While discussing the concept of 'Peak Oil' at work today, I offered that it made no sense to to invest in an expensive high mileage car (for example) in order to 'save oil'. Any oil you saved would just be used by someone else at today's low price and - in the meantime - you would put yourself at a competetive disadvantage by paying more for energy than you needed to.
The other person offered that this was an example of the "tragedy of the commons" since everyone was incentivized to use the oil and no one was incentivized to conserve it. Although I couldn't argue that it certainly looked the same, I always thought that the "commons" argument pointed to a problem with property rights - that common ownership was at the root of these sorts of problems. However, it doesn't look like oil supplies - in general - suffer from a common ownership problem.
So I'm confused with how to classify the whole situation, is it:
1) An example of the "commons" tragedy? But does that imply that "commons" is more than just property rights? or that oil supplies have ownership issues?
2) An example of something else with similar consequences? perhaps some sort of game theory?
3) A problem with the argument as a whole? (by assuming peak oil is true, am I putting some false constraint on the issue?)
Any help appreciated - even a link somewhere - I'm not sure if this is a "commons" issue or not.
This is not just a discussion for geology. Peak Oil is an interesting concept, but as with any resource, the key rationing device is the price. Conservation of oil can and will be dictated by the price alone. What seems very strange to me is that oil continues to be exclusively denominated by it's price relative to the US dollar. There are many countries throughout the world that have suggested oil be denominated relative to another currency.
What's also very interesting is that other forms of energy are denominated relative to a barrel of oil equivalent (BOE) and our friends at the IRS define BOE in terms of joules (J). But why does the IRS determine this and not a convention held by the market or at least the Department of Weights and Measures? The problem with defining oil in terms of joules is that it assumes the conversion rate of oil is constant and that there's no possibility for efficiency gains. Efficiency gains in the burn rate of oil would effectively increase the amount of oil by increasing the energy derived from converting it to another form of energy.
Peak Oil could be a construct of this thinking that the energy derived from oil is constant. But it is certainly not. So why does the government hold it constant?
Two theories:
(1) the government creates the Peak Oil myth to declare the supply of oil will run out in the short-run. Many DOE estimates over the past century have declared we will run out of oil, only to have to push the estimate back with new discoveries. Efficiency gains are like new oil finds. But the myth helps to drive the push for government interefernce in the energy markets: conservation efforts, taxes, and "investments" in back-end (consumer) efficiency technologies.
(2) the Peak Oil myth is a way of controlling the means of production. Declaring that if we running out of oil justifies the capture of land to prevent from being used for E&P operations. Preventing E&P limits the supply and increases the price of oil and the inputs costs to other production. Preventing input costs from falling prevents the efficency gains throughout the rest of the economy and the corresponding fall in wholesale prices (their dreaded deflationary event in Keynesianism).
Peak Oil is a Myth
Ask any proponent of the Peak Oil Theory what the exact amount of fossil fuels the earth contains. Without knowing this amount no rational claim of Peak Oil can be made and it is thus a Myth as currently proposed.
The only entity preventing further exploration and extraction of fossil fuels is the state and the only entity negatively effecting the actual cost of fossil fuels is the state through taxes and regulations. Only the state can cause shortages of resources and any energy "crisis". In a pure free energy market all land would be available for energy production at a free market price, thus availability would be limited by cost, technology and of course actual supply. Say a hypothetical obtainable limit to our demand was reached in actual supply, long before this was reached prices of fossil fuels would rise, once fossil fuel prices rose above what other competing free market energy sources were, these cheaper energy sources would be adopted on their own. All without government intervention. The government was not needed to switch away from horses to cars. But we have no such scenario since the state is artificially creating supply shortages by restricting land access through regulations. The state is also artificially increasing energy costs above free market rates with taxes and regulations. In essence the state is creating a Peak Oil scenario to benefit the green lobby. But no such thing exists even with known reserves:
Myth: The World is Running Out of Oil (5min)
Despite Popular Belief, The World is Not Running Out of Oil, Scientist Says (Science Daily)It’s a myth that the world’s oil is running out (The Times, UK)Myth: The World is Running Out of Oil (ABC News)No Evidence of Precipitous Fall on Horizon for World Oil Production (Cambridge Energy Research Associates)Oil: Never Cry Wolf—Why the Petroleum Age Is Far from over (Science)Oil, Oil Everywhere... (The Wall Street Journal)The World Has Plenty of Oil (The Wall Street Journal)
Reserves:- 1.3 Trillion barrels of 'proven' oil reserves exist worldwide (EIA)- 1.8 to 6 Trillion barrels of oil are estimated in the U.S. Oil-Shale Reserves (DOE)- 986 Billion barrels of oil are estimated using Coal-to-liquids (CTL) conversion of U.S. Coal Reserves (DOE)- 173 to 315 Billion (1.7-2.5 Trillion potential) barrels of oil are estimated in the Oil Sands of Alberta, Canada (Alberta Department of Energy)- 100 Billion barrels of heavy oil are estimated in the U.S. (DOE)- 90 Billion barrels of oil are estimated in the Arctic (USGS)- 89 Billion barrels of immobile oil are estimated recoverable using CO2 injection in the U.S. (DOE)- 86 Billion barrels of oil are estimated in the U.S. Outer Continental Shelf (MMS)- 60 to 80 Billion barrels of oil are estimated in U.S. Tar Sands (DOE)- 32 Billion barrels of oil are estimated in ANWR, NPRA and the Central North Slope in Alaska (USGS)- 31.4 Billion barrels of oil are estimated in the East Greenland Rift Basins Province (USGS)- 7.3 Billion barrels of oil are estimated in the West Greenland–East Canada Province (USGS)- 4.3 Billion (167 Billion potential) barrels of oil are estimated in the U.S. Bakken shale formation in North Dakota and Montana (USGS)- 3.65 Billion barrels of oil are estimated in the U.S. Devonian-Mississippian Bakken Formation (USGS)- 1.6 Billion barrels of oil are estimated in the U.S. Eastern Great Basin Province (USGS)- 1.3 Billion barrels of oil are estimated in the U.S. Permian Basin Province (USGS)- 1.1 Billion barrels of oil are estimated in the U.S. Powder River Basin Province (USGS)- 990 Million barrels of oil are estimated in the U.S. Portion of the Michigan Basin (USGS)- 393 Million barrels of oil are estimated in the U.S. San Joaquin Basin Province of California (USGS)- 214 Million barrels of oil are estimated in the U.S. Illinois Basin (USGS)- 172 Million barrels of oil are estimated in the U.S. Yukon Flats of East-Central Alaska (USGS)- 131 Million barrels of oil are estimated in the U.S. Southwestern Wyoming Province (USGS)- 109 Million barrels of oil are estimated in the U.S. Montana Thrust Belt Province (USGS)- 104 Million barrels of oil are estimated in the U.S. Denver Basin Province (USGS)- 98.5 Million barrels of oil are estimated in the U.S. Bend Arch-Fort Worth Basin Province (USGS)- 94 Million barrels of oil are estimated in the U.S. Hanna, Laramie, Shirley Basins Province (USGS)For Comparison:- 260 Billion barrels of oil are estimated in Saudi Arabia (EIA)- 80 Billion barrels of oil are estimated in Venezuela (EIA)
"Anarchism misunderstands the real nature of man. It would be practicable only in a world of angels and saints" - Ludwig von Mises
xahrx:To expand on this point, the USGS has been predicting the imminent depletion of oil since we started burning it for fuel.
Yes. I saw a list once that showed them predicting the end of oil like every 20 years since the 1860's. The inherent flaw of material-technical forecasts (when we say "this is how much we have, and this is how fast we burn it up, thus we have this long before it runs out") is that they do not take the cyclical replenishment of resources into account. Scarcity causes creation of resources. Like my fridge; it's replenished because it's getting empty. If it's full already I have no reason to buy new food. Why bother? It's like every week I tell my wife "we're gonna run out of food by next week". And then oddly enough we buy more food. But a few days later I again proclaim that our food will run out immanently. So I just repeatedly proclaim we're going to run out because I extrapolate current consumption without taking the part of the process into accout that replenishes the resource. And technically I would be right. The food in my fridge is at any point in time always "running out". The problem is that that doesn't capture the whole process. It extrapolates a part of the the process as if it were the whole process.
Opponents sometimes respond with some reference to resources being finite. You know, the earth is spherical. All the resources we will ever have are alredy there. So we couldn't create resources. It's physics! And that is,as I mentioned, simply an equivocation between known reserves an the overall amount of a resource. Reserves are not finite, we create them because we need them. They do not have to ever run out (they may though), and they can not peak.
I have found though that environmentalists aren't impressed by empirical data. The fact that our theoretical models are repeatedly backed up by reality somehow just makes our theory less pure, while the fact that their theory was shown to be repeatedly wrong elevates it into a higher level of theoretical purity. Facts that make their predictions wrong are never taken as a sign that their theoretical models may be flawed. No, these are just random incdents that happen to come about. In fact these unexpected events explain why their predictions happened to be wrong, vindicating the theory. When someone finds a giant new oil field, that doesn't mean the theory that predicted oil to run out was wrong. Their theory is inherently pure and true and reality just happened to not conform to it in that instance.
EmperorNero:Reserves are not finite, we create them because we need them. They do not have to ever run out (they may though), and they can not peak.
Well, assuming oil isn't a rapidly renewable resource (abiotic origin or whatever), reserves are finite, they do have to run out, and they will peak. The problem is just that the doom and gloom crowd is assuming our current reserves are the actual resource total and so they can calculate approximately when any of these events will happen, which isn't the case.
Of course, they mostly know this and just want to use it as an excuse to reinvent the world they way they think it ought to be.
“I take this opportunity to express my opinion in the strongest terms, that the amazing exhibition of oil which has characterized the last twenty, and will probably characterize the next ten or twenty years, is nevertheless, not only geologically but historically, a temporary and vanishing phenomenon – one which young men will live to see come to its natural end” (1886, J.P. Lesley, state geologist of Pennsylvania).
“There is little or no chance for more oil in California” (1886, U.S. Geological Survey).
“There is little or no chance for more oil in Kansas and Texas” (1891, U.S. Geological Survey).
“Total future production limit of 5.7 billion barrels of oil, perhaps a ten-year supply” (1914, U.S. Bureau of Mines).
“Reserves to last only thirteen years” (1939, Department of the Interior).
“Reserves to last thirteen years” (1951, Department of the Interior, Oil and Gas Division).
“We could use up all of the proven reserves of oil in the entire world by the end of the next decade” (President Jimmy Carter speaking in 1978 to the entire world).
“At the present rate of use, it is estimated that coal reserves will last 200 more years. Petroleum may run out in 20 to 30 years, and natural gas may last only another 70 years” (Ralph M. Feather, Merrill textbook Science Connections Annotated Teacher’s Version, 1990, p. 493).
“At the current rate of consumption, some scientists estimate that the world’s known supplies of oil … will be used up within your lifetime” (1993, The United States and its People).
“The supply of fossil fuels is being used up at an alarming rate. Governments must help save our fossil fuel supply by passing laws limiting their use” (Merrill/Glenco textbook, Biology, An Everyday Experience, 1992).
(Give particular heed to that last sentence.)
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So what are you saying then? That we are still going to discover more oil, billions of barrels of oil have just been missed by the advanced oil finding technology?
I do not think that there is a large amount of oil to still be found. They are already drilling 15000feet under the sea floor in search of oil. Why would they be going to such lengths if they could easily just drill for oil or use the 7 trillion barrels of oil shale?
While i am against governments exploiting peakoil and messing with the market and I do foresee the peakoil idea being used to artificially increase prices. That does not change my mind on the fact that it is a finite resource that takes 1000s if not 100000s of years to develop.
There is also no other type of resource that could replace oil for its many uses. Maybe a combination of resources, but even then, nothing as cheap as oil and nothing as versatile.
Sure if they find another oil well with 100s of billion barrels of oil then that changes the amount of time we have left. Which is what has happened in the past. A combination of exploiting the peakoil myth to increase prices as well as working with the information at the time.
You do realize that the best geology off the US coast is off-limits to drilling don't you?
The American Federal Bureacracy has been putting land off limits to drilling and exploration for up to 40 years now.
The reason that BP was drilling in such deep water is that the US GOVERNMENT will not let them drill in shallower water.
Not because there is no oil there, but because it is BLOCKED.
ANWR is only one of the most obvious examples.
http://www.mcclatchydc.com/2008/07/20/44740/drilling-in-anwr-remains-off-limits.html
Jack Roberts:So what are you saying then? That we are still going to discover more oil, billions of barrels of oil have just been missed by the advanced oil finding technology?
Yes. That is not some theory, that is what we are doing right now. Reserves are growing faster than we consume oil. This 'advanced oil finding technology' is essentially to drill a hole and look whether there's any oil down there. People think they have computer models that tell them where all the oil on the planet is, but that's way overestimating their abilities. They have computer models to make some educated guesses, but basically nobody has a clue how much oil there is. As for example Mukluk, a one-and-a-half billion Dollar dry hole in Alaska, should illustrate. 11 oil companies invested the GDP of Suriname and came up with nothing. That wasn't with 1920's technology either, that was in the 80's.
Jack Roberts:I do not think that there is a large amount of oil to still be found. They are already drilling 15000feet under the sea floor in search of oil. Why would they be going to such lengths if they could easily just drill for oil or use the 7 trillion barrels of oil shale?
The sea is like 70% of the earths surface. Assuming that oil is distributed roughly equally, this simple calculation tells us that we can at most access 30% of the oil on land. But since a lot of land area is deserts, arctic, mountains or otherwise inaccessible, we're probably just scratching at 10% most easily accessible oil on the planet.
Also the high sea is where you go to find oil that authoritarian governments won't expropriate from you. Which is a political problem.
Oil exploration is largely a government enterprise today. 80% of the worlds oil supply is in the hands of governments. Like any cartel with control over the market, they have no interest in finding more oil because that only drives down the price. In fact their main concern is suppressing new finds. As Redmond mentions, new oil drilling in the US has mostly been banned by established oil interests and their environmentalist lackeys.
Jack Roberts:While i am against governments exploiting peakoil and messing with the market and I do foresee the peakoil idea being used to artificially increase prices. That does not change my mind on the fact that it is a finite resource that takes 1000s if not 100000s of years to develop.
Known extractable reserves are not finite, since we're obviously adding to them. The amount of stuff on the planet is of course finite, but you can not apply that to specific resources. How much oil there is depends on what you are counting as oil. Oil comes in a range of variations from light crude to mud with tar in it. What of that do we consider "oil reserves"? How much oil there is depends on technology, market price and demand. That's why it doesn't really make sense to speak of oil as being finite.
Also I hear that thermal depolymerization is working and even financially viable.
Jack Roberts:Sure if they find another oil well with 100s of billion barrels of oil then that changes the amount of time we have left. Which is what has happened in the past. A combination of exploiting the peakoil myth to increase prices as well as working with the information at the time.
We did find oil wells with another 100 billion barrels in the last three years. (85 million barrels a day times 365 days times 3 years = roughly 100 billion barrels). We did use up 100 billion barrels in that time and still added oil to our reserves, which means we must have found that much new oil. Oil isn't finite so it makes no sense to ask how much we "have left" or when it will run out. It will never run out. We will stop using oil when better technologies (nuclear fission, nuclear fusion, cold fusion, helium from the moon) become cheaper than oil.
In theory....
What if the reason the United States refuses to access it's own oil is to effectively drain the Middle East of it's resources. Once peak middle-east oil has been surpassed and resources dwindle, deregulation in the US would allow for a significant increase in production.
The long term result being Middle East goes broke again and depends on the U.S. for both food and energy.
I'd be careful calling it a tragedy of the commons. Most people who use the commons argument are setting up the framework for government control of what they're claiming to be a publicly-held resource, like oil, health care, energy, or really any kind of natural resource. The argument typically has two components: 1) there's a resource that's being diminished in value through the public use of it, and 2) since the public generally doesn't believe they should be responsible for maintaining the value of the resource (no single raindrop believes it is responsible for the flood...), government intervention is necessary. Maybe it's just me, but I can't see either of these in peak oil, so I think it's a stretch, and you're likely dealing with someone who simply believes in big government and the commons argument is a useful way to achieve that.
Oh, and on the subject of conservation of natural resources...
I don't mind some level-headed resource management, but when it becomes impossible to use a resource because of its conservation, then it should no longer be called a "resource". It's only a resource if you get to use it.
It seems to me, then, according to that graph, that we ought to be even less concerned about peak oil as it is more right skewed than proponents have argued, since they hypothesize a completely normal curve. Furthermore, isn't much of the problem today caused by restricted supply instead of natural declines in production?
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Oh, and on the subject of conservation of natural resources... I don't mind some level-headed resource management, but when it becomes impossible to use a resource because of its conservation, then it should no longer be called a "resource". It's only a resource if you get to use it.
That conservation is best handled by the market. Why do we need the government to do something that the market does better?
I agree with imapoose666 we need to dig for electronic.
It is not a tragedy of commons.
The owners of oil wells and people that look for oil have incentives to economize.
The price of oil on the market establish the cost-effective strategies for exploration of current reserves and expansion of knowledge, either of oil deposits or new technologies helping make better use of oil.