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
I had an idea for a movie.
Sounds exactly like a lot of movies and plays that I've already seen.
OH, sorry for double post. I had an idea for a movie. Its about a rich greedy oil tycoon who discovers oil on top of an ancient indian burial ground. While drilling, the locals come and try to warn him not to disturb the indian's sacred remains, but he ignores them because he wants money so much. When they begin production of the well, the dinosaur DNA in the oil combines with the disturbed spirits of the native americans. For the rest of the movie, a giant T-rex and a gang of raptors all wearing moccasins and feather headdresses harass the oil tycoon. At one point, he passes out and has an inward journey where he sees what the world would be like if everyone were capitalist. People are starving and the earth is barren. When he wakes up, he repents and agrees to shut in the well and build an ecological preserve on top of the plot. The dinosaur indians can rest in peace, and all is right with the world. The movie closes as a nearby television shows a republican candidate, Donald Deagon, running for presidency. The dinosaur t-rex nods, and the oil tycoon quickly runs and speeds off in his prius. TO BE CONTINUED.
When they begin production of the well, the dinosaur DNA in the oil combines with the disturbed spirits of the native americans. For the rest of the movie, a giant T-rex and a gang of raptors all wearing moccasins and feather headdresses harass the oil tycoon.
At one point, he passes out and has an inward journey where he sees what the world would be like if everyone were capitalist. People are starving and the earth is barren. When he wakes up, he repents and agrees to shut in the well and build an ecological preserve on top of the plot.
The dinosaur indians can rest in peace, and all is right with the world. The movie closes as a nearby television shows a republican candidate, Donald Deagon, running for presidency. The dinosaur t-rex nods, and the oil tycoon quickly runs and speeds off in his prius. TO BE CONTINUED.
The "tragedy of the commons" is that the rich people stole them all from everyone else through acts of Parliament.
nandnor:Avatar was about iraq if ur referring to that
Great points - Peak oil is a myth...
Again Great points
My Uncle is an oil and gas geologist out in Calgary Alberta, and I got from him the following info.
Existing Oil Sands Projects - profitable at $30/Barrel
new ones - $75/Barrel.
Can quote if you like..
Peak Oil as the theory that there will be a maximum production ration, which is located somewhere around the half of the total amount of oil we ever gonna use (*), is reached.
If we do not set the constraint on wether the peak should be exactly around half of the oil usage too strict, we can almost immediately conclude that peak oil is true, since if that were not the case, the production of oil would have to keep increasing untl the last drip of oil we ever gonna use, and that is very implausable, if not outright impossible.
This argument, and the truth of the conclusion, is of course indepenent of both how much physical oil there is and how large portion of that is recoverable. Of course, as technology progresses and prices rice, it can be expected that a larger portion of the total physical oil reserve still left, can be reovered.
So, the real debate is when the peak moment will be met. But apart from a production peak, note that there is also a discovery peak. The peak of oil discoveries already happened in the 60-ies.
What is an important indication for when we will meet peak oil is the ratio of total oil used every year versus the amount of new discoveries of oil. Total oil usage increases every year - just that economic crisis cause a temporary stagnation - and the amount of new discoveries each year, decreases.
Notice also that if at some point in time we have an alternative for oil which has a lower price and can technologically replace the oil we use, there will gonna be a shift in investments from oil exploration to developing that new energy source, and will lead to the fact that the fraction of oil that was economical recoverable is going to decline deeply, instead of increasing.
So it might turn out we will never have the sharp problems associated with peak oil, we would otherwise have. But then this is also partly thanks to the fact we already invested in alternatives and subsidized it to make them more economically viable at an earlier point in time in history, and thus avoiding the problems we could have otherwise have had.
Notes * The amount of oil we ever gonna use (determined by technology and price) is not the same as the total physical quantity of oil that exists, as a portion of that oil will stay there as it is beyond technological or economical constraints to recover it.
Redmond said:
<<< Great points - Peak oil is a myth... >>>
No, peak oil is not a myth, since it does not happen that untill the very last drip, oil production keeps rising, so simply said, somewhere along the line (and expected from PO theory, somewhere half way) there will be a maximum production level of oil.
Although the above argument is rather abstract and purely mathematical, this is true, and is independend of the factual amount of oil there is (the physical quantity) and also independend of the da facto amount or fraction of that, that is ever gonna be used.
So peak oil is true. The only real debate is to find out or to predict, around when that is gonna happen.
But the furture might turn quit different, as it might be possible that at some point investments in oil production decline and are replaced by investments in other alternative sources that are cheaper and/or better. It could be nuclear fussion, or any kind of solar or geothermal, or whatever, but it is predicted that some forms of solar can compete with oil around 2020.
We won't stop using oil immediately, but there will be a shift from oil to alternatives.
Rob, you happen to know exactly how much oil is currently available on planet earth?
Very simple explenation that shows that there must be a peak in oil production:
http://www.youtube.com/watch?v=t2mKZcCVIPI&feature=related
filc:
<<< Rob, you happen to know exactly how much oil is currently available on planet earth? >>>
No. Also, it doesn''t matter for peak oil to be true, as I explained earlier.
But for the sake of discussion, let us not get into a theoretical debate, but go to the more practical, and ask ourselves is peak oil gonna be a problem we have to deal with within our life time?
I think it is, even when peak oil might be expected later as most scientific studies expect it to be (within a few decades, possible even within some years) at least it is something we need to be occupied and concerned with, because we know that since the oil discoveries, we have used oil at an ever increasing rate, which caused also the population to grow at an increasing rate, and not developing countries grow their economy and oil usage at an increasing rate, so in any scenario in which oil production is gonna decline, that is gonna be a problem.
So, yes, peak oil is a problem. We need to properly deal with it. And we can. Making oil less cheap artifically is one way, that drives other industries that increase efficiency of energy usage and develop alternatives.
There might be a way to solve it, if alternatives become cheaper soon enough, so that dependence on oil decreases, and if we do enough to prevent population growth (esp. by stimulating developing countries to develop fast enough so that they population growth declines) and find ways to use energy more efficiently.
filc wrote:
Second comment.
We do of course no know exactly what amount in total, the total physical amount, is. But here is some way we might figure that out, even if we can not exactly now the quantity of not yet discovered oil reservoirs. We take into account the rate of discoveries found each year, and our increase in technological development to discover new oil reservoirs.
What we know is that:
- The rate of discoveries already declined
- Even when our technological means for discovering new deposits increased.
By these figures we can make some estimate of what the total amount of physical oil which is there might be.
So it is not something of a total unknown, we can make some estimate.
Here is an anology.
Suppose you have a haysteck, and hidden in there, there are some items in some unknown quanity, to be discovered.
Here also, from the rate of discovery of items we find in the haysteck, even when we have no searched completely the haysteck, we can figure out from statistical analyses what the total amount may be.
Stranger wrote:
<<< Peak oil seems to be a theory for geology, not economics. So long as new oil is being discovered and appropriated, the supply of oil is for all purposes limitless. Once oil discoveries stop, then oil preservation becomes a rational choice. >>>
No. We know of course oil is not limitless. But apart from this theoretical fact, we can also make a fairly good estimate what the total amount of oil reserves are, by analyzing past data of recovery and production rates.
Now, if oil recovery rates already peaked sine the 60-ies and ever since been declining, although not impossible, how probable you guess it is that discovery rates are gonna increase again?
Rob Heusdens:So it might turn out we will never have the sharp problems associated with peak oil, we would otherwise have.
What problems will we have with an hypothetical peak oil production?
There is bound to be peak production in everything.
Richard Heinberg explain peak oil:
http://www.youtube.com/watch?v=6uYmZmWAaxk&NR=1