Yes, the market will save us. As prices rise so will production, and if an increase in production is not enough, innovation and substitution will do the trick. I know the drill.
But I'm sure you're also aware that while shortages are rare (if not at all impossible?) in a perfect market economy, communist governments and excessive central planning tend to create and exacerbate resource shortages, leading to famine and starvation.
So if peak oil is such a significant event that is happening as we go deeper into the current depression (and with ever more interventionist governments) why are you so cocksure about it? I know, this wouldn't be a problem in an ancap society. We don't live in one. We don't live anywhere near one.
During the last spike I saw examples of resilience among communities and entrepreneurs. Change to 4 day workeeks, promote feasible green technology made in a garage workshop, etcetera. But there were also marked examples of politicians being unable not to meddle in the issue. Windfall profits tax for the evil oil companies! Promote useless alternatives to petroleum! Subsidize the shit out of those poor americans that bought SUVs!
Lets not also forget the fact that oil usage has been much encouraged by government malinvestment (example: would the massive suburban sprawls be feasible without government subsidized roads and highawys?).
So can this not be interpreted as yet another massive bubble that has to pop? Would oil be so pervasive in our economy in an ancap society? Are we all doomed to the biggest ever famine attributable to central planning?
*.- Please no "Oil is Abiotic" arguments. I've frequented The Oil Drum far longer than I've been here and, while being no expert on the subject, have understood enough to form a rather fixed opinion on the issue.
The price of alternatives to oil is not infinite and even political fiddling cannot make it so.
</thread>
Clayton -
Addendum: If you think about the issue more carefully, you will realize that it is government itself which is the ultimate bubble. The massive build-out of sprawling, useless, unproductive, stifling, voracious, resource-consuming bureaucracies is the bubble of all bubbles. When it bursts, there will be blood in the streets.
http://discovermagazine.com/2006/apr/anything-oil/
DMI1, you've made a very good post, and I think we should respond to the substance of it, rather than do the quote-by-quote dissection that some do when they like to be condescending.
Your point is about uneconomic exhaustion of a scarce resource, because of price controls, subsidies, forced misallocation of scarce capital, and making of sweeping decisions under limitations of knowledge and unintended consequences, is all correct.
But that has succeeded in spreading the cost around to other parties, or having producers and consumers of oil bear that cost in a different form - it has not eliminated that cost! In short, production of oil will always be limited by the marginal cost of producing each additional barrel for the oilwell, no matter how many subsidies and misinvestments are directed towards it. Governments across the world would run out of money sooner than they can change the realities of nature - that other scarce resources and scarce capital make it only more impossible to fully exhaust a scarce resource like oil.
I have a BS in chemistry and what really makes my jaw drop is the fact that while people is literally terrorized about "peak oil" there's another much more pressing problem very few outside the industry mention: refining capacity.
For me it's pretty ridiculous having people run around scared screaming "oil is runing out, oil is running out!" while not even mentioning the most pressing issue of the moment, the one that can really drive fuel prices to the Moon.
In Europe refining capacity has declined about 33% since the Great (Political) Oil Crisis of the '70s. There are two main reasons for this: the first is the use of alternative fossil fuels (coal and natural gas) for heat and electricity generation, the second is the growing senility of the plants themselves. Yes, refining plants are getting old and inefficient all over the Western World. "Developing" countries like China, Brasil, Indonesia etc are slightly better off because they have built or are building up-to-date refining plants but old and inefficient plants are still the backbone of the industry. You may say: if we cannot build new refineries perhaps we can overhaul the existing ones. Of course there's a catch: most of the present refineries are running full steam to make up for their growing inefficiency. When five years ago the US started overhauling a number of refining plants to comply with new low-sulfur standards this sent ripples as far as Europe: refining companies were importing both semi-processed materials and finished fuel from abroad to make up for the difference. Fuel prices went through the roof. Every single overhaul needs to be carefully planned years in advance because refining capacity is so strained and must be kept limited in scope to keep interruption at a minimum. This also limits the number of sources of oil: if a refinery is geared to refine, say, some particular types of sweet and light crude it cannot be regeared overnight to refine South American heavy and sour crude. One of the reasons the US refining is so vulnerable to the hurricane season is the fact that most of it is geared to run on light and sweet crude, epsecially the varieties coming from the Gulf of Mexico: refineries in, say, Texas cannot simply buy oil coming from Venezuela or Canada.
Building new plants is, of course, absolutely off topic due to environmental legislation (part of which was put in place, you guessed it, to keep new competitors from entering the fray). ARAMCO, the State-owned Saudi oil company, had to call off their plans to enter the refining business in the US and Europe because simply put everything was working against them. Yes, even such an economical and political powerhouse as the Saudi royal family has been defeated by cartels and environmentalists.
You know, I'd have more to write about synthetic liquid fuels and the like but time's a tyrant. It will have to be for the next time!
Man, Kakugo is so informative. Now tell me some refining companies to invest in!!! : P
"Yes, the market will save us. As prices rise so will production, and if an increase in production is not enough, innovation and substitution will do the trick. I know the drill.
So can this not be interpreted as yet another massive bubble that has to pop? Would oil be so pervasive in our economy in an ancap society? Are we all doomed to the biggest ever famine attributable to central planning?"
So. to rephrase your question: why are we not worried about a non issue that the government may turn into a major issue through its incompetence?
I think you'll find that is actually the chief worry and fear of most people in this forum. And anyway, as Kakugo pointed out, infinite supplies of oil wouldn't mean jack without the ability to refine it into the more valuable fuel forms people actually want from it.
I am not convinced Peak Oil is real.
There's like, 2000 TCF (trillion standard cubic feet) of gas hydrates in the north seas. If there is peak oil, there is not peak natural gas for the next 400 years.
hugolp:I am not convinced Peak Oil is real.
Neither am I.
Abiotic oil theory aside, petroleum seems to come from long-dead oceanic microorganisms, such as algae. Now how long have these organisms been on Earth? More than 3 billion years. That seems like a lot of time for petroleum to form.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
"Abiotic oil theory aside, petroleum seems to come from long-dead oceanic microorganisms, such as algae. Now how long have these organisms been on Earth? More than 3 billion years. That seems like a lot of time for petroleum to form."
You're right in that it would be a lot of petroleum to form. However not all of that petroleum is trapped in reserves. Oil is generally formed in a "source rock", that contains the organic matter that converts into petroleum. Being a fairly light substance, it then rises up towards ther surface through permeable rocks (sandstone, etc.) and faults. For a deposit of oil to be formed, that path of movement has to be "capped" by a non-permeable formation, such as a salt dome, massive limestone formation, or something similar. So you have oil formed in a source formation, moving to a permeable resovior formation trapped by a non-permeable cap formation.
The catch is, obviously, that not all oil formed in the source formation ends up trapped in a resovior, a lot of it simply trickles to the surface and is weathered away before any sizable amount of oil accumulates.
^geologist
<petro engineer
ire...
It doesn't sound like you are petrified of peak oil per se either.
"I am not convinced Peak Oil is real." - hugolp
Oh, it's real. But so is Peak Rock and Peak Air and Peak Donkey and Peak Buggy Whip and Peak etc., etc., etc., etc. Peak Oil and Global Warming are just the most recent plausible-to-the-masses excuses for Malthusians to get everyone worked up about. The world has been ending for the last 10,000 years or more, basically ever since someone realized they can profit from its 'imminent' demise by telling idiots about it.
they can profit from its 'imminent' demise by telling idiots about it.
Well, in general, people like paying money to be lied to.
What good would worrying about it do for me?
At most, I think only 5% of the adult population would need to stop cooperating to have real change.
Electric cars are finally coming along, and nuclear power is dirt cheap. There's your answer.