thought gas was expensive now; I was asking what you would consider "evidence" that oil really was peaking.

[M1EK]

Highway,

As joe pointed out, you have it precisely backwards. The "bedroom to CBD" model is the one that works with mass transit and carpooling; the "suburban office park" model only works with cheap gas. Look at how poorly the HOV lanes do in Silicon Valley versus Washington DC, for instance.

As for "why can't zoning just change", we're taking baby steps already, but it's a hard process since we've spent 50 years convincing people that "multi-family bad, single-family good, rowhouses bad, sprawldesacs good", and thus they resist even opening up the zoning code a little bit to allow moderate infill.

And that even assumes that you CAN afford to rebuild the sprawl-de-sac model. With expensive oil, I don't think we can.

[ed]

Rumor has it we are also running out of cheap whale oil.
How will we light our homes?

[gaius inflammabus flambouyantu]

Did the Roman Empire collapse in one day?

oh, the empire never fell, sweethearts! it's as fabulous as ever!

[joe]

"I'd have thought lefties would think they'd deserve their fate!"

Sure they do. But the pain goes a lot deeper than the people who've screwed themselves with their own lifestyle choices.

Explain to me the non-energy intensive way for someone born into a low-income community in or around Phoenix to get to his job.

wsdave, you keep your cars for eight years? Man, if you're putting that few miles on them, it probably doesn't matter much what you drive.

Finally, moving "back to the city" won't do you a whole hell of a lot of good when the old connections have been severed by the removal of public transit and urban highways/barriers have been rammed through what was once dense housing and businesses.

[Jennifer]

Rumor has it we are also running out of cheap whale oil.
How will we light our homes?

Whale oil was replaced by petro oil. What will replace petroleum? And I mean with current technology, or technology we can reasonably expect in the next few years, not some blue-sky hope that science will "come up with something?"

[gaius inflammabus]

the foregoing post was not intended to poke fun (really) at any particular poster, or any orientation, so much as point out that the empire of roman didn't really "go away" -- it was simply made over. if you look at it with the right "eye," that is.

[gaius inflammabus]

But the pain goes a lot deeper than the people who've screwed themselves with their own lifestyle choices.

goddammit, it's not a "choice"!

[wsdave]

joe,
"wsdave, you keep your cars for eight years? Man, if you're putting that few miles on them, it probably doesn't matter much what you drive."

It's not the miles, it's the care. My wife's car has 113,000 miles, my Jeep has 219,000, the truck is at 217,000 (though I am going to rebuilt the motor for more power). Each of them gets better gas mileage now than the city/highway estimates when they were new.

[MikeP]

Even if my plans work out and I personally am quite comfortable, I'd just as soon NOT live through a revolution when a bunch of starving desperate people try something stupid.

Your new Honda Accord costs you $20,000. If you drive it 120,000 miles for 10 years and sell it for $4,000 all while filling it with $3 gas, you will have spent $3000 more on just the price of the car than on the gasoline to fill it.

At $1.50 a gallon of gas, the price of a car that you run into the ground is by far the greatest cost of the car. At $3 per gallon, gasoline gets into the ballpark of the price of the car. At $5, gasoline is probably the plurality and might become the majority expense of driving.

And yet people keep buying cars. We don't drive heaps that are found in the wastelands of Australia or Cuba and forced back into working order by migrant labor.

Gasoline is simply not that expensive. And there are alternatives that become long-term profitable well before $100 per barrel. There is neither starvation nor revolution around the corner.

[Frequent Lurker]

I read the article. It was not nearly as hysterical or apocalyptic as this blurb suggests.

[wsdave]

MikeP,
"Gasoline is simply not that expensive. And there are alternatives that become long-term profitable well before $100 per barrel. There is neither starvation nor revolution around the corner."

That's what I think, too. And while my oldest "heap" is nearly 20, it still has power everything, nav computer, automation, and lots of other things that new cars lack.

[The Wine Commonsewer]

Highway, the ONLY kind of racing fuel that counts is Nitro Dude. 🙂

[quasibill]

question for those who are demanding gov't intervention in response to "peak oil":

What do you want done? Forced rationing? Will that be any better for those people you complain will be hurt by high prices? As TWC has said, do you remember the 70s? These people will be waiting for hours, if not days, to get their weekly allotment, which will probably not be enough for them to live their current lifestyl anyway. To say nothing of the creation of "black" markets that will likely be rife with criminal elements and government corruption.

Government price controls? Will that do anything other than lessen the incentive to develop alternatives?

Government subsidized research? At least it makes some sense, but what in the history of government subsidized research makes you think it won't just be an excuse for pork, with little in the way of useful results? Meanwhile, you'll be taxing the same people you're crying for to pay for such research, when the risk should be borne by the who stand to eventually profit (handsomely) from the marketing of the product.

Finally, the answer is unlikely to be the same everywhere. In the SW, solar power will likely become competitive with $70+/barrel oil. In NE, offshore, giant wind turbines (much larger than the current models, and spin much slower so they aren't a threat to migratory birds) will likely be very competitive to oil fired plants. In the NW, perhaps geothermal...

And in the end, that will be a VERY good thing, as no one resource/product will be so essential to the entire economy. So letting the market diversify, as it naturally does, will be tremendously beneficial.

[Jennifer]

Mike, it's more than just gasoline. Last week WallyWorld announced that its profits were down, for the first time in god knows how long. Why? Because Wal-Mart's customers tend to come from the poorer segments of society, and when they have to spend more on gas they have less to spend on other non-necessities.

For me, it would still be worthwhile to keep my job even if gas went up to ten bucks a gallon. But I work for an ad agency whose clients mostly sell non-necessary items. How many customers would they lose if gas were that expensive? How many customers would they lose before they decided they couldn't afford out-of-house advertising? How many clients can my boss lose before he doesn't need me anymore?

Very, very few jobs in this country involve the production or distribution of things that people have to buy no matter what happens to the economy. Most of us have luxury-type jobs. How many threads can we afford to lose before our whole economy unravels?

[theCoach]

Maxspeak, in commenting on Leavitts article is too good not to quote:

"Do markets really solve all problems? Most problems? Nothing ever goes wrong? I guess it depends on how you define "wrong." For instance, Amartya Sen wrote a book about poverty and famines which describes how markets solved the problems of people having no money to buy food: they die of starvation, the ultimate steady state."

currently no time to catch up with the rest of the comments, so I hope I am not out of place.

[Bocephus]

wsdave,

Are you Night Rider?

[Bocephus]

wsdave,

Are you Knight Rider?

[The Wine Commonsewer]

So Jennifer, what are you saying? That we're running out of cheap oil? 🙂

My idea of cheap oil is different than most so I'm of the opinion that we've been out of cheap oil for my entire life.

OTOH, with the exception of the big spike this year and in the early 1980's, inflation adjusted oil prices are about the same as they were in 1950.

[JDM]

The major flaw in peak oil is close to the one people are pointing out - it doesn't take into account that alternative forms of energy are available.

What makes Peak Oil shockingly stupid is that it misses how much *oil* is available through alternative methods. Canadian oil sands can be processed for $8-$15 dollars per barrel. It is expected that if oil prices stayed at $14 a barrel, that production of oil sand crude will triple in the next 10 years.

Using current methods, it is estimated that 12% of the total available oil in the oil sands can be extracted, an amount roughly equal to the reserves of Saudi Arabia.

There are oil sand deposits located in other parts of the world as well, not to mention huge amounts of oil shale (the largest single chunk of which is in the United States) that can be economically recoverable at $40 a barrel with current technology.

As demand increases, so will price and then production. It's amazing that this is new to so many people who spend so much time and energy at a free market website.

[joe]

Mad props for keeping them running, wsdave. I'm sure they're not blowing any blue smoke, either. I can't believe how many people think their car is "old" because it doesn't smell like upholstery adhesive anymore.

quasibill,

"what in the history of government subsidized research makes you think it won't just be an excuse for pork, with little in the way of useful results?" Hiroshima?

Anyway, I'd like to see a review of all federal, state, and local regulations for their impact on energy efficiency, followed by broad reform. Particularly in the areas of transportation spending, land use regulation, and building design.

[Jennifer]

Shoot the fucking server-squirrel and replace it with a gasoline engine while we still have some oil left, why don't you?

[Sandy]

The reason our country is so rich is because it's dirt cheap to go places, to make things, and to transport things to consumers.

So, Jennifer, there are no poor countries? If that's the only reason we're rich, then there should be no poverty anywhere. I suspect we have a few advantages that don't include cheap oil. It's just that cheap oil currently exists, so we've adapted to acccomodate it.

Whale oil was replaced by petro oil. What will replace petroleum?

Before Peak Whale Oil, I'll bet money few people knew petro would replace it. It was expensive, by comparison. Overfishing depleted the whale reserves, making it more expensive.

Nobody knows what's going to replace what. That's why planning doesn't work. If it did, then we'd be part of the American Soviet Republic of the Global World Soviet.

[Captain Awesome]

Well you know what they say about shale oil, "There's always been a great future in it, and there always will be." But seriously, now days the Pathfinder moves furnature and Costco runs, but comuting and pleasure are done on the gsxr (with the exception of very bad weather). My friend does his in-city commuting by Vespa now, people adapt, and we're just some crazy kids with first job incomes to boot. All the non-market solutions seem to do is force the period of transitional pain into the present and onto the poor. Is that even remotly ethical, by any standards?

[M1EK]

JDM,

The flaw in your theory is that our economy is dependent not just on oil, but on 'cheap oil', for varying definitions of 'cheap'. The Europeans can continue to limp along in mediocrity with expensive oil; we're going to be hurt much worse.

The true Peak Oil guys would just tell you that the nonconventional oils you talk about will have their own curve, which will peak quickly after the regular 'cheap' oil is gone.

[The Wine Commonsewer]

Oddly enough the server problem seems to be attached to this thread only.

[Jennifer]

Earlier in this thread I posted something that that patchouli-stinkin' enviro-hippie Dick Cheney said back in 1999:

By some estimates, there will be an average of two-percent annual growth in global oil demand over the years ahead, along with, conservatively, a three-percent natural decline in production from existing reserves.That means by 2010 we will need on the order of an additional 50 million barrels a day.

So can you guys either explain why Cheney doesn't know what he's talking about in regards to oil, or explain where the extra 50 million barrels a day will come from?

[wsdave]

Bocephus,

No, no Night Rider: The cars can't think for themselves. But one of the rigs DOES respond when I talk to it... 🙂

joe,

Agreed. Americans want the thrill of the new almost without regard to the cost. By the way, I raed somewhere that much of the "new car smell" actually comes from formaldihyde.

As for blue smoke, all my rigs pass emissions at a minimum of LEV (Low-Emission-Vehicle)rates, one is nearly Ultra-Low. And no, I'm not a mechanic, just not afraid to try.

[quasibill]

Joe:

"Hiroshima?"

I find it sad that that is the one example of government research you thought of. And ironic, that you find Hiroshima an example of positive results flowing from government subsidized research. And perhaps saddest of all is the fact that you used the vaporization of thousands of innocents as a flippant reply to my question.

Regardless, the point is - outside of a war, does government subsidization, on the average, tend to be about getting results or about pork?

"Anyway, I'd like to see a review of all federal, state, and local regulations for their impact on energy efficiency, followed by broad reform"

Yes, the solution to problems generated by government intervention is always MORE government intervention, not less.

[wsdave]

The server isn't slow, it's just that Jennifer is posting everything 4 times.... 🙂

[M1EK]

"what would we like"

I for one would like an immediate end to fossil fuel subsidies, and to sprawl-inducing suburban subsidies. This includes all cases today where we pay for road construction and/or maintenance by means other than the gas tax, since nearly all road spending is directly attributable to either suburban drivers or freight trucking (very little is fairly chargeable to basic property access or transit/bicycle/pedestrian users, despite what highway fans will tell you).

I'd also like to see a loosening of zoning codes anywhere and everywhere; but especially in areas which CAN be served by mass transit (areas with good grid patterns, for instance - there's not much that fixing zoning can do to cul-de-sac land).

Leave the mass transit subsidies alone until all of the above is fixed. Then phase them out - let cities build their own transit systems without help from the Feds. They'll have enough money once they don't have to spend so much local income on roads.

After that's done, get big government involved in a place where only it can help - rebuilding the rail system.

An escalating tax on carbon emissions would be a fabulous idea too - this would allow the market to figure out the best way to burn less gas and use the power of the state to help provide a softer landing than we would otherwise expect.

[NPR 4-ever]

Coincidentally, this was the topic of the first hour of the Diane Rehm show this morning (I didn't listen to it):
-----
Gas Prices and the U.S. Economy
With gas prices approaching $3 a gallon in some cities, the cost of energy is becoming a political issue. A panel of experts discusses the sharp rise in energy costs and the impact on the U.S. economy.
-----
http://www.wamu.org/programs/dr/05/08/22.php

[MikeP]

So can you guys either explain why Cheney doesn't know what he's talking about in regards to oil, or explain where the extra 50 million barrels a day will come from?

1. Cheney is not an economist, and I don't believe he really believes in the free market.

2. Cheney was the CEO of a giant provider of products and services to the oil and gas industries. Of course he is going to bray about the need to go find and dig up more oil!

[smacky]

The server isn't slow, it's just that Jennifer is posting everything 4 times.... 🙂

That makes Jennifer the SUV-Driver of the Reason comment threads. 🙂

[Captain Awesome]

The only thing that can ruin the economy is letting this become a political issue.

[Jennifer]

Blame the messenger, WSDave.

Besides, it bears repeating.

[Don]

It's not the miles, it's the care. My wife's car has 113,000 miles, my Jeep has 219,000, the truck is at 217,000 (though I am going to rebuilt the motor for more power). Each of them gets better gas mileage now than the city/highway estimates when they were new.

My Jeep has 316k miles on it . . .

. . when it breaks, I'll consider rebuilding the 4.0L as a stroker.

[quasibill]

M1EK -

We disagree about most things, but I can heartily agree with all of your suggestions except the last.

If we're going to follow the coercive method of property protection, then I would prefer a scheme of tradeable emission credits, with a fairly low ceiling (compared to the current ceiling) to a tax, much less an escalating tax.

[Jennifer]

I'm curious--how many of you actually read the article here, as opposed to merely reading the post about "peak oil hysteria?"

[M1EK]

"If we're going to follow the coercive method of property protection,"

You say that like there's a choice.

The escalating carbon tax provides a 'soft landing' in a way that emissions credits don't, unless the total emissions cap declines each year somehow (i.e. your rights to emit decline by X% per year on the certificate).

[JDM]

"The flaw in your theory is that our economy is dependent not just on oil, but on 'cheap oil', for varying definitions of 'cheap'."

You know, if oil just keeps getting more expensive, soon 100% of everyone's income will be uselessly spent on drilling oil from the ground without enough leftover to even by food or micro-brewed beers. Can you spot the flaw in this reasoning?

People will continue to pay for oil as long as it brings them what they want. When the cost is too high, they'll find other ways to get what they want, or change their priorities. None of this leads to another Dark Age.

"The true Peak Oil guys would just tell you that the nonconventional oils you talk about will have their own curve, which will peak quickly after the regular 'cheap' oil is gone."

Why "quickly?" The reserves and production capacities are potentially greater.

[Herman]

Paging Gaius Marius; one emergency dose of Gibbon stat
Overcome by Current Discussion, but I believe the Consul's wife was going to be giving birth to Gaius Minor about now.

[Jonathan]

Ah yes, the 1970s. My parents had an underground gas tank. The neighbours used to come around at night and try to open the padlock. Fun times. Looking forward to the sequel.

[M1EK]

JDM,

Economics can't solve the issue of energy density. (in other words - there IS no alternative energy source out there which can meet the demands that oil is currently meeting). Fuel cells will never get there; nor will combustible hydrogen. Both, if they are EVER to be used for transportation, must surpass hurdles which are far bigger than GM would like you to believe (since they failed to jump on the hybrid bandwagon early enough) - and even THEN, they won't be usable for single occupant SUV commuting.

It's not a magic science. Yes, supply and demand will eventually come into balance - this can be after a depression destroys enough demand that supply is sufficient at a sustainable price.

[Sam]

QUASIBILL!
"If we're going to follow the coercive method of property protection, then I would prefer a scheme of tradeable emission credits, with a fairly low ceiling (compared to the current ceiling) to a tax, much less an escalating tax."
http://www.terrapass.com
not sure if that is what you are looking for, but it may at least be a model to go by.
0|-

[M1EK]

Sam,

That was brought up here before. Any voluntary scheme like that is completely and utterly useless.

[joe]

quasibill, if you've got a problem with flip and callous, you might want to think about relocating.

Then again, if you've got a problem with callous, you might not want to present "first, energy gets really, really expensive" as the beginning of your solution.

You want to talk about knee-jerk, bud? How about reading "reform" as "more government intervention?"

[gaius marius]

i agree fundamentally w/ mr walker's economics way up there -- but then, mr walker's economics worked very well in the irish potato famine as well. and it didn't stop millions of the inefficient from dying, and millions more from being dispossessed and impoverished, in favor of more efficient land usage.

it's far too complacent and somewhat naive of history, imo, to assume that the market will simply price it all into painlessness. the truth is that market movements are often not rational or smooth -- paradigm shifts are frequently realized in a catastrophic blink that can threaten the social order that makes markets possible.

i don't know that this is what will happen with oil -- but it isn't foolish to say that the divergence of supply and demand, in leading to radically higher prices at the margins, can provoke extremely undesirable social changes.

[Randolph Carter]

Gaius,
There were plenty of potatoes during the famine. It was a problem of distribution (and British hoarding/inaction) that caused the famine, compounded with a minor disease on the little taters.
We can only wish that problem was analagous with oil...

[gaius marius]

not plenty of potatoes, as i understand it, mr carter -- which suffered from a fungal disease -- but plenty of food anyway, surely. food was exported steadily throughout the famine from industrial farmers in the north at a profit.

market-driven, no matter how you slice it, a very model of victorian laissez-faire -- until the wailing from ireland got so loud that even london could not ignore it and offered up a pathetic aid package.

[Jadagul]

Except that, as I understand it, the exports occurred largely because of England's tax policy. They set up tariffs so that it was cheaper for the Irish to import certain types of food than to buy the food they had produced-the Corn Laws made it prohibitively expensive for them to eat their own produce.

[MikeP]

I'm curious--how many of you actually read the article here, as opposed to merely reading the post about "peak oil hysteria?"

I read it. All the way from page 1...

... the cost of home heating would soar -- assuming, of course, that climate-controlled habitats do not become just a fond memory.

...to page 10...

When a crisis comes -- whether in a year or 2 or 10 -- it will be all the more painful because we will have done little or nothing to prepare for it.

By "we", he means "governments" and "politicians", the theme of the final two paragraphs.

Apparently, "we" does not include engineers examining extraction from sands or shale, or scientists seeking new synthetic fuels. "We" does not include speculators trading oil futures who bring those prices into the present. "We" does not even include New York Times Magazine contributing writers who help tell what secrets Saudi oil producers might be keeping about future capacity.

Nine-and-a-half pages of problem, including a throwaway line on page 6 about alternative sources of petroleum at $40 a barrel. Then half a page of solution, which amounts to government doing something that looks a lot like what President Carter did in the '70s.

Color my position unchanged.

[Jadagul]

Yup, that was at least partially accurate. From Wikipedia:

The debate was hastened by the first appearance of the potato blight in Ireland. Sir Robert Peel, Conservative Prime Minister, responded to the crisis by purchasing cheap American wheat and proposing to remove all import duties on grain. It was hoped that these actions would lower the price of bread enough to put it within the reach of the Irish peasantry. By late 1845 Peel had become convinced that the Corn Laws had to be repealed, which put him at odds with a considerable section of his own party.

The Corn Laws drove up the price of grain (primarily wheat), helping to make it too expensive for Irish farmers to buy-even wheat that was grown domestically in Ireland. That helped make the Irish more dependent on potatoes, so that when the blight hit, it wiped out all the food that the Irish could afford. The Corn laws seem to have been repealed partly in response to the Potato Famine, but by the time the tariffs were gone the famine was already going into full swing, and was causing its own problems.

[mediageek]

I have been making plans to hopefully cushion myself and my One True Love from the blow when it comes (and I've been making these plans all by my lonesome, since said OTL rolls his eyes whever I broach the subject with him).

Geeze. And I thought I had struck gold when I had a girlfriend who made coffee and ironed my shirts. (And no, I never even asked.)

[MikeP]

I'm curious--how many of you actually read the article here, as opposed to merely reading the post about "peak oil hysteria?"

To put the criticism in a nutshell...

The article hinges on the understanding that Peak Oil is not when oil is actually depleted. Rather it's when marginal increases in daily oil production can no longer keep pace with the marginal increase in demand. One of these days we might find that the new production that day is noticeably less than the new demand that day. Fine. So far so good.

The problem is in calling that day a catastrophe. The author presents that day as though it's the end of the oil age.

What the author fails to recognize is that the next generation of transportation fuel -- whatever that might be -- does not have to replace the entirety of today's petroleum production on that day. Just as there will be a very small marginal shortfall in petroleum production, there need only be a very small marginal contribution from the production of the alternative.

There is no giant switchover. One falls short of meeting demand at the marginal price, and the other rises to take up the slack at the marginal price. The old industry slowly fades away, and the new industry has the time to ramp up production to replace it. No depression. No starvation. It's happened time and again without fail. There's no reason to think it won't happen again.

The only thing that can really impede this process is the government "doing something."

[JonBuck]

MikeP:

I consider that a best case scenario. Algal biodiesel and other production methods have the potential for exponential growth (We've gone from 500,000 gallons in '98 to 25 million gallons last year). However, we cannot depend on the government to stay out of it.

[Lowdog]

Well, this libertine consumer has only had his own car again for a little over a year after not having one for about 5 years. In Phoenix, with the heat, sprawl, and lack of good transit (taxi's are fine, but expensive), that's a big deal. So gas prices are going to have to get a helluva lot higher for me to start worrying about it.

But then, I like walkling on the backs of the bruised, or something like that, because I'm an athiest and have no morals.

Seriously, though, I imagine that it won't be anywhere near as bad as the doomsdayers claim. I would imagine that if the illuminati (just using that as a catch-phrase for all the huge corporations and those who profit greatly by them) really was concerned about oil 'running out' then they'd be making damn sure they had an alternative way to make money. Sure, they've used the US military to try and secure a large cache of it, but that's another conspiracy altogether.

Anyway, my rambling, incoherent point is that I believe that the market will end up doing a fairly good job of making the transition from oil to whatever is next as painless as possible. With the requisite numbers of people being hurt in the short term, as it has been throughout human history.

[Jennifer]

With the requisite numbers of people being hurt in the short term, as it has been throughout human history.

Oh, I agree entirely. It's just that the requisite number of people is going to be a LOT larger than before, and what's a short term from a historical perspective is a long time when compared to a human lifespan. (After this country was officially founded, slavery was gone a century later. But to the majority of the salves who ever lived in the United States of America (as opposed to the British colonies), that short term lasted their whole lives.

If things are going to be absolutely hellish for me five years from now, the knowledge that they'll be better by the time I'm sixty-five won't really cheer me up too much.

[Jennifer]

And of course, that was supposed to say slaves, and less than a century. Sigh. I suppose I should get back to work.

And use spell-check.

[Lowdog]

I'm not really arguing with you, Jennifer, but at the same time, the only real solution I see is trying to keep the govt's mitts off of the process and letting the market do it's thing. Is that little comfort to me if it gets to where I can't afford to drive to work anymore? Sure, but I can't abide by the idea of coercion to maybe help some people that might otherwise get hurt, knowing full well there will almost certainly be unintended consequences, which may hurt a lot more people that otherwise wouldn't have.

And is it fun to jump on the rich folks? It can be, yes, but it's not always their 'fault' that they're rich, at least not in a negative way. If someone busted their ass and made a shitload of money, who am I to look down on them, even though they may look down on me?

And I'm not entirely convinced that it's going to be much worse than other points in history. Yes, we're very dependent on oil, but at the same time, technology is advancing so quickly, I have hope.

Now the totalitarian/fascist direction our country is going, mainly due to the war on (some) drugs (at least facilitated by the WO(S)D, since the statists/totalitarians have wanted to keep the sheep under control for quite some time now)? That's what scares me...

[M1EK]

"Algal biodiesel and other production methods have the potential for exponential growth"

No, they really don't. Right now biodiesel works because it's utilizing the waste stream from various places - when crops are grown expressly FOR fuel, the energy economy goes to hell. You will spend more energy growing the crop than you will get by burning it.

[William Ointment Garrison]

Free the salves, I say!

[M1EK]

"Just as there will be a very small marginal shortfall in petroleum production"

This is not what the Peak Oil guys say, and therefore, you haven't refuted their claim that there's no fuel waiting in the wings to take over.

"No depression. No starvation. It's happened time and again without fail. There's no reason to think it won't happen again."

Actually, during some earlier transitions, there were depressions, and people did starve. Easter Island, for one.

[JonBuck]

M1EK:

I assume you're referring to the recent Cornell study?

The author of that study makes several faulty assumptions, even taking into account the calories consumed by the farmers and construction of facilities that would last decades. The fact is that soy-based biodiesel has a positive energy return of 3.2:1. You get 3.2 units of energy for every unit consumed. Please read this. (PDF file)

I consider soybeans a stopgap fuel source until algal methods come online.

[Jennifer]

Yes, lowdog, technology is advancing quickly, but look how much of that technology comes from petroleum. The problem, at least from our perspective (since we don't have access to the discoveries and inventions of 50 years from now) isn't technology and inventions so much as it is the raw material to power those things, and make the ones that are made of petrochemicals.

When have I jumped on "the rich," here? I haven't blamed any one person or group of people for the corner we've painted ourselves into in regards to oil. Hey, I use just over four gallons a day to get to work and back, myself. (I get good gas mileage, but it's a HELL of a commute.) I'm not sitting here riding an eco-friendly bicycle to work and feeling superior to you gas-users; I'm a major one myself, and can't see much of a way out of it, although I'd like to.

That's the problem. The number of Americans able to significantly reduce their gas consumption right now, or even in the next few years, is very, very small. Demand for oil is pretty close to the fastest supply anyone is capable of producing right now. Even ignoring the possibility of a major disruption from terrorist attacks, we've reached the point where we just don't have much wiggle room left.

And it's no longer just American demand that matters here; China and India are demanding more, too. There will still be LOTS of oil, just not enough for everybody who currently wants to buy it. So prices will go up, and up, and up.

The sooner someone comes up with an affordable, easy-to-apply alternative, the better off we;ll be. But there's no sign of that on the horizon, and while there's a CHANCE it will come in time, I'm not betting on it.

[Jennifer]

And another thing, Lowdog--when did I advocate government intervention on this thread? I alluded to the existence of a blue-sky scenario where government could theoretically help, but I NEVER said I believed government intervention would help in the real world.

[Thomas Paine's Goiter]

Can you imagine going through the process of getting permission to build hydrogen fueling stations in every little town in America? It would be litigated and "planned" into oblivion, because people would be convinced that such a fueling station wasn't "safe", despite the fact that gasoline fueling stations are already every ten feet.

Gasahol can already be handled in that same infrastructure.

http://www.azcentral.com/arizonarepublic/news/articles/0430ethanol30.html

[Thomas Paine's Goiter]

If gas went to $30 a gallon tomorrow, NASCAR would have an alternative on the tracks withing a month.

Dragsters are already alcohol-fueled.

[Thomas Paine's Goiter]

How'd you like to be a gardener in the sunbelt sprawl, putting a couple hundred miles on the truck each day?

I'd be fine with it after raising my prices.

[Thomas Paine's Goiter]

Whale oil was replaced by petro oil. What will replace petroleum? And I mean with current technology, or technology we can reasonably expect in the next few years, not some blue-sky hope that science will "come up with something?"

Science doesn't have to "come up with something". They already did. We've got a wide variety of alternative fuels for both power generation and transportation. We've got, in no specific order: Nuclear, hydro, solar, wind, bio oil. We've got alcohol, gasahol, electric, fuel cell, biodiesel, bio oil, tar sands, shale oil, hybrids....

The alternatives are there - it's a matter of price points. Experts said that it would take $200 oil to make the tar sands profitable to harvest. Guess what? Tar sands are profitable from $40-$100 a barrel depending on depth. Then experts said that shale oil would take $200 a barrel to make shale oil profitable. Guess what? Shale oil is now estimated to be profitable at $100 a barrel.

Same goes for the bio fuels and fuel cells.

[Thomas Paine's Goiter]

Jen - You seem to be assuming that there is no alternative to 100-million year old fossil oil. That's not the case, they just aren't cheap yet. There are several projects to produce oil from bacterial sources and one that is actually functional using organic farm wastes. With free feed material it outputs oil at a cost of about $80 a barrel. Not perfect, but at $100 or $120 a barrel it'll be a strong industry.

Google "changing world technologies" ; "Alberta tar sands"; "gasahol"

[Thomas Paine's Goiter]

2: Tourism. There are a lot zip codes and resorts where gas consumption by tourism out strips the populace at least 3 to 1 (Florida and D.C leap to mind). Cruise Ships also eat up a measurable quotient. Cheap Disneyfied tourism will vanish the very second it is not significantly profitable.

Cruise ships should be nuclear powered.

[MikeP]

"Just as there will be a very small marginal shortfall in petroleum production"

This is not what the Peak Oil guys say, and therefore, you haven't refuted their claim that there's no fuel waiting in the wings to take over.

As I thought was clear, I was refuting the article at hand. My apologies for using the vocabulary of This Week's Apocolyptic Prediction incorrectly.

What, pray tell, is the mechanism predicted by the Peak Oil(TM) guys that is going to cause this catastrophic drop in production and/or prevent its replacement by other sources?

[JonBuck]

MikeP:

From what I've read, they think that Peak Oil will have such a negative effect on the economy that there will be no money to invest in alternatives.

[JDM]

"Tar sands are profitable from $40-$100 a barrel depending on depth."

As I've already mentioned this is down to $8-$15 dollars a barrel in Canada now, and is expected to fall below $10 a barrel in the next 10 years. That includes the onerus Canadian environmental regs to remove the oil without making too much of a mess.

Oil sands are expected to amount for half of Canada's crude oil production by 2015 - this from a report developed before the recent price spike where oil is presumed to hold at the $14 a barrel mark. Nevermind what would happen to production if high prices continue, or if Peak Oil fantasies start coming true.

http://dsp-psd.pwgsc.gc.ca/Collection/NE23-89-2000E.pdf

The cost of developing shale oil has also fallen a great deal in recent years, and is now around $40 a barrel, which would be profitable if current prices hold, nevermind rise higher.

Peak Oil is just Doomsday Fable #112, propogated by yet another generation of know nothing ludmouths.

[Dynamist]

Y'all may have missed two ideas.

1) If the peak oil fantasy is true, it also means a reduction in the human contribution to the global warming fantsy scenario. Depending on which flavour of lefty one is, maybe that's a nice trade-off.

2) It'll be easier for people to adjust to high fuel costs in their individual lives (efficient car/move closer to job/efficient house) than it will be for much of insdustry to adjust. There's not much of an alternative fuel for the ships, trains, trucks and barges that deliver inexpensive imports and the amazing variety of convenience items (like out-of-season produce) we take for granted. Also consider that petroleum is a basic industrial feedstock. Alcohol, plastics, cement, steel, etc, all are made from or consume significant quantities of oil and gas. Will you pay $1 for a 15? disposable razor and another dollar for a 10? banana?

[Thomas Paine's Goiter]

As I've already mentioned this is down to $8-$15 dollars a barrel in Canada now, and is expected to fall below $10 a barrel in the next 10 years. That includes the onerus Canadian environmental regs to remove the oil without making too much of a mess.

The surface yield is profitable at $10, but adding depth adds problems and costs. If the damned canadians would just bring a nuke online, it would be even cheaper! I own stock in the three largest players in canada involved in the sands -- I've been following this rather closely 🙂

Oil sands are expected to amount for half of Canada's crude oil production by 2015 - this from a report developed before the recent price spike where oil is presumed to hold at the $14 a barrel mark. Nevermind what would happen to production if high prices continue, or if Peak Oil fantasies start coming true.

Estimates are 200 billion barrels accessible in the short term, and another 200 billion accessible with better technology...three to five times that is contained in the shale oils...

[Sandy]

So, Jennifer, what's the big plan? What's going to save you when the Greater Depression hits?

Organic farming? Hoarded supplies? Gold bullion? Cash reserves? Purple track suit, black Nikes, vodka, barbituates, and apple sauce?

I'm just trying to think of a plan that would actually work if things got as bad as Peak Oil enthusiasts tell us. Most of the plans I can think of end with, "but then the neighbors see it and get guns," or, "the government sees it and deploys guns."

Well, except the Heaven's Gate scenario.

[Rhywun]

"but then the neighbors see it and get guns,"

That about sums it up - unless tar sands* save the day in time. Otherwise, you're looking at millions of pissed off people who bought into the American Dream and got screwed because it didn't last forever. The market might just perform as expected - only this time the "creative destruction" might be a bit worse than usual.

*and no, I am not going to read the 121-page report that was linked.

[Jennifer]

Sandy--

I'm expecting an economic collapse, not a complete collapse of civilization. So I'm not buying land in the woods, and I'm not learning how to dig and identify edible grubs; I'm mostly doing things that I'd do even if I DIDN'T expect an economic collapse, only on a revved-up time scale: living far, far beneath my means, to eradicate debt and get a good chunk of money saved. (If I did NOT believe in a collapse, I'd go to Europe this summer. But I'd rather not spend the money just yet.) I'm planning to buy a house in the city, rather than in the sticks as I would if I were assured of a steady supply of cheap gas. Fixing things so that I don't have to use nearly so much gas to get around. My first home purchase will be a multi-family, so I can collect rents in addition to my job (assuming I can keep it). I figure New Haven won't be a complete wasteland; they've got some public transport, they're on the water, and a friend of mine who owns a multi-family in the city makes good money renting out apartments to Yalies. (The rich will always be with us.)

If it turns out that Peak Oil never happens, or some genius invents a replacement before it had time to hurt, the only difference for me is that the first house I buy will be in an area where I don't want to live forever. But if that's the case I'll move out later, anyway.

Of course, the hardcore Peak Oilers think I'm naive, and that I SHOULD buy land in the woods and learn how to dig my own well. But if civilization ever did entirely collapse, I'm not naive enough to think I could survive without it.

[Jennifer]

Oh, and I'm planning on solar panels, too. But again, I'd do that even if I didn't believe in Peak Oil--I despise our local electric company so much that I'd rather give thirty grand to a solar company than ten grand to Connecticut Light and Power.

[M1EK]

"2) It'll be easier for people to adjust to high fuel costs in their individual lives (efficient car/move closer to job/efficient house) than it will be for much of insdustry to adjust. There's not much of an alternative fuel for the ships, trains, trucks and barges that deliver inexpensive imports and the amazing variety of convenience items (like out-of-season produce) we take for granted. Also consider that petroleum is a basic industrial feedstock. Alcohol, plastics, cement, steel, etc, all are made from or consume significant quantities of oil and gas. Will you pay $1 for a 15? disposable razor and another dollar for a 10? banana?"

This is exactly backwards. PEOPLE will have a much harder time adjusting than industry. It's trivial for MOST of our retail chain in MOST of the country to back up an additional N% to rail travel rather than trucking, at the expense of worse produce and higher inventories of course. Wal-Mart will suffer since they typically aren't anywhere near rail, but will many of us miss them? But even today, Wal-Mart isn't talking about _their_ costs going up too fast; they're talking about their _customers_ costs going up too fast, leading to less disposable income. THAT's where they'll be hurt.

I invite you to figure out a way to make mass transit work in the cul-de-sac-land. Even if we had the cheap oil available, rebuilding those suburbs with good inter and intra connectivity so that buses could actually work would be an expensive multi-decade task.

And your "dollar more for a 10c banana" is a good example of how many people don't understand the problem. Today, the oil component of transportation (and fertilizers) accounts for far less than 100% of the cost of that banana (probably not even 20%). Consider all the labor that goes into growing it and packing it; the labor that goes into shipping it; the retail overhead; etc.

Let's say two cents out of that 10c is from oil. Oil goes up tenfold; the banana goes up by 20c, for a total cost of 30c, not a buck-10.

It's really going to be transportation for INDIVIDUALS which sees the worst hit here. And it's the suburban individuals who will be worst hit. But those like Jennifer and I who bought in the city center to avoid this will still get hurt due to the macroeconomic effects of destruction of consumers' disposable income.

[M1EK]

JonBuck,

That paper is good news if it holds up. The only one of their responses which smells fishy to me is their handwaving away of labor costs - this SHOULD count in my opinion; since otherwise that labor energy could be used somewhere else. (They focus on calories in to the laborers, assuming that they'd have to eat the same good whether working or sitting on their asses; while I'd prefer to focus on what else they could be doing with their labor - hence there's an opportunity energy cost to consider).

I _hope_ it holds up. If this were as sunny as they say, I think we'd already be seeing a lot more biodiesel than we are today; let's pray it's just lagging behind consumer demand.

[joe]

Just so I'm perfectly clear on this: transitioning away from oil because of skyrocketting prices: easy and painless. Creative people, new techologies, happy happy happy.

Transitioning away from oil because of concerns about global warming: difficult, disruptive, poverty inducing. Baffled people, stagnant technology, sad sad sad.

Dynamist, the purpose of doing something about Global Warming is to AVOID the sort of painful disruptions that are your "solution" to oil dependence.

Got it.

[Thomas Paine's Goiter]

Just so I'm perfectly clear on this: transitioning away from oil because of skyrocketting prices: easy and painless. Creative people, new techologies, happy happy happy. Transitioning away from oil because of concerns about global warming: difficult, disruptive, poverty inducing. Baffled people, stagnant technology, sad sad sad.

Yup. One case is market-driven by price points. The other case is demanded by government intervention even though oil is still the cheaper alternative.

The scenario driven by the market occurs when Oil is no longer the most affordable energy. Even then, we still have oil, tar sands and shale oil.

The best that we can hope for is an amalgam of competing energy sources to drive innovation and drive down costs.

[The Wine Commonsewer]

Jennifer, my grandfather dug his own well. It isn't difficult, just takes a long time. My grandmother's job was to haul the dirt up in a big bucket with a rope. It worked pretty good until that day she dropped the bucket on his head.

[Jennifer]

Yeah, TWC, but there's still the whole raise-and-preserve-your-own-food bit to trip me up. I'll just prepare for an economic collapse, and cast my lot in with America's cities.

[Dynamist]

joe: It's: transitioning from mandate, bad, bad, bad; transitioning as a free process, uncomfortable for some, opportunity for some, not such a big deal for most.

M1EK: The consumer side is a problem, too. The poorest people have the hardest time accomodating nearly any change. But even the poor are more mobile than a container port, rail line, and warehouse store. WMT is primarily concerned about the supply chain (the business is based on selling consumer staples). They're notorious for driving down cost and price, right? How much labor goes into a banana or a Chinese-made T-shirt? Nearly none, I maintain. The cost is all in transport/distribution/warehousing.

Ultimately, of course you're right, since there are only INDIVIDUALS in an economy. The people who do the work and buy the shirts and bananas always and inescapably pay the cost.

The difference or distinction I see is that individual direct fuel consumption choices are easier to individuals to modify than are capital-intensive infrastructure-dependent production choices. I can put on a sweater to save fuel more easily than a minimill can lower the melting point of steel. I can move to Jennifer's urban apartment more easily than CSX can build new electrified rail lines to serve the exurban warehouses in greater Connecticut.

It probably ends up cheaper if we re-redevelop joe's urban loft back into a warehouse a few blocks from the port. And joe can live ever more densely as the poor start farming the acre lots in semi-abandoned mcmansion land.

[Kevin Carson]

I totally agree that increasing fuel prices will encourage conservation and economic decentralization, and make solar and wind more competitive.

Unfortunately, the government is operating at cross-purposes to the market. By subsidizing transportation (and hence fuel consumption), it has encouraged economic centralization and sprawl far beyond sustainable levels, and set the economy up for a much harder fall. My guess is that if we lived closer to where we worked and shopped, and bought stuff produced in smaller factories closer to where we live, the economy could get by on a fraction of its present fossil fuel consumption with little or no reduction in real standard of living. Subsidies to transportation and energy just increase the distance between things, and (surprise!) further increase dependence on transportation and energy.

[Jennifer]

Posted on another thread by "Ed:" (and copied here with his permission)

For the record, I'm not a peak-oil doomster- I'm a libertarian and a free-marketeer.. and I'm definitely not an economist (I have an MS in applied math). Since "discovering" peak-oil a couple of years ago, I've tried to remain objective about the issue and research both sides rather than immediately dub all peak-oil enthusiasts as anti-capitalist, environmentalist nutballs. From what I've seen, the peak oil crowd seems to make a better argument than most of the peak oil "debunkers" (mostly economists). There are a few nutcases predicting the end of the world out there, but Matt Simmons definitely doesn't seem like one to me - he's done his homework and definitely has the right credentials. All the economists seem to be able to come up with is to say, "don't worry - some new technology will come along". Ok. What technology and when? I remember reading a Barrons article from November of last year (oil was around $40 at the time) where 5 wall street strategists including a money manager at Solomon Brothers and an energy strategist at Merrill Lynch predicted where oil prices would be in the last quarter of 2005. 4 of the 5 predicted they'd fall to the lower 30s range. Only one, Peter Schiff, predicted prices would rise. So now whenever an expert energy strategist tells me oil prices will fall, I ignore them - why shouldn't I? Over the past 2 years or so, the peak-oilers have been right and the peak-oil debunkers wrong. That's the simple truth. My personal gut feeling is that there will be some type of oil shock leading to a global recession/depression. But people who claim that peak-oil will be a "non-event" or is nothing to worry about simply haven't convinced me yet.

Comment by: Ed at August 23, 2005 12:39 PM

[Dynamist]

An "oil shock" that results in recession/depression seems quite different from chaotic apocalypse. Maybe the sky takes a dip now and again, but it has yet to actually fall to earth.

I must suggest that the 4 mistaken analysts were hoping stuff would have gone better in Iraqistan, but they still hedged their portfolios and made money. Listen to the hands...the mouth often lies.

[Sandy]

Jennifer, you'll have to save a lot for that dwelling given the current bubble. I rent in the city, walk to work, and live below my means (have for years). But if there's an economic collapse...well, remember that FDR made owning gold illegal. If the government is hungry, it will look for concentrations of wealth, including your bank account (which will shrink mightily due to inflation). Your tenants can become squatters and the government can force you to house them (ask New York landlords with rent-controlled properties).

[Jennifer]

Sandy--
I believe the bubble will soon pop, but even if it doesn't I'll be able to afford what I want in a year. And if things get as bad as you say then there's no hope for ANY of us, so why bother trying? You're sounding far more gloomy and doomy than I am here.

[Thomas Paine's Goiter]

All the economists seem to be able to come up with is to say, "don't worry - some new technology will come along". Ok. What technology and when?

Reposted from this same thread as an answer the same question you keep posing, yet you keep ignoring the answer:

"Science doesn't have to "come up with something". They already did. We've got a wide variety of alternative fuels for both power generation and transportation. We've got, in no specific order: Nuclear, hydro, solar, wind, bio oil. We've got alcohol, gasahol, electric, fuel cell, biodiesel, bio oil, tar sands, shale oil, hybrids....

The alternatives are there - it's a matter of price points. Experts said that it would take $200 oil to make the tar sands profitable to harvest. Guess what? Tar sands are profitable from $40-$100 a barrel depending on depth. Then experts said that shale oil would take $200 a barrel to make shale oil profitable. Guess what? Shale oil is now estimated to be profitable at $100 a barrel.

Same goes for the bio fuels and fuel cells."