The least satisfying [but possibly truest] argument against Peak Oil

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Summary: Peak Oil predicts we will eventually reach a point where demand will strip supply in oil, and this will create a massive issue as societies based around cheapish petroleum are strained. In a 2010 interview, a BP Chief Economist Cristof Ruhl gives an extremely unsatisfying but likely truest response to the concept of Peak Oil.

BLOT: (13 Apr 2011 - 01:26:43 AM)

The least satisfying [but possibly truest] argument against Peak Oil

I'm a bit of a greeny. Have been my whole life. I don't apologize for it. I'd willingly sacrifice some progress for a cleaner way of life, and it often comes down to which bits of progress and what degree of cleaner. I'm also a pragmatist and, as a student of history, know that a true eco-paradise government probably will not develop until something like a fascist regime enforces it.

One of the greeny talking points is Peak Oil. To sum up: we will eventually want more oil than we can produce, and when this happens it is only a matter of time before oil runs out. I've been reading about this some, because back in the 70s or so it was supposed that circa 2000 was the deadline. Now, it is supposed about 2050 give or take. It is pretty safe to say that certain passionate demographics are likely to assume the worst, but there is a degree of increasing science surrounding it.

In a 2010 interview, Christof Rühl, Chief Economist for BP, is asked about the concept of Peak Oil. His response is possibly the least satisfying, but truest, answer there is:

Therefore there will never be a moment when the world runs out of oil because there will always be a price at which the last drop of oil can clear the market. And you can turn anything into oil into if you are willing to pay the financial and environmental price.

Essentially, the idea that demand will stay the same no matter the cost is balderdash. Sure, the cost will eventually be too high to sustain society as we know it, but let's not tell fairy tales that somehow people will not find a way to decrease demand.

This doesn't do us lesser folk, us peons, any good, mind. We're still going to be using sticks to fight each other for food, but at least somewhere, some billionaire will be able to pilot his jet ski around for a weekend.

Oh, an interesting quote about why high oil prices doesn't necessarily solve the market right away:

Oil companies will try to maximise output to maximise profits when oil prices are high, and they will do so in competition with each other even to their own long-term detriment, meaning even if they create excess capacity and economic cycles.

Which means that as oil prices go up, production will also go up, to try and create a greater future worth. It's a fascinating corollary to the Tragedy of the Commons. Let's say that we have a pretty little garden but only one row of tomatoes. As tomatoes decrease, that increases the amount we can charge for them. However, our response is going to be to pick more tomatoes and sell them to drive up profits. If we forced our tomatoes into storage and then only meted out a certain amount, then we get the double benefit of scarcity [they have been picked] and a healthy supply [we have said healthy supply in storage so we are fine]. It is easy to see a number of problems here: storage could fail, people could learn to live without tomatoes, regulation could force our hand, and it's not going to last forever but our storage forces us to stick to a model that is dying partially because we killed it. All of these are currently analogous to the oil situation.

Ah, well, here's to our days in a rediscovered 19th century. I say we should bring back M.R. James style ghost stories to kick it off.

Matters Ecological


Written by Doug Bolden

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