Peak Oil and National Debt

[meanlittlechimp]

Malthus may end up being right after all.

If peak oil theory is correct, we are in for a significant population contraction. Once we’re farther along the downslope of energy supply, we won’t be able to support the existing population, let alone, projections factoring in inevitable pop. growth. The double whammy of peak oil and crippling national debt is a pretty nightmarish scenario.

Our national debt is so massive that the interest payments alone will outstrip most other expenditures in the federal budget, in less than a decade. Even worse, most debt figures don’t include social security and medicare that will be insolvent by the time baby boomers start drooling on themselves. Currently, the number one cause of personal bankruptcies is medical bills and in 10 to 20 years, that number will probably skyrocket to horrific levels.

At the current trajectory, we are really, really fucked. Expanding the money supply might ease the pain temporarily but that solution will eventually lead to inflation. Likewise, Keynesian fiscal stimulus will temporarily increase employment levels but will further drive up our debt.

The problem is pushing a few easy policy levers will not get us out of the clusterfuggle. Policy makers resort to these tactics because they’re easy. Increasing standards at schools, raising taxes, and cutting spending simultaneously, simply aren’t feasible because they won’t get re-elected. The voting public has to grow up and accept and support temporary pain for long term gain. What we have now is temporary gain for long term pain.

The best way to escape our debt calamity is by increasing productivity and stop acting like a teenager with their first credit card. How do you increase productivity? I think the best approach is education and developing a skilled work force, which has been slowly eroding over time, relative to other industrialized nations.

Peak oil states we have already hit our production peak according to ex-oil industry physicist, M Hubbard. Most oil analysts that know what they’re talking about, agree with this. A price shock (caused by oil) combined with our national debt, is a recipe for disaster. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

On the other hand, maybe necessity is the mother of invention. If someone bet me – all we had to do is spend 2 billion dollars, hire 130,000 people, and we could split the atom in 4 years – I would have bet against it (and been wrong). To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Ultimately, the only chance we have are alternative energy breakthroughs, to be able to sustain projected population growth with finite dwindling resources.

*This was taken from my blog I started a few weeks ago.
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[Dodeca]

If I may ask a question.

Why pay back the debt at all. Enough with the banker bonuses already.

---------- Post added 03-16-2010 at 10:18 PM ----------

Where did our deters get there money to lend us anyway. Does China have a trillion dollar printing press.

[Causa Mortis]

Please find me one academic economist outside of the crank austrian camp who thinks that debt is a panic button issue during recessions (particularly when the Fed is buying up half the debt anyways). Keynesians think debt is a positive during recessions. Monetarists think its either impotent or will have no greater deadweight loss than additional taxes. The RBC camp general echoes monetarists' view on the subject.

The baseless histrionics over the national debt calls your general credibility into question, so I'm skeptical that the histrionics over "peak oil" are any more founded.

[herbicidal]

The planet earth is 52 trillion in debt.... who do we owe it to... Pluto.

Shows the planet Pluto dressed up as a pimp with bling.

A line from the movie/documentary ohcanada. Highly recommended for Canucks.

[Arkeph]

Actually, things aren't that bad, although peak oil and economic weakness are both major concerns. Things aren't going to blow up, but they will become increasingly difficult in general. The crises that will unfold will not be in the US, but will be among the subsistence class of humanity, which has little power to adapt to change. Nonetheless, all of these problems can be more or less solved, or at least treated.

The only true crisis I can envision is a complete and utter disregard for fixing problems. It's just possible that the developed world will wait until the globe becomes so much worse of a place that we can no longer ignore it, and then continue to ignore it because it has become too difficult to solve. I think this is unlikely, however.

In my view, there are just too many people with the mindset that problems are just going to fall on our heads, and all we can do is brace for the impact. We are culturally resistant to the idea that we need to transform our society to meet problems head on, or that doing so is somehow unusual in the course of human history. Nonetheless I think that this will happen, and the world will continue to live on. Even the US will change...eventually.

[Reivan]

What kind of peak oil are we talking. Is it a the amount being produced right before the world starts moving away from oil as an energy source or the max oil being produced before we start running out of it?

Personally I don't think the world will ever run out of oil because if it's needed, companies will have an incentive the find more efficient and newer ways of producing it. For example lots Texas oil wells that were declared dead are being opened up again because new pumping techniques are able to extract more oil from them. Also there are other unconventional sources of oil like tar sands or even turning organic garbage into oil that haven't been fully utilized.

[plotthickens]

Peak Oil is bunk.

Debt is part of a game we agree to play between ourselves. To say that the game will fall apart because we won't change the rules is to not understand who owns, administers and plays the game.

[blueback]

Peak oil is a very good theory. But, like all good theories, it is limited to specific circumstances. Kind of like how evolution is a good theory, but people like to expand on it and pretend it applies outside of its own constraints.

All Peak Oil says is that given a certain size well of oil, that well will achieve maximum production when half of the oil is extracted, and will never again achieve that level of production as the last half of the oil is removed. It was based on very reliable data, and successfully predicted several future peaks (like America's), and it currently predicts a world peak. . .based on its constraints.

The theory presumes that one knows how much oil is in the well.

The idea that we will discover more oil, or new sources, or will invent methods of recycling, does not invalidate the theory of Peak Oil. It's just like the discovery of quantum mechanics doesn't invalidate Newtonian physics. Each theory works perfectly well when the constraints are respected.

Also, the idea that we will learn to extract the oil we do know about faster definitely doesn't invalidate the theory, because it simply means production will remain relatively high for a short time and then drop off dramatically instead of dropping off gradually.

Also, the idea that we will learn to use less oil, or use it more efficiently, doesn't invalidate the theory, because all it means is that the existing supply will be produced more slowly.

The theory is good. The problem is that no one wants to be honest or consistent on the subject of oil. There aren't consistent definitions of terms, a "barrel" of oil means different things depending on who you talk to, there are actually many different "kinds" of oil and how they are tracked and grouped varies, most of the oil in the world is "owned" by governments rather than corporations and they have every reason in the world to lie about their supply, etc.

[plotthickens]

Peak Oil theory gives dates and numbers. So far, it's been wrong five times. Each time the numbers were jimmied and the dates of OH NO CRISIS were pushed out.

Every natural resource which is not reproducing itself is finite. That's... standard. Understandable. Peak Oil, however, is bunk.

[Causa Mortis]

Peak Oil theory gives dates and numbers. So far, it's been wrong five times. Each time the numbers were jimmied and the dates of OH NO CRISIS were pushed out.

Every natural resource which is not reproducing itself is finite. That's... standard. Understandable. Peak Oil, however, is bunk.

Right.

As importantly, allowing the market to set the price for oil will ensure that it never "runs out" per se - it may get very expensive, but that will bias growth away from oil-intensive industries and will encourage more exploration and production that was otherwise marginal. A tax on oil would speed up innovation/substitution away from the product, but I'm not sure its necessary.

[meanlittlechimp]

Peak Oil theory gives dates and numbers. So far, it's been wrong five times. Each time the numbers were jimmied and the dates of OH NO CRISIS were pushed out.

Every natural resource which is not reproducing itself is finite. That's... standard. Understandable. Peak Oil, however, is bunk.

The only reason oil prices temporarily stopped climbing is the current recession. Over the next decade, oil prices will begin to skyrocket unless much of China's growth was merely a bubble and demand flatlines or drops, which isn't likely. Mexico will turn into a net importer of oil very shortly. This will happen to some of other sources of our oil, while the Chinese and other growth economies bid up what's coming out of the middle east.

Most energy analysts and geologists are well aware of this almost inevitable probability, it's not a myth.
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Howard Lindzon interviewing an analyst a few days ago:
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Some respected energy analysts blogging about the issue:
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Taken from a paper from the American Chemical Society

"Many Countries Have Peaked Already
Ibrahim Nashawi and colleagues assessed oil production trends in 47 major oil-producing countries, which supply most of the world's crude oil. Notably, some of the countries have already hit their peak. Canada, the U.S., Mexico, Russia, Norway, the U.K., China, Iran, and Indonesia have all peaked, according to the researchers' calculations.

But there are many countries which are expected to peak after 2014, most notably OPEC member countries, which are expected to peak in 2026; the non-OPEC countries included in this study peaked in 2006."

The Neo-cons didn't invade Iraq for WMDs or terrorism. Considering their oil industry backgrounds, they were aware of this serious and real problem, for quite some time. Wolfowitz and others wrote about it in the early 90s, and their urgency to lock down oil supplies in the face of projected chinese growth rates (over 20 years ago)

[plotthickens]

MLC,

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[Causa Mortis]

The only reason oil prices temporarily stopped climbing is the current recession. Over the next decade, oil prices will begin to skyrocket unless much of China's growth was merely a bubble and demand flatlines or drops, which isn't likely. Mexico will turn into a net importer of oil very shortly. This will happen to some of other sources of our oil, while the Chinese and other growth economies bid up what's coming out of the middle east.


Even if I accept your premise that its running out, you're ignoring substitution, efficient market, and technology effects, which makes all of this rather silly.

[MrFlaneur]

Anyone heard of shale-gas. It's come to my attention only recently.

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Once again it has to be said that we wont know the limits of our resources until we know the limits of our technology.

For what it's worth I do believe in peak-oil. Chinese and developing-world consumption will make the west look like steady weekend drinkers compared to all week binge drinkers soon enough. China's usage is exponential.

Is this all comes to pass the world will become very autocratic (and nasty) very quickly.

There is no such thing as friends when it comes to survival.

And what for nuclear-proliferation when every shitbag country on the planet has a dozen reactors which the French have kindly gifted them.

It's all very frightening. No more laissez faire - all active (coercive) planning. Innocence is gone. Welcome to the future.

[meanlittlechimp]

Even if I accept your premise that its running out, you're ignoring substitution, efficient market, and technology effects, which makes all of this rather silly.

I'm not ignoring it at all. As I said in the last sentence, of the OP.

On the other hand, maybe necessity is the mother of invention. If someone bet me – all we had to do is spend 2 billion dollars, hire 130,000 people, and we could split the atom in 4 years – I would have bet against it (and been wrong). To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Assuming technology will get us out of it this, is possible, but not necessarily probable. The double whammy of crippling debt will make it much harder and unless some radical energy breakthrough happens very soon, the prospects look dim of averting the upcoming calamity that will likely occur in the next 10 to 15 years.

[Syntax]

Since when is peak-oil "bunk"? It seems like I would have heard about such a finding outside of a web-forum. The last I heard the only thing up for discussion is when it will occur(I recall reading that some thought it would come as soon as 2015 but other well-respected organizations predicted later dates.)

Any links of support I should read?

[Causa Mortis]

I'm not ignoring it at all. As I said in the last sentence, of the OP.

On the other hand, maybe necessity is the mother of invention. If someone bet me – all we had to do is spend 2 billion dollars, hire 130,000 people, and we could split the atom in 4 years – I would have bet against it (and been wrong). To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

There's not 1 effect, there's 3 MAJOR effects:
1. The substitution effect - As the price of oil occurs, people will engage in more activities and more consumption that does not use oil. There is a lot of low-hanging fruit in terms of eliminating demand for oil.

2. The efficient market hypothesis - I do not accept a strong form view of the theory, but markets price in all information about future prices plus an error term for animal spirits. Animal spirits do not, however, throw prices off by +100 or -100%, so unless the long term growth prospects for China, the US, or other major countries changes, expect the 80/barrel to more or less hold as growth to normal levels returns.

3. Technology. People respond to incentives. Any time a price has become radically distorted from its marginal cost of production for an intermediate good, innovation has occurred that pushes demand for the good down to the point where mc=mr. This was true of railroads. It was true of telephone companies. It was true of shipping companies. It was true of aluminum companies. And its true of the entertainment industry. Markets handle these things just fine.

Assuming technology will get us out of it is possible, but necessarily probable. The double whammy of crippling debt will make it much harder and unless some radical energy breakthrough happens very soon, the prospects look dim of averting the upcoming calamity that will likely occur in the next 10 to 15 years.

I already heavily questioned your assumptions on this - debt is not "bad". Debt is, by Keynesian, RBC or Monetarist standards, either good or an irrelevant tradeoff with taxes. And you've ignored me, John Maynard Keynes, Milton Friedman, Paul Krugman, Robert Lucas, and a half a dozen other nobel prize winners. The only mainstream economist who worries about it is Greg Mankiw, lead economic advisor to President Bush, and he doesn't worry about it much right now.

[RBM]

Those who use the 'running out' meme - are you being purposely misleading, or do you not know any better, or are you an economist ?

MLC, I commend you for wading into this but ... please ... define "Peak Oil' so the level of dialog is kept honest.

For those interested in this topic, and interested in the data and technical details explained such that a layman can understand I heartily suggest reading Robert Rapier. He's recently combined his efforts and blog with Consumer Energy Report's efforts and here is a taste:

Petroleum (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) – While I have a background in the oil industry, I don’t wish to see the world continue to rely on petroleum. There are many reasons that I will detail in a future post, but I think we have built a society that is far too dependent on oil. The consequences of oil shortages in a petroleum-dependent world are severe, and that is a risk that I don’t believe we can afford in the long run. On the other hand, I recognize the reality that the world has long run on cheap petroleum, and we will need petroleum for many years to come. Thus, I don’t favor punitive legislation that causes artificial shortages while demand is still high.

There are many nuances in the stated position that any commenter who is looking for something more than an argument can sink their INTJ teeth into. One such nuance in RR's position, called Peak Lite. (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)

[Arkeph]

The problem, in my view, is not the lack of fuel per se, but the combination of climate change resulting from fuel use in combination with the decline/slow growth of fuel resources. If we keep burning fossil fuels, we can do so for a long while, but the cost to ecological systems we rely on would probably far outweigh the benefits of the extra time, and the infrastructure requirements are in the trillions of dollars--not to mention the wars and economic/political problems that would be likely.

We need a solution which not only replaces our fossil fuel use, but is scalable enough to have double our current global energy consumption in just a few decades.

If we do wait, we'll need to have a solution which can not only provide twice our current energy needs, but can be implemented very rapidly, on top of a large-scale ecological/economic/political disaster.

That's the nature of the crisis, though there are two counter-theories:

a) Better renewables will gradually replace fossil fuels anyway (market forces), so there's no need to proactively change our fuel use.
b) Climate change isn't a problem, or it isn't big enough to be worth preventing.

These ideas are compelling enough to delay action in the US, but the majority of the world recognizes at least one of them to be false. Hence my prediction that the crisis (in whatever form it takes) will be more or less averted, provided that the rest of the developed world doesn't wait for the US to jump on the bandwagon.

Side note about markets: Consumers drive the market, and it's up to them to make value judgments beyond trivial price calculations. Using market price alone to make decisions creates a distortive feedback loop, in my view, which delays changes in consumption until the un-priced costs (say, pollution) exceed some threshold value.

[blueback]

Peak Oil theory gives dates and numbers. So far, it's been wrong five times. Each time the numbers were jimmied and the dates of OH NO CRISIS were pushed out.

The theory predicts that maximum production will occur when half of the oil in a well has been extracted, and production will never again achieve that peak. The dates that you are referring to, on the other hand, are more complicated.

First, the way you've interpreted it "Peak Oil theory" has been wrong hundreds, if not thousands of times. This is because you've mistaken the individual predictions of people applying the theory for the theory itself. That's like saying that the theory of best-fit lines is proven wrong every time the next value doesn't fall precisely on the line. Also, you've left out the crucial detail that no one makes a prediction of the date of Peak Oil without including either a date range or an error range.

The reason no one does so is because actually applying the theory requires an estimation of not only how much oil is actually in the well but also how fast it will be extracted in the future. Some people tend to err on the side of less and faster respectively, and many organizations tend to err on the side of more and slower respectively. Actually, the predictions of the most well-respected organizations have never been proven wrong, because they've always been significantly further out than the minority reports.

Don't oversimplify an issue and then pretend that everyone who understands it enough to qualify it is stupid.

---------- Post added 03-18-2010 at 11:56 PM ----------


1. The substitution effect - As the price of oil occurs, people will engage in more activities and more consumption that does not use oil. There is a lot of low-hanging fruit in terms of eliminating demand for oil.

There is a lot of low-hanging fruit, but there is a whole lot more out-of-reach-bite-your-hand-off-if-you-try fruit. For example, there is no substitution for oil-derived fuels in air cargo transportation. There is no substitution for oil-derived fertilizers in agriculture. There is no practical substitute for oil-derived fuels in ground cargo transportation. There is no practical substitute for oil-derived plastics. An increase in the cost of oil will dramatically increase the cost of everything else, because everything depends on oil. There are things we can do, but the amount of effect they could have is so small and/or long-term compared to the problem that "the substitution effect" probably won't save us.

2. The efficient market hypothesis - I do not accept a strong form view of the theory, but markets price in all information about future prices plus an error term for animal spirits. Animal spirits do not, however, throw prices off by +100 or -100%, so unless the long term growth prospects for China, the US, or other major countries changes, expect the 80/barrel to more or less hold as growth to normal levels returns.

Until people actually believe that we have passed, or are approaching, a Peak in oil. I don't believe that possibility has actually been included in the price yet. Tell me, what do you think would happen to the markets if tomorrow Obama announced that the EIA had determined we passed the global oil Peak and will never be able to produce as much oil as we did yesterday?

3. Technology. People respond to incentives. Any time a price has become radically distorted from its marginal cost of production for an intermediate good, innovation has occurred that pushes demand for the good down to the point where mc=mr. This was true of railroads. It was true of telephone companies. It was true of shipping companies. It was true of aluminum companies. And its true of the entertainment industry. Markets handle these things just fine.

Was it true of tulips? To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
The difference between the oil market and every other market is that the cost of oil is included in every single market. People don't rationally understand that. The average person isn't even aware of the concept of Peak Oil, yet. I'm sure most professional investors are, but they are also strongly inclined to dismiss it. It would be like if all of a sudden we had to pay for sunlight! It's a game changer.

It is even a legitimate argument that the economic theories you are citing were invented after oil began to fuel the modern world. It is difficult to really appreciate just how much energy oil makes available to us. For a long time we got 100 barrels of oil for every 1 barrel we burned extracting oil! A 100 to 1 return on energy invested is unheard of in human history. Today I can fill up my truck and accidentally go 150 miles in the wrong direction, and still get back to the gas station, refill, and go in the correct direction. Not only is it fantastically energy dense (it has more hydrogen per volume than liquid hydrogen) but it is also stable and noncorrosive (comparatively). We like to give ourselves credit for the modern world, but it is arguable that it is the presence of oil that created the modern world.

We have always had an increasing supply of oil. Our economic theories are based on a constantly expanding foundation of available energy. They haven't been tested in a world with a shrinking foundation of energy.

---------- Post added 03-19-2010 at 12:03 AM ----------


There are many nuances in the stated position that any commenter who is looking for something more than an argument can sink their INTJ teeth into. One such nuance in RR's position, called Peak Lite. (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)
Oh, don't go telling people they need to do any research to understand a global problem. It's obvious that the predictions are unacceptable, and therefore wrong. . .right?

Good link. I've sometimes found myself wondering why anyone is worried about health care reform when the Hurst Report says we're already screwed. My mid-30s could be very interesting.

[plotthickens]

First, the way you've interpreted it "Peak Oil theory" has been wrong hundreds, if not thousands of times. This is because you've mistaken the individual predictions of people applying the theory for the theory itself.

It's not how I interpret the issue, BB, it's how Hubbert himself set down the numbers. He was wrong five times for peak oil dates. Since you're such an expert, please let me know how fracking, horizontal drilling, (CO2) injection, the new fields, and the more advanced offshore drilling -- all discovered/developed since Peak Oil's first peeking its head above water -- might change Peak Oil's numbers.


The reason no one does so is because actually applying the theory requires an estimation of not only how much oil is actually in the well but also how fast it will be extracted in the future.

+ accurate estimation of new fields found
+ accurate estimation of how much oil is being held back by cagey countries
+ accurate estimation of new tech revivifying old wells
+ accurate estimation of new tech accessing difficult fields
+ accurate estimation of more efficient uses of oil
+ accurate estimation of better uses for with-products (did you know Natural Gas used to just be burnt off as waste?)


Don't oversimplify an issue and then pretend that everyone who understands it enough to qualify it is stupid.

Ahem. "Peak Oil is bunk. Feel free to read the thread, through the link posted below, as it has most of the below arguments and their rebuttals. Unless you're in this only for the argument itself, in which case, good luck finding someone else to play with. Repeating myself for your amusement is not my idea of a good time."

[Syntax]

Devil's Advocate: If new technologies make a peak unlikely, wouldn't we have expected oil production in the U.S.(where oil extracting technology is state of the art) to plateau? The Hubbert curve seems to fit the data pretty nicely...

[plotthickens]

Devil's Advocate: If new technologies make a peak unlikely, wouldn't we have expected oil production in the U.S.(where oil extracting technology is state of the art) to plateau? The Hubbert curve seems to fit the data pretty nicely...

Overseas oil is frequently cheaper due to lower labor costs and more relaxed views towards toxicity. Therefore: neither oil PPB nor oil production figures are representative of supply. Again.

[Syntax]

Overseas oil is frequently cheaper due to lower labor costs and more relaxed views towards toxicity. Therefore: neither oil PPB nor oil production figures are representative of supply. Again.

Is there an accurate method of quantifying supply?

[plotthickens]

Is there an accurate method of quantifying supply?

The ONLY accurate method of quantifying supply is to look back once the very last drop is out and start adding. Considering that most 'dry' wells still contain 1/3 - 2/3 of their total estimated petroleum products, it's practically impossible to calculate.

Well, you can guess. Where the oil is helps one guess. Some geological formations produce a slow steady seep, so if you drill near there, most of those wells have a kind-of-predictable rate of extraction using that technology. Then new technologies come up, or you can apply a different kind of extraction, which can help extend extraction rates. Some formations explode a lot of oil all at once for a while and then dry up all at once, and nobody knows when or why. They can also be revived. And sometimes this does or does not affect or help predict the performance of neighbor wells.

So no. Nobody knows how much oil there is out there. Nor do we know what we 'could' be pulling out of the earth. Nor will we know when we've gone halfway through our reserves, because technological advances keep changing the numbers of those reserves, through methods mentioned before.

Peak Oil is bunk.

[Causa Mortis]

There is a lot of low-hanging fruit, but there is a whole lot more out-of-reach-bite-your-hand-off-if-you-try fruit. For example, there is no substitution for oil-derived fuels in air cargo transportation. There is no substitution for oil-derived fertilizers in agriculture. There is no practical substitute for oil-derived fuels in ground cargo transportation. There is no practical substitute for oil-derived plastics.

And the things you've mentioned are...perhaps 30% of oil consumption?

An increase in the cost of oil will dramatically increase the cost of everything else, because everything depends on oil.

Wrong, wrong, wrong.

An increase in the price of oil will, without an increase in the money supply or velocity, reduce the price of non-oil intensive goods. The "oil is everything" and "oil causes inflation" mentality is a mix of media hype and discredited old-keynesian nonsense.

There are things we can do, but the amount of effect they could have is so small and/or long-term compared to the problem that "the substitution effect" probably won't save us.

"Save us"? There's plenty of oil today, the price of oil today reflects aggregate expectations about the future of oil as well.

Until people actually believe that we have passed, or are approaching, a Peak in oil. I don't believe that possibility has actually been included in the price yet. Tell me, what do you think would happen to the markets if tomorrow Obama announced that the EIA had determined we passed the global oil Peak and will never be able to produce as much oil as we did yesterday?

If they're waiting for the President to give them their investment data, then they're going to get hammered in the markets.

A significant number of people buy peak oil. A significant number do not. Its approximate probability is priced into oil through EMH, unless you believe a panic or mania has set into the oil market as a result of Robert Kioysaki-type memes...I do not.

Was it true of tulips? To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
The difference between the oil market and every other market is that the cost of oil is included in every single market. People don't rationally understand that. The average person isn't even aware of the concept of Peak Oil, yet. I'm sure most professional investors are, but they are also strongly inclined to dismiss it. It would be like if all of a sudden we had to pay for sunlight! It's a game changer.

I believe we've been paying for oil for quite some time, and I believe that every institutional investor is familiar with peak oil and how oil influences the price of other goods (probably more familiar with this than you are, since you've repeated several fallacies in this post)

It is even a legitimate argument that the economic theories you are citing were invented after oil began to fuel the modern world. It is difficult to really appreciate just how much energy oil makes available to us. For a long time we got 100 barrels of oil for every 1 barrel we burned extracting oil! A 100 to 1 return on energy invested is unheard of in human history. Today I can fill up my truck and accidentally go 150 miles in the wrong direction, and still get back to the gas station, refill, and go in the correct direction. Not only is it fantastically energy dense (it has more hydrogen per volume than liquid hydrogen) but it is also stable and noncorrosive (comparatively). We like to give ourselves credit for the modern world, but it is arguable that it is the presence of oil that created the modern world.

We have always had an increasing supply of oil. Our economic theories are based on a constantly expanding foundation of available energy. They haven't been tested in a world with a shrinking foundation of energy.

I don't know of any theory in economics today that says there's an infinite amount of energy available in any form. The discipline's major focus is how society resolves the problems of scarcity. That oil is now becoming more scarce is something that the market can handle on its own. A fairly large tax on oil would simultaneously jump start change away from oil and would promote green outcomes, but that's not politically feasible.

[plotthickens]

There is no substitution for oil-derived fertilizers in agriculture.

An increase in the cost of oil will dramatically increase the cost of everything else, because everything depends on oil.

:nono:

Just for kicks:

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Where do ya'all guess that extra caloric energy is coming from?
And which is a bigger return: 42:1 or 1:20?

(PS: 'intensive' is short for Biodynamic Intensive (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) farming. Which does nothing with plastics or gasoline. Just human muscle.)

[blueback]

It's not how I interpret the issue, BB, it's how Hubbert himself set down the numbers. He was wrong five times for peak oil dates.

Ummm. . .you must be referring to how he correctly predicted that the lower 48 states would peak around 1970, back in the 1950s. Also, you haven't actually rebutted my argument. I said you were confusing individual predictions with the theory itself; a mistake you just doubled down on.

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Since you're such an expert,

Seriously? You aren't more than two sentences in before you start coming after me personally? That's not something serious people do. I hope we can all expect better from you in the future. Unless you are seriously trying to say that the only people who have any place in this debate are people who professionally study oil production. But that would be a stupid thing to say, so I'm sure it wasn't what you were going for.

...please let me know how fracking, horizontal drilling, (CO2) injection, the new fields, and the more advanced offshore drilling -- all discovered/developed since Peak Oil's first peeking its head above water -- might change Peak Oil's numbers.

They would change the shape of the curve, but they wouldn't change the curve itself (faster production leads to a flatter plateau and a steeper drop off). Also, "peak oil's numbers"? Really? Were you pressed for time when you asked that question? Did you need to get the rest of the post typed out and get back to something more important? If not, why the vague reference to "numbers" instead of a specific metric? Peak Oil is specifically concerned with oil production, not "numbers."

+ accurate estimation of new fields found
+ accurate estimation of how much oil is being held back by cagey countries
+ accurate estimation of new tech revivifying old wells
+ accurate estimation of new tech accessing difficult fields
+ accurate estimation of more efficient uses of oil
+ accurate estimation of better uses for with-products (did you know Natural Gas used to just be burnt off as waste?)

Yup. There is a lot of uncertainty in the application of the theory. However, that uncertainty becomes less and less of an issue the faster oil production increases. You see, of course, that oil is a finite resource (unless you're in the abiotic generation camp). If you only have 100 gallons of something in the whole world, and you steadily increase how much of that 100 gallons you are extracting over time, when you reach only 50 gallons left you will be extracting it so fast that you'll slurp up what's left in a tenth the time it took you to use up the first half. That is what's happening with oil production. We are using so much oil right now that we'll use as much in the next 10 years as we used in the last 100 (roughly). That means the uncertainties become nothing more than noise on the graph. We'd have to discover another world of oil to keep producing it like we are for another decade. There is no uncertainty that we don't have another world of oil.

Feel free to read the thread, through the link posted below,

There wasn't a link below that. Do you mean the link you posted directed at MLC? Cuz that's a link to a thread I started and remained actively involved in. If there's an unrebutted point in it, I must have missed it.

Overseas oil is frequently cheaper due to lower labor costs and more relaxed views towards toxicity. Therefore: neither oil PPB nor oil production figures are representative of supply. Again.

So...the lower 48's peak was voluntary? Or are you saying that the lower 48 peaked only because labor in the US costs so much that the oil in the lower 48 isn't cost effective to produce in the global market?

The ONLY accurate method of quantifying supply is to look back once the very last drop is out and start adding.

Well, that's the only method that can't turn out to be wrong in the future. But it side-steps the actual question, which was how do we PREDICT supply.

Considering that most 'dry' wells still contain 1/3 - 2/3 of their total estimated petroleum products, it's practically impossible to calculate.

Ummm. . .if you can estimate how much of the well's total capacity remains inside it aren't you predicting its total capacity?

So no. Nobody knows how much oil there is out there. Nor do we know what we 'could' be pulling out of the earth. Nor will we know when we've gone halfway through our reserves, because technological advances keep changing the numbers of those reserves, through methods mentioned before.

Peak Oil is bunk.

Ha ha! That's awesome.

So, your argument is "no one knows" and "therefore anyone who's worried is an idiot." I can now see why you think Peak Oil is "bunk." If it's impossible to come up with a useful estimate of total capacity then it's impossible to apply the theory. But, back in the real world, there are useful estimates of total capacity.

I don't want to spoil the voyage of discovery you could embark on, so I'll only provide one link To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

And the things you've mentioned are...perhaps 30% of oil consumption?

More like >60%.
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Wrong, wrong, wrong.

Blah, blah, blah. How about contributing. It's a crazy idea, but it just might be crazy enough to work.

An increase in the price of oil will, without an increase in the money supply or velocity, reduce the price of non-oil intensive goods.

Lets see. . .if a basic commodity, the price of which is included in everything else, increases in price, then the things that don't include it in their price will decrease. Sure, why not. Could you expand on what you mean by "non-oil intensive goods"? Also, could you explain what this has to do with the theory of Peak Oil.

If they're waiting for the President to give them their investment data, then they're going to get hammered in the markets.

So you don't want to answer the question? It seemed pretty straight forward to me, so you couldn't have misunderstood it, that must mean answering it would have been uncomfortable. Hmmm...you're starting to look a bit irrational there investor guy.

A significant number of people buy peak oil. A significant number do not.

Does that leave a significant number undecided? Or an insignificant number? Please, be specific.

Its approximate probability is priced into oil through EMH, unless you believe a panic or mania has set into the oil market as a result of Robert Kioysaki-type memes...I do not.

I don't believe the risk has been factored into the market. If it had, I think non-oil energy technologies would be worth far more than they are right now.

I believe we've been paying for oil for quite some time, and I believe that every institutional investor is familiar with peak oil...

I didn't say they weren't familiar (in fact I said they probably were) I said they probably dismissed it. To give the theory of Peak Oil any weight is to call into question the foundation of modern economics. That's not the sort of thing that people who have to pay their mortgage by selling advice about modern economics will do voluntarily.

I don't know of any theory in economics today that says there's an infinite amount of energy available in any form. The discipline's major focus is how society resolves the problems of scarcity. That oil is now becoming more scarce is something that the market can handle on its own.

Oh, just like the market can handle everything on its own?

Please, explain to me how the recent economic problems (due to de-regulation) support the idea that the market can "handle things on its own." I say that the market can't even handle business as usual all by itself, and that something as potentially disruptive as Peak Oil is totally beyond its ability to handle.

A fairly large tax on oil would simultaneously jump start change away from oil and would promote green outcomes, but that's not politically feasible.

Yeah. That's because people are stupid. And hungry. It's tough to convince stupid, hungry people that they need to voluntarily endure hardships.

Just for kicks:
Where do ya'all guess that extra caloric energy is coming from?
And which is a bigger return: 42:1 or 1:20?

I don't get what that has to do with Peak Oil.
Also, am I reading that chart correctly? Does it really say that hunting and gathering is more efficient than egg factories? Like, if everyone in the world would just stop farming eggs and start collecting them in the wild we'd solve world hunger?

[plotthickens]

Ummm. . .you must be referring to how he correctly predicted that the lower 48 states would peak around 1970, back in the 1950s. Also, you haven't actually rebutted my argument. I said you were confusing individual predictions with the theory itself; a mistake you just doubled down on.

Bakken.


They would change the shape of the curve, but they wouldn't change the curve itself (faster production leads to a flatter plateau and a steeper drop off). Also, "peak oil's numbers"? Really? Were you pressed for time when you asked that question? Did you need to get the rest of the post typed out and get back to something more important? If not, why the vague reference to "numbers" instead of a specific metric? Peak Oil is specifically concerned with oil production, not "numbers."

Jeavon's Paradox rebuttal.


If you only have 100 gallons of something in the whole world, and you steadily increase how much of that 100 gallons you are extracting over time, when you reach only 50 gallons left you will be extracting it so fast that you'll slurp up what's left in a tenth the time it took you to use up the first half. That is what's happening with oil production. We are using so much oil right now that we'll use as much in the next 10 years as we used in the last 100 (roughly).

Citations needed.


Or are you saying that the lower 48 peaked only because labor in the US costs so much that the oil in the lower 48 isn't cost effective to produce in the global market?

Yes. Please feel free to prove otherwise.


Ummm. . .if you can estimate how much of the well's total capacity remains inside it aren't you predicting its total capacity?

Estimating to the nearest 33.33% - 66.66% is not considered an accurate prediction. Feel free to prove otherwise.



I don't want to spoil the voyage of discovery you could embark on, so I'll only provide one link To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

This entry is the stock of proved reserves of crude oil in barrels (bbl). Proved reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with a high degree of confidence to be commercially recoverable from a given date forward, from known reservoirs and under current economic conditions

...Not counting undiscovered fields & new tech & unproven estimation capacities.

And a few other things. But sure, let's go with that. It's online so it's true, right?






There is no substitution for oil-derived fertilizers in agriculture.

An increase in the cost of oil will dramatically increase the cost of everything else, because everything depends on oil.


(PT's rebuttal chart)


I don't get what that has to do with Peak Oil.

It was a rebuttal to your statements re: why Peak Oil is so very very scary, as were quoted and are quoted again.

[Arkeph]

I don't like the "markets will solve X" idea because markets don't solve anything. It's the consumers who do the solving, and markets merely reflect their decisions.

Most often, saying "let the markets solve it" is basically an abrogation of one's market decisions to producers. Naturally, they're going to choose to supply in the way that is most profitable to them, without seeking a compromise with consumer values.

---------- Post added 03-19-2010 at 04:08 PM ----------

Also, technology gets treated very poorly. Technology which allows us to avoid a peak necessarily means not burning the oil, but using it in recyclable forms only or replacing oil with renewable alternatives as it becomes more costly. Either way, we're headed for an oil-free society. Ditto for natural gas and coal. How fast that happens depends on how much we want to spend/waste on fuel and how much we want to preserve our ecological systems.

[Causa Mortis]

Overseas oil is frequently cheaper due to lower labor costs and more relaxed views towards toxicity. Therefore: neither oil PPB nor oil production figures are representative of supply. Again.

That's not the only factor. Saudi oil, for instance, is so close to the surface that there's next to no risk and diminutive extraction costs with drilling. I believe their marginal cost of producing a barrel is around 6 per. In the Canadian oil sands, I believe the MC is around 60-80 per barrel even before you bring in risk and drilling problems.

---------- Post added 03-19-2010 at 10:28 PM ----------


More like >60%.
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You showed that 60% of oil consumption is related to transportation. A huge portion of that is rather easy to eliminate.

For example, when gas was coming up on 5 per gallon where I live, I drove to the train station about 2 miles away and then waited for the train for the remaining 15 miles. Now that gas is more reasonably priced, I usually just drive the whole way. If oil goes back up, there will be another substitution effect.

Lets see. . .if a basic commodity, the price of which is included in everything else, increases in price, then the things that don't include it in their price will decrease. Sure, why not. Could you expand on what you mean by "non-oil intensive goods"? Also, could you explain what this has to do with the theory of Peak Oil.

Because the overall price level in the economy is determined by the money supply and velocity. A shift up in the price level without an offsetting increase in the money supply or velocity will cause prices to rise and unemployment to occur. If given time, the economy will return to its original price level, with relative prices for oil-intensive goods being higher but the overall price level the same.

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I don't believe the risk has been factored into the market. If it had, I think non-oil energy technologies would be worth far more than they are right now.

So you and your crystal ball know more about the price of oil than the market price - the price thats basically set by institutional investors and end users of oil with virtually unlimited access to information, human capital, and financial capital who spend all day every day scouring the marketplace for any hint of it going up or down.

Put your money where your mouth is then, and go long in oil.

I didn't say they weren't familiar (in fact I said they probably were) I said they probably dismissed it. To give the theory of Peak Oil any weight is to call into question the foundation of modern economics. That's not the sort of thing that people who have to pay their mortgage by selling advice about modern economics will do voluntarily.

Bullshit. Show me one goddamned economic theory that assumes an absence of scarcity - that's the whole fucking point of the discipline.

Oh, just like the market can handle everything on its own?

Please, explain to me how the recent economic problems (due to de-regulation) support the idea that the market can "handle things on its own." I say that the market can't even handle business as usual all by itself, and that something as potentially disruptive as Peak Oil is totally beyond its ability to handle.

Wow, I see I'm dealing with a cogent and nuanced argument here.

The recent crisis was not caused in any meaningful sense by deregulation. It was caused by the Robert Kioysaki meme followed by a Robert Kioysaki is a fucktard and I hate him meme that caused a panic in a critical market that has never been regulated (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.).

Furthermore, the financial system is very different from traditional markets because perverse incentives dominate. Bill Gates gets rich by making products everyone wants to buy. Ditto for Blizzard and Hollywood and a thousand other industries. There aren't major incentive problems. Because of too big to fail, bankers have perverse incentives to take excess risks.

The market stocks your groceries, movie theaters, Best Buy's, car dealerships, airports, and a hundred thousand other facilities. Does government help? Sure, its important as a facilitator and regulator and, when necessary, redistributor. But government directly resolving scarcity problems? Good luck.

[blueback]

Wow. Just wow.

Bakken.

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Jeavon's Paradox rebuttal.

You asked how enhanced extraction techniques would change the oil production graph of a well. I responded by explaining that extracting a finite resource faster will alter the shape of the production curve, but won't fundamentally change it. You responded with a cryptic reference to a theory that states an exceptional increase in fuel efficiency actually leads to more demand for that fuel. I don't see how Jeavon's Paradox has anything to do with enhanced extraction techniques.

Citations needed.

It's not a topic that's open for debate. It's just math.
If you have a finite resource, and your rate of production is always increasing (say by around 2% per year), the same amount of resource will last you shorter and shorter periods of time.
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Yes. Please feel free to prove otherwise.

I don't think it's an important point.

Estimating to the nearest 33.33% - 66.66% is not considered an accurate prediction. Feel free to prove otherwise.

Compared to "know one knows anything at all" it is.

...Not counting undiscovered fields & new tech & unproven estimation capacities.

Which isn't a rebuttal, because I included it in a full explanation of reality first. You said no one could estimate anything. But in reality estimates exist, and are used to make decisions with real money and lives every day.

And a few other things. But sure, let's go with that. It's online so it's true, right?

Well, I was going to go with "if the government says it's true..." Everything in the world needs to be taken with a grain of salt, but skepticism reaches diminishing returns.

It was a rebuttal to your statements re: why Peak Oil is so very very scary, as were quoted and are quoted again.

Yeah. . .no, it wasn't. It was out of context and incoherent, just like most of the things you've added to this thread. Until I see an article that makes that make sense I'm not buying that hunter-gatherers are more efficient than factory farms.

I don't like the "markets will solve X" idea because markets don't solve anything. It's the consumers who do the solving, and markets merely reflect their decisions.

That's really just a semantic argument. When people claim the market will solve a problem what they mean is that the presence of a market will create the incentive and provide the structure that will encourage and allow (respectively) people to solve the problem. Personally I think that markets are necessary, but not sufficient, to solve all our problems.

Naturally, they're going to choose to supply in the way that is most profitable to them, without seeking a compromise with consumer values.

That's where the other necessary thing comes in: government. Markets are inherently destabilizing. They tend to produce monopolies, which tend to suck the customers dry, and tend to ruin everything. Markets work best when rules are imposed from the outside that keep everything fair and ensure those participating in the market can't treat "fairness" as one of those problems to solve.

Also, technology gets treated very poorly. Technology which allows us to avoid a peak necessarily means not burning the oil, but using it in recyclable forms only or replacing oil with renewable alternatives as it becomes more costly. Either way, we're headed for an oil-free society. Ditto for natural gas and coal. How fast that happens depends on how much we want to spend/waste on fuel and how much we want to preserve our ecological systems.

Well, I don't think we'll ever stop using naturally occurring oil entirely. It will always be a fantastic resource, and we'll never manage to suck the last drop out of the ground. I think a more accurate statement would be that we are faced with an oil-scarce future. Also, coal and natural gas will effectively last as long as we want them to (we've got a lot more of that than of oil), so we'll always use at least a little.

Personally, I'm not as worried about ecological change as Peak Oil. I think technology will go a lot farther towards dealing with changing climates than with energy scarcity. Given enough energy we can deal with everything. Given no energy, we can't deal with anything.

You showed that 60% of oil consumption is related to transportation. A huge portion of that is rather easy to eliminate.

Oh yeah. I forgot. I have to produce sources to back up my claims, but yours are so obvious they stand on their own. Silly me.
No. It's not easy to eliminate "a huge portion" of oil consumed for transportation.
Most of the gains in worldwide oil use occur in the transportation sector. Of the total increase (11.4 million barrels per day) projected for the industrialized countries from 1997 to 2020, 10.7 million barrels per day are attributed to the transportation sector, where few alternatives are economical until late in the forecast.
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For example, when gas was coming up on 5 per gallon where I live, I drove to the train station about 2 miles away and then waited for the train for the remaining 15 miles. Now that gas is more reasonably priced, I usually just drive the whole way. If oil goes back up, there will be another substitution effect.

Did you seriously just generalize from your personal experience to the entire world? I mean, really? Your argument that we can totally just replace "a huge portion" of the oil used for transportation is that you live near a train? Are you taking this seriously or are you messing with me? If I didn't know better I'd swear that was a joke.

So you and your crystal ball know more about the price of oil than the market price - the price thats basically set by institutional investors and end users of oil with virtually unlimited access to information, human capital, and financial capital who spend all day every day scouring the marketplace for any hint of it going up or down.

Again with the jokes!

I just brought up the example of the housing bubble and you cite the infallibility of the market as a reason not to worry. So, how do you explain the necessity of massive efforts to stave off the collapse of the financial sector when they have "virtually unlimited access to information, human capital, and financial capital who spend all day scouring the marketplace for any hint of it going up or down?" I think it's because they do their best, but they're motivated by quarterly profits and they're just as stupid and short-sighted as any other group of humans. But, I'll wait for your rebuttal. I expect it to be excellent.

Put your money where your mouth is then, and go long in oil.

I said I expected non-oil energy sources to increase in price. It's hard to take you seriously when you regularly demonstrate that, not only are you not thinking about this, but you aren't even reading it.

Bullshit. Show me one goddamned economic theory that assumes an absence of scarcity - that's the whole fucking point of the discipline.

Whoa, there cowboy. This is the internets, cursing will get you kicked off (there could be children present).

Wow, I see I'm dealing with a cogent and nuanced argument here.

And knowing is half the battle.

The recent crisis was not caused in any meaningful sense by deregulation. It was caused by the Robert Kioysaki meme followed by a Robert Kioysaki is a fucktard and I hate him meme that caused a panic in a critical market that has never been regulated (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.).

All right. It was all his fault. Whatever. Anyway, arguing that it's wrong to say a problem was caused by deregulation, because the market was never regulated to begin with, is mere semantics.

Because of too big to fail, bankers have perverse incentives to take excess risks.

And I would say that means they need to be regulated. Apparently you would say that means they shouldn't be allowed to read Robert Kiyosaki's books. I suppose that would technically be a regulation, so lets agree on that as a starting point.

The market stocks your groceries, movie theaters, Best Buy's, car dealerships, airports, and a hundred thousand other facilities. Does government help? Sure, its important as a facilitator and regulator and, when necessary, redistributor. But government directly resolving scarcity problems? Good luck.

Ummm, yeah, that's all you right there. I never claimed the government could "directly resolve scarcity problems." Feel free to come back to the point. You're always welcome.

[meanlittlechimp]

There is a lot of low-hanging fruit, but there is a whole lot more out-of-reach-bite-your-hand-off-if-you-try fruit. For example, there is no substitution for oil-derived fuels in air cargo transportation. There is no substitution for oil-derived fertilizers in agriculture. There is no practical substitute for oil-derived fuels in ground cargo transportation. There is no practical substitute for oil-derived plastics. An increase in the cost of oil will dramatically increase the cost of everything else, because everything depends on oil. There are things we can do, but the amount of effect they could have is so small and/or long-term compared to the problem that "the substitution effect" probably won't save us.

This is a very good point which most don't realize. It's not just gas, it's fucking everything. The oil shock Carter faced in the 70's, was nothing compared to what we're going to face.

Carter put solar panels on the White house 30 years ago; before Reagan laughed, and ripped them down when he took over. (Carter was top of his class at Annapolis, while Reagan was a crap student at the community college he went to, before blossoming into a B actor portraying cowboys in his illustrious career, before becoming Governor of California). Engineers at the Naval Academy tend to a know a bit more about science than second rate actors who led unions (SAG), go figure.

Even funnier, people like Carter and Bush Sr. who actually led the CIA and had real military training were perceived as "wimps"; while bullshit actors like Reagan had the reputation as a tough guy, who could protect us from the "evil communist menace".

Oil affects prices on ALL other commodities, as well as finished products. It can independently be more inflationary than anything the Fed can do; because it has been the most important factor of productivity in modern society than anything else, including the computer.

to quote myself on a post I made here a few years ago (that supports your point).
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"So much of our economy and society is dependent on oil. Not just for transportation, heating, electricity but a vast array of goods most people aren't aware of: plastics, paints, solvents, clothes, guitar strings, epoxy, medicines, fertilizers, cds (you can add another couple of hundred major products here). It takes 22 GALLONS of oil to make a single truck tire.

When you have a finite resource that is getting depleted at ever faster rates from the industrialization of billions of people (in China, India, SE Asia etc). The pressure on prices within our lifetimes will be enormous. If you can imagine a world with 50 dollars a gallon, the cost of transporting goods form New York to Iowa, will be obscene. Our entire infrastructure and suburban sprawl is based on cheap gas. When the fuel in a truck is approaching the value of the contents it's transporting, much of our lifestyle will be impossible to sustain.... without major technological breakthroughs."

[Causa Mortis]

That's where the other necessary thing comes in: government. Markets are inherently destabilizing. They tend to produce monopolies, which tend to suck the customers dry, and tend to ruin everything. Markets work best when rules are imposed from the outside that keep everything fair and ensure those participating in the market can't treat "fairness" as one of those problems to solve.

Citation needed.

Markets, particularly markets that allow international trade, do not tend towards monopoly unless there are large benefits from economies of scale (rare).

Oh yeah. I forgot. I have to produce sources to back up my claims, but yours are so obvious they stand on their own. Silly me.

Cool story bro. You want me to show you how substitution occurs in the market?

No. It's not easy to eliminate "a huge portion" of oil consumed for transportation.
Most of the gains in worldwide oil use occur in the transportation sector. Of the total increase (11.4 million barrels per day) projected for the industrialized countries from 1997 to 2020, 10.7 million barrels per day are attributed to the transportation sector, where few alternatives are economical until late in the forecast.
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...

Because with the spikes in oil of 2006 and 2007 we didn't see a significant decline in the rate of growth in consumption? Be

Did you seriously just generalize from your personal experience to the entire world? I mean, really? Your argument that we can totally just replace "a huge portion" of the oil used for transportation is that you live near a train? Are you taking this seriously or are you messing with me? If I didn't know better I'd swear that was a joke.

It was an example that highlighted the principle of substitution that you don't appear to have any grasp of, or don't want to integrate it into your argument.

If you want empirical work on substitution:

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I just brought up the example of the housing bubble and you cite the infallibility of the market as a reason not to worry.

Straw man alert!

I did not state that the market was infallible. I stated that you pretending to know so much more than an aggregation of institutional investors is hubris of the highest order.


So, how do you explain the necessity of massive efforts to stave off the collapse of the financial sector when they have "virtually unlimited access to information, human capital, and financial capital who spend all day scouring the marketplace for any hint of it going up or down?" I think it's because they do their best, but they're motivated by quarterly profits and they're just as stupid and short-sighted as any other group of humans. But, I'll wait for your rebuttal. I expect it to be excellent.

So every other group of people (besides yourself of course) is stupid and short sighted and irrational. Except for Blueback, oil prognosticator extraordinaire!

I said I expected non-oil energy sources to increase in price. It's hard to take you seriously when you regularly demonstrate that, not only are you not thinking about this, but you aren't even reading it.

I'm having trouble separating the arguments from the hubris, I admit.

And knowing is half the battle.

Nope. "Knowing" more than dudes with PhDs and MBAs and complex statistical models and unlimited access to information and who spend all day pouring over data is a joke though. The market isn't infallible, but I can assure you that its doing a better job of determining the clearing price of oil than you are.

All right. It was all his fault. Whatever. Anyway, arguing that it's wrong to say a problem was caused by deregulation, because the market was never regulated to begin with, is mere semantics.

No, its not semantics. The repo market has never been regulated and was the starting point of the crisis. Deregulation was not the causal factor, animal spirits were.

And I would say that means they need to be regulated. Apparently you would say that means they shouldn't be allowed to read Robert Kiyosaki's books. I suppose that would technically be a regulation, so lets agree on that as a starting point.

Straw man. That animal spirits caused the crisis does not mean that I think animal spirits should not be allowed.

Ummm, yeah, that's all you right there. I never claimed the government could "directly resolve scarcity problems." Feel free to come back to the point. You're always welcome.

So other than much arm flailing, paranoia supported by bad science, and hubris, what is exactly your argument? That oil should be taxed heavily? That we should use top-down regulations to guide markets?

[blueback]

This is a very good point which most don't realize. It's not just gas, it's fucking everything. The oil shock Carter faced in the 70's, was nothing compared to what we're going to face.

Potentially. I don't think the world is going to end, I just think Peak Oil is a true existential threat to the modern world, and should be treated as such. It's a risk management problem. Maybe cold fusion will save us. I dunno. But I agree that it definitely has the potential to be unprecedented.

Oil affects prices on ALL other commodities, as well as finished products. It can independently be more inflationary than anything the Fed can do; because it has been the most important factor of productivity in modern society than anything else, including the computer.

Yeah. But a lot of people don't accept that argument. By way of example, just read this thread. The hard part is coming up with an explanation that makes that conclusion obvious to the people who don't want to believe it.

I think for most people it's a simple avoidance mechanism. Again, I'll refer to this thread as an example. You can see how much emotion the very concept stirs up. If people were actually evaluating the possibility rationally, and had simply decided that the risk was insubstantial, the conversation wouldn't be taken nearly as personally. If I tell people that they're going to die next week they don't get mad at me, they just laugh and ignore me. If I tell people Peak Oil is a real problem that has the potential to change all the rules, they get all excited and angry. I think the difference is that people who can understand it actually kind of do, but the results are unacceptable, so they have to actively fight against the conclusion.

Or maybe I'm the asshole. I guess we'll see.

When you have a finite resource that is getting depleted at ever faster rates from the industrialization of billions of people (in China, India, SE Asia etc). The pressure on prices within our lifetimes will be enormous. If you can imagine a world with 50 dollars a gallon, the cost of transporting goods form New York to Iowa, will be obscene. Our entire infrastructure and suburban sprawl is based on cheap gas. When the fuel in a truck is approaching the value of the contents it's transporting, much of our lifestyle will be impossible to sustain.... without major technological breakthroughs."

The hard thing about making the case is that there aren't (that I've been able to find) any good examples of the phenomenon on a small scale. The energy market is pretty fluid across the entire globe, so it's hard to find an example of a place that peaked and had to deal with the inevitable decrease in available energy.

What that leaves is appeals to basic math, but all those examples are theoretical. So, what seems obvious to some people seems stupid to others, whether or not their motivations are pure. I can point to models all day long, and my audience can simply dismiss them with one of a dozen excuses. Of course they don't have anything to point to except other models, but that never seems to affect the certainty of their conclusions. So all we're left with (again citing this thread) is a back and forth that slowly wanders off topic.

Citation needed.

I think you might be confusing me with someone who thinks theoretical economic models are hot shit. I prefer things that work in real life. When I said "monopolies" I didn't mean the technical definition which only exists on an "L with an X in it" graph. I meant the generic definition in which anything that becomes too concentrated is destabilizing. For example, just like there are markets for oil, there are markets for power over people. When power becomes concentrated in one place that place becomes a monopoly. It's the principle, and all of recorded history is my citation.

But I don't expect you to buy that, because you seem irrationally dead set on winning. Since this is a discussion about predictions of the future based on extrapolations from the past and present, there isn't any way to win it. Therefore, the only way you can achieve a win is to skip all of the important stuff and zero in on some particular facet that's been discussed in a textbook. Then you can play one theoretical model off of another and declare a victory. I suggest you be more productive. Not all situations are zero sum.

Markets, particularly markets that allow international trade, do not tend towards monopoly unless there are large benefits from economies of scale (rare).

Please consider something outside of narrow economic definitions. In the real world there are four primary forms of power: Diplomatic, Information, Military and Economic. These forms of power affect each other. For example, governments have always tended to use their military and diplomatic power to protect the economic interests of their country's corporations. For example, the East India Company was granted a monopoly by the English government.

In the real world, everything tends towards a monopoly. That's just the way power works.

Cool story bro. You want me to show you how substitution occurs in the market?

Ummm...I cited the EIA to support my point. And you dismissed it as a "cool story" and me as "bro." What sources do you trust? If I can't cite the EIA who can I cite?

Because with the spikes in oil of 2006 and 2007 we didn't see a significant decline in the rate of growth in consumption? Be

Was that a typo?

It was an example that highlighted the principle of substitution that you don't appear to have any grasp of, or don't want to integrate it into your argument.

My rebuttals illustrated that I understand the concept, but that I don't think it will be enough. The whole point of showing that a significant percentage of oil has no substitutions was a rebuttal to your idea that the substitution effect would solve everything.

I'll go one step further, a point that I haven't made yet. First, to reiterate, there is no substitution for at least 50% of the oil we currently use. Okay, but what if something was invented tomorrow that could totally replace oil in all of its applications. Well, it would still take AT LEAST a decade to replace current oil-consuming technology with oil-free technology, and that's the most optimistic estimate (look up the Hirsch report if you want a citation). But, that is based on growth not continuing while we make the switch. If we want to continue growing out economy we'll still need more oil just to get us through the transition period. If Peak Oil happens DURING that transition we'll be in quite a pickle. We will suddenly have to decide how to retool the majority of our infrastructure while enduring a declining energy supply.

Don't sell yourself short. You can factor in more than one effect. The situation is complicated, but I'm sure you can rise to the appropriate level.

I did not state that the market was infallible. I stated that you pretending to know so much more than an aggregation of institutional investors is hubris of the highest order.

Can I call double straw man alert? Is that a thing?

I agree that you didn't use the word "infallible." All right. But, I didn't say that I knew more than the aggregate of all investors. I said that I suspect they are aware of the issue, but that they intentionally avoid it.

Also, it's absurd to claim that one person can't be right when thousands are wrong. (also, I'm not the only one who says this stuff about Peak Oil and there are plenty of people who understand it better than I do) For example, To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts. Schiff was right in that he pretty much predicted the economic meltdown while surrounded by people who thought he was full of it. Sometimes the sky really is about to fall.

So every other group of people (besides yourself of course) is stupid and short sighted and irrational. Except for Blueback, oil prognosticator extraordinaire!

Wow. I'm not deleting this, and instead responding to it, because I think anyone who reads through this thread needs to see just how anti-intellectual you're being. I mean, seriously, how old are you? Don't you have a source of self-confidence outside of scoring points in an internet discussion forum? I'll let you in on a secret, when those with maturity have an issue with a point made (or with techniques used to make a point) in a debate they address them specifically and rationally. When those without maturity see an opportunity to take something out of context, amplify it, and then declare the result stupid, they do it. . .and then the adults just sigh and count to ten.

I'm having trouble separating the arguments from the hubris, I admit.

Try harder.

Nope. "Knowing" more than dudes with PhDs and MBAs and complex statistical models and unlimited access to information and who spend all day pouring over data is a joke though. The market isn't infallible, but I can assure you that its doing a better job of determining the clearing price of oil than you are.

Okay, so after I specifically call you out on not even exerting the effort to read what is literally right in front of you on the screen, you proceed to AGAIN fail to read what's right in front of you. It's like you're going for the a Guinness World record in reading incomprehension.

I've never once even mentioned the price of oil. Until now. Just so that I could point out I never mentioned it. I did mention the price of non-oil energy sources. But that is specifically THE OPPOSITE of the price of oil. So, I'm not even going to bother explaining why your claim that people with advanced degrees and "unlimited access to information" is in no way a guarantee of successful predictions. Instead I'm going to point out that everything you claim is immediately suspect because you don't actually have any idea what I'm saying.

No, its not semantics. The repo market has never been regulated and was the starting point of the crisis. Deregulation was not the causal factor, animal spirits were.

Okay, then wherever I wrote "deregulation" replace it with "lack of regulation" and reread it. Or, read it for the first time. Or notice something outside of theoretical models.
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If you want to call the systematic gutting of banking regulations "animal spirits" then sure, I'm with you.

Straw man. That animal spirits caused the crisis does not mean that I think animal spirits should not be allowed.

You do know that there's no sanctioned body recording the number of times you can declare "straw man" on an internet discussion forum, right? You're not actually getting real points. Maybe you are aware, but I'm not sure any more, so I just wanted to put that out there.

You did clearly blame a single person's advice for the entire crisis. So, either he shouldn't be allowed to give his advice, or no one should be allowed to listen to it, or no one should be allowed to follow it. That's the logical conclusion from your argument. Besides, you changed your wording, and presumably also changed the underlying thing you were blaming (otherwise there'd be no need to change the wording). Did you really think I was trying to argue that people shouldn't be allowed to have emotions?

So other than much arm flailing, paranoia supported by bad science, and hubris, what is exactly your argument? That oil should be taxed heavily? That we should use top-down regulations to guide markets?

I'm gonna ignore the juvenile tone because I've already called you on that and address this as if only a rational argument existed (it does require some interpretation).

When I googled "top down regulation" I actually found more references to studies of the plant and animal kingdom than economics. So I'm not entirely sure what you were going for. But, I think the spirit of the phrase means something more communist than capitalist.

I think that markets are a great tool for establishing values. But they are just a tool. Like all tools, they have rules which, when followed, ensure they do their job and don't cause any damage. For example, a screwdriver works great on screws, but not so well when used those screws are on battery terminals (because there is a very real chance of shorting out the battery). The markets are limited (severely in some cases) in their ability to establish the value of unprecedented things.

It's like housing appraisal. The only way to estimate the value of a house is to compare it to how much similar houses have sold for. If the house is odd, and there aren't any comparable houses, the estimated value is nothing more than a guess. The markets are what work out the appropriate value for something, but (by definition) that means things don't just magically have the appropriate value when they enter the market for the first time. It's the same with risk. If a situation has a lot of similar situations it is easy to figure out how risky it is. If it is an unusual situation, it is much harder to estimate the risk. That's why there is such a long history of markets screwing up. When they encounter something for the first time there is a good chance the correct value and risk won't be applied to it in time, and bad decisions will be made.

So, when the markets screw up and create dangerous conditions, something outside the markets needs to step in and straighten things out. Hopefully before the crisis snowballs into a disaster. But, once we know what circumstances caused the crisis, we can create rules which forbid those circumstances again, so that we can move on to a new mistake.

The problem is that this cycle has continued long enough to prove that markets do a very bad job of dealing with unprecedented situations. So, if we think an unprecedented situation is approaching, it doesn't make sense to rely on the markets to solve it.

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[Arkeph]

I'm having a bit of trouble understanding why the disagreements in question have direct relevance to the topic of peak oil. On the one hand, there are those who acknowledge the finite nature of oil resources and think that scarcity will allow the market to shift to better efficiency and alternative energy. On the other hand, there are those who acknowledge the finite nature of oil resources and think that the market may ignore scarcity until it is difficult to shift to better efficiency and alternative energy.

Everyone appears to be in agreement that oil is going to be scarce at some point in the future.

Let's say the market has, indeed, priced in future scarcity into the present cost of oil, and thus we can expect market activity to replace oil with improved efficiency and alternative energy over time. Then we have nothing to worry about. Somebody will figure out how to solve our problems, so long as there is a price incentive to do so.

Now let's assume the market will follow "animal spirits," and supply oil not according to future scarcity, but according to other parameters (perhaps a too-optimistic estimate of undiscovered reserves). Then, the market will price oil too cheaply until the errors are discovered and the peak oil crisis will occur as advertised.

My question is: does either scenario have any bearing on what we should be doing in the present? It only makes good sense to develop and deploy alternatives to oil while it's still cheap, and government intervention might be desirable as a mechanism to ensure that a peak oil crisis can't occur, even if it's unlikely.

As I said, if we don't act to avoid scarcity, we'll be beholden to producers and be forced to pay the price--reacting to high prices rather than anticipating them and avoiding their associated costs.

[blueback]

Thank you. That's a very good analysis of the real issue.

The overall problem is a risk management one. If there really isn't a problem, then there's nothing to worry about. If there really is a problem, then the only way to mitigate the effects is to start solving it as soon as possible.

Personally, I think the only real solution is a switch to nuclear energy distributed via electricity. Isotopes will work for a while, but ultimately the best source of energy we have is the solar (geothermal and tidal will work, but never on a large scale). At any rate, we need to move to a system in which energy is distributed and utilized via electricity, instead of chemicals.

We could theoretically produce enough artificial chemical fuel to meed demand, and could even do so without adding any more net carbon to the atmosphere, but such a system will never be as efficient or scalable as one based on electricity.

[meanlittlechimp]

I already heavily questioned your assumptions on this - debt is not "bad". Debt is, by Keynesian, RBC or Monetarist standards, either good or an irrelevant tradeoff with taxes. And you've ignored me, John Maynard Keynes, Milton Friedman, Paul Krugman, Robert Lucas, and a half a dozen other nobel prize winners. The only mainstream economist who worries about it is Greg Mankiw, lead economic advisor to President Bush, and he doesn't worry about it much right now.

Just realized, this part of my original response was cutoff.

Debt is normally not a big deal. Debt becomes"bad" when the interest payments on the debt, gets so high it hampers your government from doing anything else. If for instance, the Fed tripled the interest rate to attract more buyers to government bonds because buyers lose faith in our ability, or willingness, to pay them down; do you have any idea how much the interest payments would consume of ENTIRE tax revenue in 5, 10 or 20 yrs?

It's already bad assuming we continue expanding money supply at the current levels without raising interest rates. Projecting out the interest load, with higher interest rates, is one of the reasons many are bearish on Japan. If the Japanese collapse, as some predict, it will add further pain, since they are the largest foreign holders of US debt (not the Chinese)

If you're saying the economists you named (in your appeal to authority) agree with you - that debt is NEVER bad; it tells me you haven't actually read any of them and just wanna name drop.

[RBM]

In 2006 (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.), the world oil production took a downturn from 84.631 to 84.597 million barrels per day ...

If there are no unexpected disruptions, manmade such as war, or natural such as hurricanes in the GOM or LA oil production areas, I don't expect any noticeable effects at the gas line for a decade or more - cause of the underpinning financial issues. The demand won't hit the supply wall for years as a result. I also don't expect any better preparation in that time.

[meanlittlechimp]

From businessinsider 30 minutes ago

How Real Are Fresh Claims That Oil Reserves Are Being Overstated By One Third?
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[Causa Mortis]

Debt is normally not a big deal. Debt becomes"bad" when the interest payments on the debt, gets so high it hampers your government from doing anything else. If for instance, the Fed tripled the interest rate to attract more buyers to government bonds because buyers lose faith in our ability, or willingness, to pay them down; do you have any idea how much the interest payments would consume of ENTIRE tax revenue in 5, 10 or 20 yrs?

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It's already bad assuming we continue expanding money supply at the current levels without raising interest rates.

You are aware of the fact that increases in the money supply reduce the national debt, aren't you?

Projecting out the interest load, with higher interest rates, is one of the reasons many are bearish on Japan. If the Japanese collapse, as some predict, it will add further pain, since they are the largest foreign holders of US debt (not the Chinese)

By Japan "collapsing" I take it you mean that their government will default on their bonds? If that's the case, there's going to be a flight to quality, which would actually lower US interest rates.

Of course Japan is nowhere near defaulting because private savings are incredibly robust in the economy and there's zero shortage of capital - they're actually running large surpluses.

If you're saying the economists you named (in your appeal to authority) agree with you - that debt is NEVER bad; it tells me you haven't actually read any of them and just wanna name drop.

Find me a single academic economist outside of the Austrian camp who believes that budget deficits are a serious macroeconomic malady during times of steep recession. Hint: you won't because they almost all either think it stimulates the economy or is completely impotent.

---------- Post added 03-27-2010 at 11:09 PM ----------

Potentially. I don't think the world is going to end, I just think Peak Oil is a true existential threat to the modern world, and should be treated as such. It's a risk management problem. Maybe cold fusion will save us. I dunno. But I agree that it definitely has the potential to be unprecedented.

People have been talking about this since the 1960s. What's happened to the real cost of natural resources since then? They've steadily declined. Why? Innovation.

The hard thing about making the case is that there aren't (that I've been able to find) any good examples of the phenomenon on a small scale. The energy market is pretty fluid across the entire globe, so it's hard to find an example of a place that peaked and had to deal with the inevitable decrease in available energy.

Is there an argument in there?

I think you might be confusing me with someone who thinks theoretical economic models are hot shit. I prefer things that work in real life. When I said "monopolies" I didn't mean the technical definition which only exists on an "L with an X in it" graph. I meant the generic definition in which anything that becomes too concentrated is destabilizing. For example, just like there are markets for oil, there are markets for power over people. When power becomes concentrated in one place that place becomes a monopoly. It's the principle, and all of recorded history is my citation.

LOL "all of recorded history is my citation"?

Do you think all of the oil in the world is going to dry up one day at the same time? Do you think it will happen in a year? Or ten? Even strong form peak-oil suggests its declining a steady and increasing rate.

What does this imply for its market price? A steady appreciation in price if presuming demand stays at its current levels. And as the price rises, people economize and substitute.

Please consider something outside of narrow economic definitions. In the real world there are four primary forms of power: Diplomatic, Information, Military and Economic. These forms of power affect each other. For example, governments have always tended to use their military and diplomatic power to protect the economic interests of their country's corporations. For example, the East India Company was granted a monopoly by the English government.

In the real world, everything tends towards a monopoly. That's just the way power works.

Nope. There has to be a self-reinforcing feedback loop in order for there to be a strong tendency for monopolization.

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There was in East India. There is in Microsoft and the Iphone. There was with railroads for a time, and as they abused their power markets found a way to adapt. There also was with the entertainment industry earnings for a while, but again markets found a way to adapt.


I'll go one step further, a point that I haven't made yet. First, to reiterate, there is no substitution for at least 50% of the oil we currently use. Okay, but what if something was invented tomorrow that could totally replace oil in all of its applications. Well, it would still take AT LEAST a decade to replace current oil-consuming technology with oil-free technology, and that's the most optimistic estimate (look up the Hirsch report if you want a citation).

The most optimistic estimate among a group of wildly pessimistic estimates.

And again, even if they're right, oil is going to run out over the course of decades. Fine.


I agree that you didn't use the word "infallible." All right. But, I didn't say that I knew more than the aggregate of all investors. I said that I suspect they are aware of the issue, but that they intentionally avoid it.

Right, because you said that economics isn't based on any model that assumes scarcity when, um, that's a core assumption of all economic rationale. So that has no merit.

Also, it's absurd to claim that one person can't be right when thousands are wrong. (also, I'm not the only one who says this stuff about Peak Oil and there are plenty of people who understand it better than I do) For example, To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts. Schiff was right in that he pretty much predicted the economic meltdown while surrounded by people who thought he was full of it. Sometimes the sky really is about to fall.

Lots of people forecasted the fall. Lots of people are always forecasting a fall. Just like thepeak oil people are constantly screaming about how the end is really fucking nigh.

Comparing yourself to Schiff is pretty rich, by the way.


You did clearly blame a single person's advice for the entire crisis. So, either he shouldn't be allowed to give his advice, or no one should be allowed to listen to it, or no one should be allowed to follow it. That's the logical conclusion from your argument. Besides, you changed your wording, and presumably also changed the underlying thing you were blaming (otherwise there'd be no need to change the wording). Did you really think I was trying to argue that people shouldn't be allowed to have emotions?

I said it was the Robert Kiyosaki meme. Look up the definition of the word meme.

And just because markets fuck it up does not mean that government can do it better.



It's like housing appraisal. The only way to estimate the value of a house is to compare it to how much similar houses have sold for. If the house is odd, and there aren't any comparable houses, the estimated value is nothing more than a guess. The markets are what work out the appropriate value for something, but (by definition) that means things don't just magically have the appropriate value when they enter the market for the first time. It's the same with risk. If a situation has a lot of similar situations it is easy to figure out how risky it is. If it is an unusual situation, it is much harder to estimate the risk. That's why there is such a long history of markets screwing up. When they encounter something for the first time there is a good chance the correct value and risk won't be applied to it in time, and bad decisions will be made.

Oh that's so wrong I don't even know where to begin.

First of all, there are many ways of evaluating the price of a home beyond just looking at comps.

Secondly, there's no perfect way for anyone to price it. Your best bet is to assign the property rights to individuals and let them make the best calls about what's in their own interest and allow people to collectively set the price. As bad as individuals may be at setting the price of oil and housing, I have zero faith that one dude with perverse incentives can do it better than millions with aligned incentives.

Thirdly I have no idea why you think government can effectively intervene in things like the price of oil and the price of housing when the Fed can't even manage the rate of growth of the money supply or, I don't know, to regulate the derivative markets 18 months after the crisis started?

[meanlittlechimp]

By Japan "collapsing" I take it you mean that their government will default on their bonds? If that's the case, there's going to be a flight to quality, which would actually lower US interest rates.

Of course Japan is nowhere near defaulting because private savings are incredibly robust in the economy and there's zero shortage of capital - they're actually running large surpluses.

Btw, I agree, this possibility is slim. I would put it at below 15%. The reason I brought it up is that - those that are bullish on the US, but bearish on Japan don't make sense. In other words, everything bad you can say about the Japanese economy, doubly bad in the US example.

The reason I brought up their holdings of US T-bonds, is that if they have a "flight" I don't think speculators would necessarily run to the US. They might move it to China, Germany or someone else. If the Japanese did collapse, they would have to dump their T-bonds holdings which would force the US Treasury to hike interest rates to attract buyers for US bonds, while demand is falling from a Japanese sell off.

This would have secondary effects on the interest rates that the Fed issues through the "prime rate" they loan to other banks. Meaning the percentage of US tax revenue to service the interest rate load would skyrocket.

The perverse environment we have now is that the Fed is TRYING to expand money supply by lowering interest rates, but it is not actually having that effect. Banks are averse to lending even with historically low interest rates provided by the FED. Monetarists believe expanding money supply will stimulate the economy (which it can); but the FED can't actually force an expansion of money supply, if secondary banks are unwilling to lend (even though the FED is providing them the low prime rate to entice this action).


You are aware of the fact that increases in the money supply reduce the national debt, aren't you?

It has a bit more nuance than that. Indeed, it could reduce the national debt because we are paying back our debt with de-valued dollars, if nothing else happened.

The problem is there are repercussions. Other foreign central banks might want higher interest rates on this debt, knowing full well of our de-valuation strategy. Again, the higher interest rates we might need to entice future buyers of our debt, might drain our federal budget or tax revenue in such a a portion of our federal budget - it could be crippling.

This is why debt can be an issue, though historically it hasn't been.

[blueback]

OMFG. Are you trying to be dense? Is this a put-on? I'm still, like, 51% certain that you are being genuine, so I'll try once again to set you straight.

People have been talking about this since the 1960s. What's happened to the real cost of natural resources since then? They've steadily declined. Why? Innovation.

Are you seriously arguing that because people started talking about Peak Oil decades ago that Peak Oil is an invalid theory? Da Vinci figured out the principle behind a propeller hundreds of years before anyone actually built a propeller. Just because something was first proposed a long time ago doesn't mean it's wrong.

Additionally, the vast majority of global Peak Oil predictions only begin around 2010! It's absurd to claim that Peak Oil is invalid because Peak Oil hasn't happened yet when only a few extreme outliers predicted it happening before 2015. I think the average prediction is still around 2025.

You really don't know anything about the theory, do you? I understand that you don't want to admit it, but it's like you are arguing that farming doesn't happen because food just shows up on your local supermarket's shelves. Nearly every argument you advance betrays a complete lack of information on the subject. I'm sure you know a lot about economic theories, and maybe one of your classes mentioned Peak Oil, but you really should read up on the actual theory so that you have at least a vague idea what it says and what it's based on before arguing against it.

Is there an argument in there?

Ah, no. Just honesty.

Do you think all of the oil in the world is going to dry up one day at the same time? Do you think it will happen in a year? Or ten?

Wow. I think I'm at around 50.5% now. And that's only because I'm trying to give you the benefit of the doubt. How can you expect your arguments to be taken seriously when you can't even be bothered to keep track of the debate?

What does this imply for its market price? A steady appreciation in price if presuming demand stays at its current levels. And as the price rises, people economize and substitute.

A "steady" change? No, that's precisely what I don't expect. As I've explained before, I don't think the true risk is factored into the markets. Not just the oil market, ALL markets. I think that we are going to continue ignoring the risk, and that there is a very real possibility at some point in the future the consensus among reputable agencies is going to be that we already passed the Peak. They are going to make a public announcement and all of a sudden people are going go panic as they realize their model of the world is flawed.

Nope. There has to be a self-reinforcing feedback loop in order for there to be a strong tendency for monopolization.

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Did you really think I needed a primer on what "feedback loop" means? And, if you did, did you really think I couldn't plug the term into Google on my own? And, on another topic, stop citing wikipedia! Wikipedia is not a reliable source of information. It's great as a place to start looking, but you shouldn't stop there.

So, is your argument that only SOME systems have a feedback loop that promotes monopolization? If so, I disagree. Everything tends towards monopolies. That is why they don't always happen, because different potential monopolies are competing against each other. The government wants a monopoly, and business wants a monopoly, so they try to take power away from each other and hence retard each other's advance towards monopoly.

The most optimistic estimate among a group of wildly pessimistic estimates.

And again, even if they're right, oil is going to run out over the course of decades. Fine.

Did you even glance at the report I cited? It's very well written. They use small words wherever possible, and pictures are liberally sprinkled throughout. Give it a shot. If you don't, you'll be forced to make silly little attempts to sound informed and authoritative despite not having any idea what the person on the other side of the debate is talking about. I mean, did you seriously think that I wouldn't notice you deflected the point with a vague, short, general statement that in no way depends on any information from the actual report?

How certain can you be of your own conclusions when you refuse to investigate any information that contradicts them? Sticking your head in the sand doesn't make the sandstorm go away.

Right, because you said that economics isn't based on any model that assumes scarcity when, um, that's a core assumption of all economic rationale. So that has no merit.

Nope, that's not something I said. Try again.

Lots of people forecasted the fall. Lots of people are always forecasting a fall. Just like thepeak oil people are constantly screaming about how the end is really fucking nigh.

So. . .your point would be. . .hmmm. . .give me a second. . .it's hard to penetrate the thick smog of self-righteous ignorance. . .Okay, I pointed out an example of a person who said a financial collapse was coming despite being surrounded by people who thought that idea was absurdly pessimistic, and then a financial collapse occurred. Then you pointed out that "people are always" doing things like that, so I suppose you were trying to say that in hindsight it's easy to find an example of a person who predicted a crash because at all points in time someone is predicting a crash, so that example is irrelevant.

Okay, fine. Please explain what standards a situation has to meet before YOU take evasive action to avoid a POTENTIAL catastrophe. So, looking into the future, what is the standard of evidence you require to support a decision that something bad is probably going to happen, or if it's probably not going to happen the effects would still be so bad that they are still worth mitigating.

Comparing yourself to Schiff is pretty rich, by the way.

Wow. I brought up that example to show that just because a lot of people think the good times will last forever, a prediction of an end to the good times can be spot-on. You can't even argue that's not true, so you just jumped to the next logical thing, which was a personal attack. But, little did you know, this is the internet and if I want to feel better about myself I can jump over to pictures of people at Walmart, so your personal attacks have no power over me.

I said it was the Robert Kiyosaki meme. Look up the definition of the word meme.

ATo view links or images in this forum your post count must be 2 or greater. You currently have 0 posts. is someone desperately clinging to a stupid idea? I think someone is. So, it's not that you specifically blamed one person's books for the entire collapse, it's that you really meant to blame all ideas that are in any way similar to one person's books.

It's more than you've earned, but to be fair to you I plugged "Robert Kiyosaki meme" into Google trends to see if it was a real thing. It's not. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts. Also, I plugged it into Google, and it returned only 6,650 results out of the entire internet. Then, just to be sure, I plugged it into Google with quotation marks to show only results that included that precise phrase, and the one and only result was this exact topic! To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

So, there is no such thing as a Robert Kiyosaki meme. Give it up.

And just because markets fuck it up does not mean that government can do it better.

Very true. Now please explain why you felt the need to mention that. Or not. It's irrelevant.

First of all, there are many ways of evaluating the price of a home beyond just looking at comps.

Whatever. The point still stands.

Secondly, there's no perfect way for anyone to price it. Your best bet is to assign the property rights to individuals and let them make the best calls about what's in their own interest and allow people to collectively set the price.

So. . .the best way to price things is to let the market work out the correct price over time. . .isn't that exactly what I said? By claiming that as the best way, you are agreeing that new things don't have a set price before they are introduced to the market.

As bad as individuals may be at setting the price of oil and housing, I have zero faith that one dude with perverse incentives can do it better than millions with aligned incentives.

"millions with aligned incentives"? What does that even mean? Are you suffering under the illusion that the market is populated with people who agree? The whole point of the markets is that people disagree! The most basic of economic theories is based on that fact. That is what produces the compromise on price in the first place. You're really starting to become incoherent.

Also, is it your impression that I claimed to want to set prices? Cuz, you know, that's not anywhere close to right.

Thirdly I have no idea why you think government can effectively intervene in things like the price of oil and the price of housing...

You really are having your own little debate with yourself and just typing random excerpts form it, aren't you? I'm not even participating in whatever argument is going on inside your head.

I've specifically said that I'm not interested in the price of oil. And the only reason the price of houses came up is that I mentioned the recent financial collapse and house valuation as tangents to illuminate a point in the discussion. You seem to be into economics, so I tried to pick economic ideas. Maybe that was a mistake. Maybe you take economics so seriously that mentioning anything in it immediately sets you off on a rant about your pet peeves. My bad.

[Causa Mortis]

This is really getting too prolix for me, I'm not going to respond to all of this because most of it is "USE GOOGLE TO PROVE MY POINT BECAUSE I DON'T HAVE AN ARGUMENT, YOU'RE AN IDIOT"

OMFG. Are you trying to be dense? Is this a put-on? I'm still, like, 51% certain that you are being genuine, so I'll try once again to set you straight.

Are you seriously arguing that because people started talking about Peak Oil decades ago that Peak Oil is an invalid theory? Da Vinci figured out the principle behind a propeller hundreds of years before anyone actually built a propeller. Just because something was first proposed a long time ago doesn't mean it's wrong.

Additionally, the vast majority of global Peak Oil predictions only begin around 2010! It's absurd to claim that Peak Oil is invalid because Peak Oil hasn't happened yet when only a few extreme outliers predicted it happening before 2015. I think the average prediction is still around 2025.

You really don't know anything about the theory, do you? I understand that you don't want to admit it, but it's like you are arguing that farming doesn't happen because food just shows up on your local supermarket's shelves. Nearly every argument you advance betrays a complete lack of information on the subject. I'm sure you know a lot about economic theories, and maybe one of your classes mentioned Peak Oil, but you really should read up on the actual theory so that you have at least a vague idea what it says and what it's based on before arguing against it.

No I get it: there's a finite quantity of oil and essentially infinite demand for oil. We're running out, the sky is falling. Except, uh, substitution and technology effects which have totally transformed the production and consumption over the past fifty yeas. And, uh the solution is gobblement fiat and Blueback setting the price of oil instead of an aggregation of expectation of thousands of very informed people and millions of people - almost all of whom are familiar with peak oil.

A "steady" change? No, that's precisely what I don't expect. As I've explained before, I don't think the true risk is factored into the markets. Not just the oil market, ALL markets. I think that we are going to continue ignoring the risk, and that there is a very real possibility at some point in the future the consensus among reputable agencies is going to be that we already passed the Peak. They are going to make a public announcement and all of a sudden people are going go panic as they realize their model of the world is flawed.

Sure, its going to be an utter panic - nevermind the fact that we have fifty years of proven reserves (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) - and bureaucrats and BLueback to the rescue



So, is your argument that only SOME systems have a feedback loop that promotes monopolization?

Correct. Many industries have diseconomies of scale. Some have economies of scale. Economies of scale and self reinforcing feedback loops are usually what drives monopoly or near monopoly - as in the case of Alcoa, the railroads and, to a lesser extent, microsoft.

If so, I disagree. Everything tends towards monopolies. That is why they don't always happen, because different potential monopolies are competing against each other. The government wants a monopoly, and business wants a monopoly, so they try to take power away from each other and hence retard each other's advance towards monopoly.

Yeh bro you've just described schumpeterian competition. That's what a market is.

Did you even glance at the report I cited? It's very well written. They use small words wherever possible, and pictures are liberally sprinkled throughout. Give it a shot. If you don't, you'll be forced to make silly little attempts to sound informed and authoritative despite not having any idea what the person on the other side of the debate is talking about. I mean, did you seriously think that I wouldn't notice you deflected the point with a vague, short, general statement that in no way depends on any information from the actual report?

:yawns: somewhere in here may be an argument besides you failing your arms and saying "YOUR'RE AN IDIOT USE GOOGLE TO PROVE MY POINT"




Okay, fine. Please explain what standards a situation has to meet before YOU take evasive action to avoid a POTENTIAL catastrophe. So, looking into the future, what is the standard of evidence you require to support a decision that something bad is probably going to happen, or if it's probably not going to happen the effects would still be so bad that they are still worth mitigating.

There's a role for government when individuals are flatly ignoring risk. As they were in banking because of the FDIC and the concept of to big fail.

There's not a role for government when the markets are clearly considering risk. They're clearly considering risk - the price of oil went up, what, six hundred percent as the idea came in back into vogue in 06 07 & 08? That's markets responding to information. There's no market failure.


It's more than you've earned, but to be fair to you I plugged "Robert Kiyosaki meme" into Google trends to see if it was a real thing. It's not. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts. Also, I plugged it into Google, and it returned only 6,650 results out of the entire internet. Then, just to be sure, I plugged it into Google with quotation marks to show only results that included that precise phrase, and the one and only result was this exact topic! To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

So, there is no such thing as a Robert Kiyosaki meme. Give it up.

The Robert Kioysaki meme is the "If real estate goes up I win, if real estate goes down I win" mentality that drove people to believe that returns in the housing market were going to be double digits forever and ever. Its not an academic idea, which I thought you would have appreciated. Turns out its not academic ideas you think are crap, its any subjective opinion besides your own :)

You're really starting to become incoherent.

Right. When there's a large erudition and education gap, the party on the lower half of that spectrum generally has trouble comprhending the other's argument.


I give up. The sky is falling. The world is ending. Economics is worthless. Millions of people's and large financial institution's expectations about the future of oil are irrelevent, yours is gospel.

[RBM]

Another benchmark,

Net Exports Peaked in 2006! (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)

An aggregation of net exports by country reveals that global oil exports peaked in 2006 after making only marginal gains for two consecutive years. An even more troublesome statistic is that global exports were lower by 783,000 barrels per day (bpd) in 2007 than they were one year earlier. To put this amount in context, 783,000 bpd is roughly one percent of global production and nearly two percent of net exports. Despite a tripling in price, global exports were in fact lower in 2008 than they were in 2004. The market clearly provided strong financial incentives for exporters to release more oil to the global market, but very few were able to do so, and a growing number were not.

H/T to Energeek (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.-609252) at The Oil Drum.

[meanlittlechimp]

Potentially. I don't think the world is going to end, I just think Peak Oil is a true existential threat to the modern world, and should be treated as such. It's a risk management problem. Maybe cold fusion will save us. I dunno. But I agree that it definitely has the potential to be unprecedented.

I agree, I don't think the world will end. I also agree it's a risk-management problem.

I'm just saying it's one of the top 2 biggest risks in the short term (along with sovereign debt) and one of the top 3 in the long term (when you throw in global warming). Furthermore, the focus of the wealthiest nations on earth is NOT on research or technology advancements, but rather resource theft through military superiority. A misguided policy approach in my opinion.

If you look at this list that just came out today on the 14 most threatening crises facing the US today. The overwhelming majority of them are roundabout ways to say sovereign debt and oil price shocks. Keep in mind, we don't care about peace in the middle east in itself - we only care about the effect on commodity prices it will have.

To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.-debt-crisis-japan-collapse-1

[meanlittlechimp]

The only thing that even approaches oil, in terms of impact of current productivity levels is Moore's Law.

Moore's law is an analagous boost that has allowed us to double computing power every 18 months. This is not just an abstract thought exercise - computer productivity has also increased the amount of sustainable life. This exponential productivity growth (to a lesser extent, after oil) allows us to sustain the population and comfort we have now (including billions living below the poverty line, before the likely shortfall). In other words, if we don't maintain this geometric growth we must assume a painful population contraction and the phenomenon that always come with it (war, famine, conflict and strife).

Most think these productivity gains (created by man's technology) and commodity supplies will continue forever, because of some bizarre notion that these things have to be limitless with no ceiling..

It's far more likely that there is a finite limit on oil supply, just as it's moore likely there is a limit on how small we can make transistors. Sure Moore's Law hasn't been wrong yet, but it doesn't mean that it will likely continue doubling, ad infinitum (every 18 months). I don't underestimate the ingenuity of man, here, I just think there may be a limit to how much we can bend the physical universe.

I don't think we'll ever make transistors smaller than electrons or other infitessimally smaller particles (assuming an electron sized transistor was built). Not saying it's impossible, just not very likely. Maybe as likely for man to come up with a way to send a 2 ton ship faster than the speed of light. Some things might simply be impossible to execute, regardless of how clever the monkey is trying to do it.

The problem that is being underestimated re: oil is that, it is a dwindling, contracting resource, with constantly expanded demand from overall world development (except for recessions, like we're facing now). Yes, this current recession has halted this price increase temporarily, but any eventual recovery will inevitably increase the speed at which oil price climbs.

And when technologically sophisticated countries go through hard times, (like Japan and Germany went through in the 1930) - they generally try to compensate through military conquest or empire expansion. If a growing portion of population is going through this pain, who has military/technological ability - they usually invade and steal other weaker states' resources. That scenario is far more likely than most think, because of the overconfidence we have in the civility of modern societies.

Just look at the wealthiest societies on earth and how they are trying to respond to these issues..... look at portion of military spending vs scientific research (by the 5 largest economies on earth). It's not a good direction to solve our problems, in the long run.

[Causa Mortis]

Most think these productivity gains (created by man's technology) and commodity supplies will continue forever, because of some bizarre notion that these things have to be limitless with no ceiling..

The same argument has been made for 300 years. So far, Paul Romer is right and you all are totally wrong. Maybe the tide has turned and all the paranoia over the past 300 years will, in fact, be vindicated.

[blueback]

The same argument has been made for 300 years. So far, Paul Romer is right and you all are totally wrong.
We can say exactly the same thing about you in reverse. Your argument, that things will continue on their current course forever, has been made countless times throughout history and has always been correct. . .right up until things changed.

Also, it's STILL absurd for you to be arguing against a theory you don't understand. You can't even be consistent in your misconception(s).

[Causa Mortis]

We can say exactly the same thing about you in reverse. Your argument, that things will continue on their current course forever, has been made countless
times throughout history and has always been correct. . .right up until things changed.

One anecdote perhaps? What's something we thought we'd have forever and then suddenly things changed and we had none of it?

Your kind has been preaching doom and gloom since Malthus and has been particularly histrionic since the 1970s. There's just not enough you say. In Malthus' generation it was agricultural goods...and there was an agricultural productivity explosion soon thereafter. In the next generation it was whale oil and, oopsies, a high price encouraged innovation and substitution. Then it became coal until, erm, we discovered that its everywhere. Then it was oil in the late 19th century and, erm we found oodles of it. Then it was rubber and copper and, erm, we found ways around using so much of it. Then it was oil in the 1970s and, erm, the fuel injector. And now its oil in the 2010s and we're shitting bricks again, despite the fact that we've shat bricks about resource depletion a dozen times and always been fine by just letting the market handle it.

And what happens to the standard of living and population? It just keeps on rising. Why? Because we keep finding new and more valuable ways of organizing resources.

If I don't understand your arguments its because they're poorly formed or left intentionally vague.

[AnotherNormal]

And another article about peak oil: To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.

---------- Post added 04-15-2010 at 09:30 PM ----------

On the other hand, maybe necessity is the mother of invention. If someone bet me – all we had to do is spend 2 billion dollars, hire 130,000 people, and we could split the atom in 4 years – I would have bet against it (and been wrong). To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

The Manhattan Project, I recently read a book about that: The making of the atomic bomb.

One of the best books I've read, the enormity of the task probably rivals going to the moon.

You might enjoy it, I picked up a used copy from Amazon: To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

[Undead Bonzi]

And now its oil in the 2010s and we're shitting bricks again, despite the fact that we've shat bricks about resource depletion a dozen times and always been fine by just letting the market handle it.

The residents of the Easter Islands might have some insight as to the corrective powers of the free market to fix all scarcity problems.

[blueback]

One anecdote perhaps? What's something we thought we'd have forever and then suddenly things changed and we had none of it?

If that was what anyone here was arguing I'd feel moved to provide one. But it's not. So I don't.

Your kind has been preaching doom and gloom...There's just not enough you say.

To be fair, none of the following examples support the idea that supplies AREN'T limited. So, you must agree that we have a limited amount of resources.

In Malthus' generation it was agricultural goods...and there was an agricultural productivity explosion soon thereafter.

The Green Revolution was made possible by crude oil, specifically in the form of fertilizer and massive farm equipment. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

In the next generation it was whale oil and, oopsies, a high price encouraged innovation and substitution.

Seriously? Whale oil? That was also replaced by crude oil To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Then it became coal until, erm, we discovered that its everywhere.

We've been aware of massive resources of coal for a very long time.

Then it was oil in the late 19th century and, erm we found oodles of it.

"Oodles?" Citation please.

Then it was rubber and copper and, erm, we found ways around using so much of it.

Great example. Oh wait, that's the lack of an example.

Then it was oil in the 1970s and, erm, the fuel injector.

Wait, what? The fuel injector? Like, it is more efficient than carburettors? You do know that the very market you've been talking about demonstrates that increased efficiency only leads to increased demand, right?

And now its oil in the 2010s and we're shitting bricks again, despite the fact that we've shat bricks about resource depletion a dozen times and always been fine by just letting the market handle it.

So, you're going to double down on your assertion that everything is fine and things will just keep going the way they are going forever. That's the thing I said you were wrong about. You're still wrong about it. For an example of people who thought the same thing you think, and were so wrong they had to resort to cannibalism, read up on the history of Easter Island To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

And what happens to the standard of living and population? It just keeps on rising. Why? Because we keep finding new and more valuable ways of organizing resources.

That is true. But that is not an argument against my point.

If I don't understand your arguments its because they're poorly formed or left intentionally vague.

Ha ha. Right. Whatever you have to tell yourself.

Don't hide behind the rationalization that I'm failing you. You've said yourself that you have no interest in using Google in this discussion, so you have no way to learn anything besides what I'm telling you. If I'm failing, then you can just hop one tab over to Google and read up on Peak Oil for yourself. You don't want to. That's your motivation problem, not my explanation problem.

[Causa Mortis]

Don't hide behind the rationalization that I'm failing you. You've said yourself that you have no interest in using Google in this discussion, so you have no way to learn anything besides what I'm telling you. If I'm failing, then you can just hop one tab over to Google and read up on Peak Oil for yourself. You don't want to. That's your motivation problem, not my explanation problem.

So seriously, what is you argument? Use google to discover the meaning of Blueback's poorly formed, incoherent, rambling, prolix generalized scarcity rant?

---------- Post added 04-15-2010 at 11:41 PM ----------

The residents of the Easter Islands might have some insight as to the corrective powers of the free market to fix all scarcity problems.

Ah right. One mysterious incident on a small island in the middle of the pacific where they overfarmed and what economic system they used is indeed strong support for, I don't know, 300 years of miserably-failing, always-catastrophe-just-around-the-corner predictions.

[ArtistTyrant]

d00ds, chill out...oil sands are feasible at $40 a barrel, and there is a lot more heavy crude than light crude...there is no real chance of running out of oil before society implodes

[meanlittlechimp]

One anecdote perhaps? What's something we thought we'd have forever and then suddenly things changed and we had none of it?

How about drinkable water which has been dwindling at astonishing rates? How about the the idea that the national debt can keep increasing forever? How about 99% of the extinct species on earth, where man was responsible?

There were dozens of large mammals, man used to hunt when they first colonized Australia, Americas etc. They disappeared because we ate and killed them all - contemporaries never dreamed it would stop and faced population contractions after they went hungry. How long do you think Blue Fin Tuna or half of the big fish in the sea will survive in the next century?To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Many societies have "collapsed" (see Jared Diamond) from scarcity of resources that were once abundant. None may have come to mind for you, because you don't read history.

Do you really think Moore's Law will go on forever? Do you really think transistors will be created that will be smaller than an electron? Do you even know what Moore's Law is?

[blueback]

So seriously, what is you argument... One mysterious incident on a small island in the middle of the pacific...
This is awesome. I'm actually starting to enjoy watching you squirm. You're still trying, but you have fewer and fewer absurd rebuttals to use with every reply.

1) no trend continues forever
2) increasing production of oil is a trend
1+2=3) oil production will not continue to increase forever

So, it's not a question of whether or not your assertion that the current state of affairs will last forever is wrong, it's a question of how soon nature will prove you wrong.

4) things that haven't been introduced to the market can't be valued
5) a contracting oil supply hasn't been introduced to the market
4+5=6) it is impossible to know precisely how much needs to be saved to cope with a contracting oil supply

3+6=7) some amount needs to be saved, but we don't know how much, so it is better to err on the side of more

In this context, "saved" is simply a catch-all for various investments that would mitigate the effects of Peak Oil; like alternative energy sources and whatnot.

[Causa Mortis]

This is awesome. I'm actually starting to enjoy watching you squirm. You're still trying, but you have fewer and fewer absurd rebuttals to use with every reply.

1) no trend continues forever
2) increasing production of oil is a trend
1+2=3) oil production will not continue to increase forever

[Citation Needed] GDP - the sum total of the goods and services we produce - has been increasing exponentially since the late 18th century on both absolute and per capita bases.

So, it's not a question of whether or not your assertion that the current state of affairs will last forever is wrong, it's a question of how soon nature will prove you wrong.

4) things that haven't been introduced to the market can't be valued
5) a contracting oil supply hasn't been introduced to the market
4+5=6) it is impossible to know precisely how much needs to be saved to cope with a contracting oil supply

3+6=7) some amount needs to be saved, but we don't know how much, so it is better to err on the side of more

In this context, "saved" is simply a catch-all for various investments that would mitigate the effects of Peak Oil; like alternative energy sources and whatnot.

The oil markets are well aware of the theory of peak oil. Its what drove the price spike from~40 to 150 in the middle part of this past decade. Its in the price, unless they're not profit maximizers.

---------- Post added 04-16-2010 at 10:09 PM ----------

How about drinkable water which has been dwindling at astonishing rates?

That's what you claim, yet I turn on my tap and water flows freely and there's no impending disaster.


How about the the idea that the national debt can keep increasing forever?

Yes, it can actually. Japan is at 200% of GDP and interest rates are still shockingly low.

There were dozens of large mammals, man used to hunt when they first colonized Australia, Americas etc. They disappeared because we ate and killed them all - contemporaries never dreamed it would stop and faced population contractions after they went hungry. How long do you think Blue Fin Tuna or half of the big fish in the sea will survive in the next century?To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

The first legitimate point I've seen made on the thread.

Still doesn't justify every resource paranoia.

Many societies have "collapsed" (see Jared Diamond) from scarcity of resources that were once abundant. None may have come to mind for you, because you don't read history.

Do you really think Moore's Law will go on forever? Do you really think transistors will be created that will be smaller than an electron? Do you even know what Moore's Law is?

You're right, anyone who doesn't agree with you is an idiot. :rollseyes:

[Undead Bonzi]

[CitationThat's what you claim, yet I turn on my tap and water flows freely and there's no impending disaster.

Call Colorado and ask them how much they pay for an acre foot of water and how much the cost goes up each year. Call Nebraska and Kansas and tell them to stop sueing one another over water rights on the Republican river basin and while your at it, tell Nebraska that the Platt river isn't really dried up in the middle of the state and that Lake McConaughy just looks like it's getting empty, it's all just an optical illusion. Call the mayor of Atlanta and tell him/her that in 2007 the 11th largest city in the US was never down to less than a two week supply of potable water, that was just some crazies with tin foil hats who didn't know what they were talking about. You also might want to mail some of your abundant tap water to California where some of the most productive farmland in the US is left empty because there is no water for the crops. By the by, could you swing by my hometown and take down all the signs warning pregnant women not to drink the water, the nitrates contamination is all just in their minds. And swing through one of the neighboring towns where the sulfur content of the water is so high it works as a laxative for non-residents. Most importantly don't take my word for it, I only worked in water supply and purification related fields for six years of my life. Surely you know what's in the water wells better than I, after all...you've seen it come out of your tap.


To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

[Causa Mortis]

, that was just some crazies with tin foil hats who didn't know what they were talking about.

Pretty much. Maybe if you all didn't act like every time there was something approximating a legitimate shortage that the world was going to end people would take you seriously, however you have cried wolf far too many times.

[blueback]

[Citation Needed] GDP - the sum total of the goods and services we produce - has been increasing exponentially since the late 18th century on both absolute and per capita bases.

Which is in no way a rebuttal to the argument that trends don't continue forever. It is merely an example of a trend that hasn't ended yet. History is full of examples of trends that hadn't ended, right up until they ended. You know what it's not full of? Trends that continued indefinitely.

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To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Right around the time you mentioned, you know, when everything started coming up roses? That was when the petroleum era started. The entire modern world has been made possible by petroleum. It is the reason modern economics exists. Not if, but WHEN the global supply of oil begins to contract, the modern economic model will face a situation it hasn't experienced in hundreds of years, if ever. I don't think it's ready.

"The most striking of these entrances, however, is that of petroleum and natural gas. The curves depicting their consumption remain shallow for several decades following the success of Edwin Drake's drilling rig in 1859, but begin to rise more steeply in the 1920s. Then, interrupted only by the Depression, the curves climb at increasingly alpine angles until 1973. Annual consumption of petroleum and natural gas exceeded that of coal in 1947 and then quadrupled in a single generation. Neither before nor since has any source of energy become so dominant so quickly."

"In the mid-1800s, expanding uses for oil extracted from coal and shale began to hint at the value of rock oil and encouraged the search for readily accessible supplies. This impetus launched the modern petroleum age, which began in August 1859 at Oil Creek in northwestern Pennsylvania...Until the 1950s the United States produced nearly all the petroleum it needed. But by the end of the decade the gap between production and consumption began to widen and imported petroleum became a major component of the U.S. petroleum supply. Beginning in 1994, the Nation imported more petroleum than it produced."

"U.S. petroleum consumption rose annually until 1973, when the Arab OPEC embargo stalled the annual increases for two years...Although emphatically not to be taken as predictions--no model pretends to be able to foresee critical but unexpected events, such as the 1973 oil embargo--EIA's projections can sketch a plausible general picture of future developments....What of our long-term energy future? That is even more speculative. Many would argue that the world is destined to move beyond fossil fuels eventually; if the threat of global climate change does not compel it, then exhausted supplies and rising prices might. The far future seems likely to belong to renewable sources of energy."

And that was back in 2001. The EIA is more pessimistic now. So, you know, you're just plain wrong. Like, not even plausibly wrong, more like utterly wrong. The US has already proven that a population can easily demand far more energy than it can produce. What happens when the entire world hits that point? For the US it wasn't that bad, cuz we could buy more oil from some other part of the world. But where is the world going to buy more oil from? Mars?

The oil markets are well aware of the theory of peak oil. Its what drove the price spike from~40 to 150 in the middle part of this past decade. Its in the price, unless they're not profit maximizers.

I still don't care about the price of oil. Never have. You're the one who keeps bringing it up. If I care about the price of anything it's alternate forms of energy, and more sustainable infrastructure, and social adjustments. So, you know, keep talking about the one thing you understand while the rest of us talk about adult topics.

That's what you claim, yet I turn on my tap and water flows freely and there's no impending disaster.

Ha ha! This is really great. You're not even seriously trying any more are you? I think you're just too invested in this thread to let anyone else get the last word.
Maybe if you all didn't act like every time there was something approximating a legitimate shortage that the world was going to end people would take you seriously, however you have cried wolf far too many times.
Wow. Sometimes I feel like I'm not very smart. Like there are other people with a way better grasp on things than I have. And then I come back here. . .and feel better about myself.

[meanlittlechimp]

[Citation Needed]
That's what you claim, yet I turn on my tap and water flows freely and there's no impending disaster.

Wow, that is the most sensor based argument I've ever heard. I just ate Tuna last week. so it can't be going extinct!
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Granted, clean water isn't nearly as critical of an issue as oil but it's similar in the sense it's NOT infinite AND it's shrinking in terms of supply while demand is simultaneously increasing.

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Do you realize that most people in Mexico can't get clean water because Vicente Fox, sold most of it to multinational corporations like Pepsi (where he used to work before becoming President). Problem is that when an aquifer or lake drains it NEVER comes back (look at lake Ural). Mexicans, south and central americans understand this issue because they literally get shit water. Wealthy Americans' haven't felt the shortage yet, because they are getting as much as they want for the most part, but this doesn't mean it will always be the case.

Did you ever watch Chinatown? Classic film noir from the early 70's (Jack Nicholson, Polanski, Faye Dunaway etc). It was a very real problem 40 years ago and still is today re: California's distribution of water rights. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

[Causa Mortis]

Which is in no way a rebuttal to the argument that trends don't continue forever. It is merely an example of a trend that hasn't ended yet. History is full of examples of trends that hadn't ended, right up until they ended. You know what it's not full of? Trends that continued indefinitely.

Lots of trends continue indefinitely. Real GDP is one. The accumulation of knowledge is another. The accumulation of knowledge is what's led to the increase in real GDP.

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Tthere was a decline in consumption of two goods during the 1970s and then it resumed its upward trend.

Right around the time you mentioned, you know, when everything started coming up roses? That was when the petroleum era started. The entire modern world has been made possible by petroleum. It is the reason modern economics exists.

This argument - that oil=industrial revolution - is flatly asinine. To place a broad, general, and sustained accumulation of capital, knowledge, and output on one resource when the distinguishing feature of the industrial revolution is sustained growth of virtually every resource, is not a coherent argument.

Not if, but WHEN the global supply of oil begins to contract, the modern economic model will face a situation it hasn't experienced in hundreds of years, if ever. I don't think it's ready.

Cool story bro. You haven't supported the notion that global oil supply is going to contract, and your assertion that economic catastrophe stems from a terrible argument.

And that was back in 2001. The EIA is more pessimistic now. So, you know, you're just plain wrong. Like, not even plausibly wrong, more like utterly wrong.

Wohoo you claim victory with a straw man and a series of very weak arguments.

The US has already proven that a population can easily demand far more energy than it can produce. What happens when the entire world hits that point? For the US it wasn't that bad, cuz we could buy more oil from some other part of the world. But where is the world going to buy more oil from? Mars?

I still don't care about the price of oil. Never have. You're the one who keeps bringing it up. If I care about the price of anything it's alternate forms of energy, and more sustainable infrastructure, and social adjustments. So, you know, keep talking about the one thing you understand while the rest of us talk about adult topics.

And this is why your comments are impossible to take seriously - prices are how market societies resolve scarcity problems. This argument apparently doesn't carry any weight with you, you prefer to insist on silly notions like "Economics assume lack of scarcity" which is erm, the point of the discipline.

Yes, the US and Chinese and Indian demand for oil is sky-high. Yes, we are capable of demanding far more than there is supply. Yes, your theory that the supply will contract in the near future is a fairly widely held position, but that's precisely what drove the spike in prices and the bias in growth away from oil-intensive activities and production.

We resolved issues of scarcity with a "price mechanism" whereby when something becomes more scarce, it becomes much more expensive. This encourages conservation, substitution, and innovation. It also biases growth away from the expensive resource, ie as oil becomes more scarce, its price will spike, and things like alternative forms of energy and mass-transit infrastructure. Which is, gosh, exactly what's been happening since the 1970s (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.), and golly, arose as a result of individuals making decisions for themselves.


Individuals are in a better position than Blueback to decided for themselves when they want to take public transit versus when they want to drive. That you claim otherwise in the same post where you declare victory, engage in a series of personal comments, and claim to know more than the aggregation of supply and demand that is the mareket-clearing price - the best guess at scarcity as suggested by, you know, a bit of information from every individual in society about scarcity - is evidence that you're not really engaging in much of anything besides hubris.

---------- Post added 04-18-2010 at 10:34 AM ----------


Did you ever watch Chinatown? Classic film noir from the early 70's (Jack Nicholson, Polanski, Faye Dunaway etc). It was a very real problem 40 years ago and still is today re: California's distribution of water rights. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Chinatown was set in the 1930s. Your camp has been screaming loudly about resource panics since Malthus, and at flatly histrionic tones since the 1970s. That growth has been, erm, exponential in Southern California since the 1930s and yet water still is readily available suggests that resource scarcity or innovation are the determinants of quality of life?

BLueback's claim that "We've been dead wrong for 300 years but just you wait" isn't one I take seriously.

That Mexicans have screwed up water management is not surprising. That because Mexicans have screwed up water management the US will necessarily screw up water management doesn't follow.

[blueback]

This is awesome. I don't want you to keep coming back with these kinds of arguments, but the fact that you do fascinating.

Infinite growth isn't possible with finite resources. What is possible is infinite refinement. If we can figure out how to use resources more cleverly we can get more done with the same amount of stuff. However, there is never a guarantee that someone will come up with a clever solution to a problem in time to avoid the problem.

Pointing out that, in the past, people avoided problems is not in itself a solution to future problems. It is merely an excuse.

This argument - that oil=industrial revolution - is flatly asinine. To place a broad, general, and sustained accumulation of capital, knowledge, and output on one resource when the distinguishing feature of the industrial revolution is sustained growth of virtually every resource, is not a coherent argument.

The industrial revolution and the petroleum age aren't the same thing. The industrial revolution started first. So, you know, that's not even a coherent argument.

Also, the idea that harvesting energy at a 1:100 ratio accounts for economic growth is a solid theory. Look, it even has math and everything:

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Cool story bro. You haven't supported the notion that global oil supply is going to contract, and your assertion that economic catastrophe stems from a terrible argument.

Yeah, I've been supporting the possibility of global oil production peaking this entire thread. Also, merely claiming that an argument is bad in no way demonstrates that it is. I can claim the sky is red, but that doesn't make the sky red. Feel free to provide an actual argument if you can, instead of mere opinion.

And this is why your comments are impossible to take seriously - prices are how market societies resolve scarcity problems...Yes, we are capable of demanding far more than there is supply. Yes, your theory that the supply will contract in the near future is a fairly widely held position, but that's precisely what drove the spike in prices and the bias in growth away from oil-intensive activities and production.

Feel free to provide support for your own argument. It's a good habit to get in to. While you're working on that, you should also meditate on the idea that markets (by definition) cannot create a price for something that doesn't exist yet. So, you cannot cite "the invisible hand" in support of your argument that an unrealized situation has already been fully an accurately "priced" into the market.

We resolved issues of scarcity with a "price mechanism" whereby when something becomes more scarce, it becomes much more expensive.

EXACTLY!!!11!1 But, only AFTER something becomes scarce can its scarcity be priced in the market. Not before. Before we have to make an educated guess.

This encourages conservation, substitution, and innovation. It also biases growth away from the expensive resource, ie as oil becomes more scarce, its price will spike, and things like alternative forms of energy and mass-transit infrastructure.

But what if adjusting AFTER the fact isn't soon enough? Making that argument is like saying that you'll only leave your house when the flood waters are actually inside of it. But that you might not leave; you might invest in pumps and buckets first, since they will be cheaper than moving.

If you turn out to be wrong about the effect decreasing oil production will have on the word the results could be much worse than everyone buying more efficient cars over a period of a generation. Did you ever read the Hirsch report? To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

The huge problem with leaving risk mitigation up to the markets is that the markets don't "instinctively" respond to unrealized possibilities. The market can only compare prices of things that actually exist, not of things that don't exist yet. I mean, that should be obvious. What's the market price of a nice little house in a Martian suburb? Oh, you don't know? That's because it doesn't exist yet. The market is notoriously short-sighted (quarterly profits anyone?) specifically because it's so hard to predict the future.

But, while we can't predict exactly what will happen, we can predict what certain scenarios will look like based on prior scenarios. For example, the Hirsch report goes into detail regarding just how long it would take for the entire market to replace its current oil-dependent infrastructure with machines and processes that don't depend on oil. It could easily be done, and will happen automatically once oil supply production begins to contract, but it might take far too long to happen. So, the only way to switch to a post-petroleum infrastructure is to start BEFORE oil production begins to contract. Or, in terms of the metaphor, before the flood waters are soaking into the carpet.

Individuals are in a better position than Blueback to decided for themselves when they want to take public transit versus when they want to drive. That you claim otherwise in the same post where you declare victory, engage in a series of personal comments, and claim to know more than the aggregation of supply and demand that is the mareket-clearing price - the best guess at scarcity as suggested by, you know, a bit of information from every individual in society about scarcity - is evidence that you're not really engaging in much of anything besides hubris.

I don't remember ever telling anyone to take the train. If I did, feel free to quote me.

Do you know how long it takes to build a train and its associated infrastructure? Neither do I, but it doesn't happen overnight. So, what happens when an individual decides to take the train because gas is too expensive, but there's no room on the train because everyone else decided to take it because gas is too expensive? Hmmm? Are you going to say that such a situation creates a price incentive to build more trains? You'd be absolutely right. But how long does it take to build a train? If it takes X years to build a train, but only takes X/2 years for gas to get so expensive an individual is fired for not being able to get to work, then building a train isn't a solution unless you start building it before gas gets expensive.

You can't pretend that the world moving away from its reliance on petroleum is in any way similar to one person taking the train instead of the car.

That growth has been, erm, exponential in Southern California since the 1930s and yet water still is readily available suggests that resource scarcity or innovation are the determinants of quality of life?

You know what's great about energy? It solves all problems. There's no such thing as water scarcity when you can just truck water to where it's needed, or build a desalinization plant to purify water, or pull oxygen and hydrogen out of the atmosphere and build some water. But all those solutions require energy. We've been solving all sorts of problems by simply throwing our 1:100 EROEI at them via petroleum. But what happens when that EROEI drops to 1:2? There won't be nearly as much energy left over to drive water around. Some people might have to make due with the water that's nearby. And if there isn't any water nearby, and hasn't been in a long time, then we've got a real problem. And it will definitely affect quality of life.

BLueback's claim that "We've been dead wrong for 300 years but just you wait" isn't one I take seriously.

That's fair. That's why I keep trying to convince you. If I can figure you out, maybe I can figure the rest of the world out.

That Mexicans have screwed up water management is not surprising. That because Mexicans have screwed up water management the US will necessarily screw up water management doesn't follow.

Lets say you're on an airplane crossing some mountains. These are particularly remote mountains so if you crash no one will be able to rescue you. Then you crash. There are some survivors, and there is still some food in the galley. But, it's not enough food to feed everyone. What would you do? Would you split up the food equally and ensure that everyone gets something, but no one gets enough; or would you ensure a few people got enough and simultaneously ensure that some people didn't get any?

Because that's the scenario you are talking about. The issue isn't how poorly we can manage to distribute water when there is enough to go around. The issue is how we can deal with a situation in which there isn't enough to go around. This seems to be one of the core concepts you keep ducking. Kind of like how you keep replacing the things I say with things you wish I had said so that you can dismiss them. Hopefully if you keep this up long enough you'll come full circle and use up all your cognitive mistakes so that I can figure out where the list ends.

[Causa Mortis]

This is awesome. I don't want you to keep coming back with these kinds of arguments,

Because with your personal comments and waving the flag of victory, you're clearly losing the debate?

Infinite growth isn't possible with finite resources. What is possible is infinite refinement. If we can figure out how to use resources more cleverly we can get more done with the same amount of stuff. However, there is never a guarantee that someone will come up with a clever solution to a problem in time to avoid the problem.

Marginally right, wrong, and dead wrong:

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To sum up: economic growth is nothing more than organizing existing resources in ever more creative ways. Unless the creativity that's defined growth since the early 1700s dries up (another of your "300 year trends are meaningless" arguments), growth will continue. The scarcity of oil will merely determine how much of it is used in our daily life, and whether or not we will have to go through painful adjustment periods.

The industrial revolution and the petroleum age aren't the same thing. The industrial revolution started first. So, you know, that's not even a coherent argument.

I've never even heard of "the petroleum age" before your posts, and its a silly concept. Petroleum is, for the time being, the lowest cost method of transportation. Because it is the lowest cost method, people use a lot of it. As it becomes more scarce, people will use less of it and use more public transportation, alternative fuels, etc.

Also, the idea that harvesting energy at a 1:100 ratio accounts for economic growth is a solid theory. Look, it even has math and everything:

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Oh wow, so long as there are some squiggly lines and shit, it must be valid.

They state in the abstract that they take your position as a leading presumption:

It begins from the belief that consumption of natural resources – especially energy (or, more
precisely, exergy) — has been, and still is, an important factor of production and driver of
economic growth.

...so basically they start with your argument as a leading assumption, in fact, its pretty questionable. And Ayers is a physicist working for an environmental think tank - not exactly the type to be doing solid econometric work, particularly not work that's going to fail the Lucas critique in about 7 seconds.

t's a good habit to get in to. While you're working on that, you should also meditate on the idea that markets (by definition) cannot create a price for something that doesn't exist yet. So, you cannot cite "the invisible hand" in support of your argument that an unrealized situation has already been fully an accurately "priced" into the market.


Bollox

You do not know what you are talking about but are pretending to be an expert on the subject.

The meme that oil is running out is what caused the spike in prices in 2003-2007 as institutional investors and Rich Dad acolytes poured into it as an investment vehicle as a result. Investors will incorporate expectations about the future into the spot and near-term future price of the good. They were well aware of it, it was incorporated into the price, inventories spiked, demand fell, the price plummeted.

That they came up with an aggregation you don't like is why your tone is what it is.


EXACTLY!!!11!1 But, only AFTER something becomes scarce can its scarcity be priced in the market. Not before. Before we have to make an educated guess.

So your argument is that the price of oil is a bad guess about the future, ie that Goldman Sachs and Ibanks run by Nobel Prize winners and George Soros and Warren Buffet either aren't profit maximizing or know less than blueback.

Put your money where your mouth is an put every penny you own into going long on oil.

If you turn out to be wrong about the effect decreasing oil production will have on the word the results could be much worse than everyone buying more efficient cars over a period of a generation. Did you ever read the Hirsch report? To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

And all we have to do in order to achieve your aim is to rob individuals of their capacity to make choices that they deem benefit themselves in order to

The huge problem with leaving risk mitigation up to the markets is that the markets don't "instinctively" respond to unrealized possibilities. The market can only compare prices of things that actually exist, not of things that don't exist yet. I mean, that should be obvious. What's the market price of a nice little house in a Martian suburb? Oh, you don't know? That's because it doesn't exist yet. The market is notoriously short-sighted (quarterly profits anyone?) specifically because it's so hard to predict the future.

The clearing price of houses on Mars is zero because there are no houses on Mars and there is no expectation that there will be houses on Mars in the future. Now, if technology comes along that makes houses on Mars feasible, then you will see the price of real estate on Mars jump.

Applied to our oil analogy, the notion of peak oil is something that's widely considered by economists and oil traders, eg we know there's a chance we're going to Mars. Its caused a spike in the price of oil, and GDP intensity has steadily declined, eg the nominal behavior has caused a real change in the consumption path. The thing is, its not really certain that substitution and technology effects won't make peak oil irrelevent, and we're not really certain that peak oil is really going to materialize, thus its only placing a small premium on the price; ie real estate is cheap on Mars, if you think the technology that will get us there will develop, sell your home and buy one on Mars.

But, while we can't predict exactly what will happen, we can predict what certain scenarios will look like based on prior scenarios. For example, the Hirsch report goes into detail regarding just how long it would take for the entire market to replace its current oil-dependent infrastructure with machines and processes that don't depend on oil. It could easily be done, and will happen automatically once oil supply production begins to contract, but it might take far too long to happen. So, the only way to switch to a post-petroleum infrastructure is to start BEFORE oil production begins to contract. Or, in terms of the metaphor, before the flood waters are soaking into the carpet.

I don't care enough to read the Hirsch report. Is the argument going to be that oil is all of a sudden going to dry up?

I don't remember ever telling anyone to take the train. If I did, feel free to quote me.

Yes, you did. By demanding costly projects and social adjustments on the basis of an idea that may not materialize, you're calling for government to force people to drive certain types of cars and to build trains in order to subsidize assuaging your fears of peak oil which, erm may not exist and, erm, even if it does it might not be the disaster many are claiming it will be.

Do you know how long it takes to build a train and its associated infrastructure? Neither do I, but it doesn't happen overnight. So, what happens when an individual decides to take the train because gas is too expensive, but there's no room on the train because everyone else decided to take it because gas is too expensive? Hmmm? Are you going to say that such a situation creates a price incentive to build more trains? You'd be absolutely right. But how long does it take to build a train? If it takes X years to build a train, but only takes X/2 years for gas to get so expensive an individual is fired for not being able to get to work, then building a train isn't a solution unless you start building it before gas gets expensive.

And so the solution to serious dislocation effects in the future is to mandate serious dislocation effects now?

You can't pretend that the world moving away from its reliance on petroleum is in any way similar to one person taking the train instead of the car.

You know what's great about energy? It solves all problems. There's no such thing as water scarcity when you can just truck water to where it's needed, or build a desalinization plant to purify water, or pull oxygen and hydrogen out of the atmosphere and build some water. But all those solutions require energy. We've been solving all sorts of problems by simply throwing our 1:100 EROEI at them via petroleum. But what happens when that EROEI drops to 1:2? There won't be nearly as much energy left over to drive water around. Some people might have to make due with the water that's nearby. And if there isn't any water nearby, and hasn't been in a long time, then we've got a real problem. And it will definitely affect quality of life.

Or, gosh, we'll substitute away from petroleum as it gets more expensive and use other forms of energy that are currently viable but more expensive than petroleum. Will that adjustment be painful? Undoubtedly. Can government intervene to make it less painful? Probably not.

Lets say you're on an airplane crossing some mountains. These are particularly remote mountains so if you crash no one will be able to rescue you. Then you crash. There are some survivors, and there is still some food in the galley. But, it's not enough food to feed everyone. What would you do? Would you split up the food equally and ensure that everyone gets something, but no one gets enough; or would you ensure a few people got enough and simultaneously ensure that some people didn't get any?

Because that's the scenario you are talking about. The issue isn't how poorly we can manage to distribute water when there is enough to go around. The issue is how we can deal with a situation in which there isn't enough to go around. This seems to be one of the core concepts you keep ducking. Kind of like how you keep replacing the things I say with things you wish I had said so that you can dismiss them. Hopefully if you keep this up long enough you'll come full circle and use up all your cognitive mistakes so that I can figure out where the list ends.

This is getting prolix.

[H264]

You do realize there is a factory that is producing #2fuel oil (the useful stuff) right now.
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It takes about 2 hours to whip up a batch of #2fuel oil and is ~85% efficient. There is also a method for making 'oil' from the excess heat from nuclear plants, perhaps the same method just less efficient.

I'm not sure why peek oil people don't look at things like that, and often don't mention shale oil. As far as I can tell shale oil is not quite worth getting yet, but probably will be in the future at ~$150+/barrel.

The green river formation has about 1.5trillion barrels of oil. Lets say that we can only get about 1/2 of that in usable oil, and oil consumption in the US (let the other countries fend for themselves) is 20million barrels/day constant (which will not be true, but makes the math easier). Then that one shale oil reserve is enough to last the US about 100 years. A lot happens in 100 years, perhaps fusion.

Shale oil and oil manufacturing I believe is more than enough to offset rising energy costs in the long run.

[Aronnax]

You do realize there is a factory that is producing #2fuel oil (the useful stuff) right now.
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It takes about 2 hours to whip up a batch of #2fuel oil and is ~85% efficient. There is also a method for making 'oil' from the excess heat from nuclear plants, perhaps the same method just less efficient.

I'm not sure why peek oil people don't look at things like that, and often don't mention shale oil. As far as I can tell shale oil is not quite worth getting yet, but probably will be in the future at ~$150+/barrel.

The green river formation has about 1.5trillion barrels of oil. Lets say that we can only get about 1/2 of that in usable oil, and oil consumption in the US (let the other countries fend for themselves) is 20million barrels/day constant (which will not be true, but makes the math easier). Then that one shale oil reserve is enough to last the US about 100 years. A lot happens in 100 years, perhaps fusion.

Shale oil and oil manufacturing I believe is more than enough to offset rising energy costs in the long run.


If you're wondering why more people don't discuss shale oil as a practical alternative to crude oil check the water requirements to process shale.

[meanlittlechimp]

Infinite growth isn't possible with finite resources. What is possible is infinite refinement. If we can figure out how to use resources more cleverly we can get more done with the same amount of stuff. However, there is never a guarantee that someone will come up with a clever solution to a problem in time to avoid the problem.

Exactly! Very well put.

You will probably like this link about Kurzweil's theory, halfway down the page.
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Chinatown was set in the 1930s.
Were you trying to catch me in an error of fact? If you re-read what I wrote, I said the FILM was from the 70s, not where it was set.

[CrazyCapitalist]

Peak oil is real, but it won't matter. Once it shows itself, and supply plumets, prices will soar. There will be a point where it is so expensive that incentives for replacing it are irresistible. Someone will have an idea, a very simple idea, that makes them the richest man in the world within a period of a year.

The stone age didn't end due to lack of stones.

[Causa Mortis]

Were you trying to catch me in an error of fact? If you re-read what I wrote, I said the FILM was from the 70s, not where it was set.

It was an error of omission, not an error of fact. When the film was shot is rather irrelevant if its playing out a melodrama from the 1930s.

[blueback]

Because with your personal comments and waving the flag of victory, you're clearly losing the debate?

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To sum up: economic growth is nothing more than organizing existing resources in ever more creative ways.

Ummm. . .yeah. So, I, like, followed that link you provided and the conclusion undermines your assertion that whatever theory it is you're appealing to invalidates my position.

"We have surveyed several of the important phases in the history of optimal growth theory...Optimal growth theory has changed more than we have indicated here...Today, optimal growth theory and other variations on the Ramsey exercise are marketed as actual representations of how the economy works -- despite the fact that reality tells us the social planner does not exist... for some mystifying reason, modern economics persists with this fiction, despite the overwhelming theory and evidence against it. Appealing to "representative agents" is a deplorable, but sadly common and ancient habit in economics...optimal growth theory turns out to be quite a curiosity. It was drastically transformed in the 1980s from a normative theory to a positive theory, from a theory which sought to find out what ought to be, to one which claims to discern what is. This has almost no parallel in the history of economic theory. It is striking in at least two respects. Firstly, this metamorphosis managed to do something that seems to be quite unprecedented: instead of falling into the classical fallacy of "deriving an ought from an is", as David Hume famously warned against, they actually managed to fall into the reverse fallacy of "deriving an is from an ought"."

Whoever wrote that obviously thinks your pet theory is a fantasy. So, you know, it's strange that you would cite that source.

The scarcity of oil will merely determine how much of it is used in our daily life, and whether or not we will have to go through painful adjustment periods.

Yup. But how painful (and abrupt) will the adjustment period be? How can you be sure it won't actually be an existential threat?

I've never even heard of "the petroleum age" before your posts, and its a silly concept.

That's hardly surprising, since you think the concept of Peak Oil is irrelevant and you've refused to look into the subject at all. There are probably a lot of terms I haven't heard of simply because I have ignored the people that use them.
Would you prefer "the age of petroleum?"
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Oh wow, so long as there are some squiggly lines and shit, it must be valid.

They state in the abstract that they take your position as a leading presumption:

It begins from the belief that consumption of natural resources – especially energy (or, more
precisely, exergy) — has been, and still is, an important factor of production and driver of
economic growth.

...so basically they start with your argument as a leading assumption, in fact, its pretty questionable.

Wait, what? So, just taking what you quoted as a problem literally and only in the context you provided it, what problem do you have with the statement "the consumption of natural resources is an important factor of economic growth"? Who would ever say it isn't an important factor? Are you operating under the assumption that the consumption of natural resourses ISN'T an important factor in economic growth?

So that objection doesn't even stand on its own. However, putting it back in context of the paper, you have apparently forgotten what you learned in high school science. The appropriate way to structure an experiment is to first state an hypothesis. The hypothesis must be falsifiable, so that the experiment will either succeed of fail. You can't have a question as an hypothesis; it has to be a statement. Declaring the hypothesis is in no way the same as being caught admitting to pre-existing biases that tainted the experiment.

"We argue (Section 4) that the economic system should be understood as a sequential materials processing system, converting raw materials (and fuels) by stages into final products and services. The existence of (possibly lagged) feedbacks from downstream sectors to upstream sectors is understood. Capital services constitute one such lagged feedback. Exergy services can be regarded as a generic intermediate with both feedback and feed-forward. Whether it has explanatory power is then an empirical question."

As you can see (or maybe not, but other people probably can) all the authors are doing is stating the structure of their experiment.

Finally, that you didn't even seem to get past the introduction is not a sign that anyone should take your objection to the paper seriously. The conclusion actually includes some verbage that would seem to be more supportive of your pet theory, at least it would have been a substantive objection. I'm not gonna quote it for you. If you want to come up with a real objection no one is stopping you.

Bollox

Well, I guess the debate is over then. You should have dismissed everything with one word weeks ago and saved us all the trouble. It's actually kind of liberating to think that all the work I've done is balanced out by one word from you. I might as well stop trying.

You do not know what you are talking about but are pretending to be an expert on the subject.

Oh, wait, you're still being insufferable. I guess I still have some work to do. Feel free to explain where I go wrong. I don't actually think that your declaration that I'm wrong is meaningful. I just said that stuff before to mess with you.

The meme that oil is running out is what caused the spike in prices in 2003-2007 as institutional investors and Rich Dad acolytes poured into it as an investment vehicle as a result. Investors will incorporate expectations about the future into the spot and near-term future price of the good. They were well aware of it, it was incorporated into the price, inventories spiked, demand fell, the price plummeted.

If it's so obvious it should be no trouble at all for you to provide at least one single, solitary source to back up your opinion. But you didn't do that. Hmmm. . .

While you're at it, feel free to explain how the market's risk-pricing mechanisms always result in perfect allocation of resources. You know, since, according to you, the market never makes incorrect predictions of the future. (man, I actually laughed a little to myself as I wrote that)

That they came up with an aggregation you don't like is why your tone is what it is.

My tone? He he, please, explain what's wrong with my tone. This ought to be good. Also, I still don't care about the price of oil. I'm not sure how many more times I'm going to have to say that. It's like the forum is removing those sentences before you read them or something.

So your argument is that the price of oil is a bad guess about the future,

Nope. Never has been. In fact, that's never even been close to what my argument is. I recognize that you have consistently THOUGHT that was incorporated into my argument. But you've always been wrong about that. Maybe the reason you're so incoherent is you really are just talking to yourself and not listening to me at all.

ie that Goldman Sachs and Ibanks run by Nobel Prize winners and George Soros and Warren Buffet either aren't profit maximizing or know less than blueback.

See, this objection is just so wrong on so many levels. Either you're actively trying to misinterpret my argument, or you are blind to it, or maybe you're just really committed to playing devil's advocate.

First, everyone tries to maximize profit. It's a simple as that. So, no, I'm not saying professional investors are actively avoiding profit maximizing. Everyone is always profit maximizing. . .to the best of their ability.

Second, I've never once said anything about what individual investors should do with their money, and I've never said anything about what specifically should be invested in to generate the largest return possible in the future. Never. Didn't happen.

Finally, how do you even manage to respond to my assertion that investments are made with imperfect estimates of the future, with the idea that stating that is the same as stating that I can personally predict the future? It's like you aren't even reading what's literally right in front of you as you type.

And all we have to do in order to achieve your aim is to rob individuals of their capacity to make choices that they deem benefit themselves...

Well, there's nothing inherently wrong with that. Would you like to argue otherwise?

The clearing price of houses on Mars is zero...

Ah, no. There is no price for houses on Mars. The price isn't zero because the price doesn't exist. Zero exists, the price of houses on Mars doesn't.

The thing is, its not really certain that substitution and technology effects won't make peak oil irrelevent, and we're not really certain that peak oil is really going to materialize, thus its only placing a small premium on the price

Wow. Did you step away from your computer for a moment and let someone else add to your post? That's pretty much the best thing you've contributed so far.

The appropriate way to describe the situation is with qualifiers, as you've finally done here. The issue under discussion is a risk management one, which means it is inherently uncertain. The difference between us is that you round the grey area off to white and I round it off to black.

I don't care enough to read the Hirsch report. Is the argument going to be that oil is all of a sudden going to dry up?

OMFG. Yeah. That's why you don't deserve the last word in this debate. Why would you expect to be taken seriously when you REFUSE TO READ THE BACKGROUND MATERIAL and then dismiss the arguments of someone who has read the background material with nothing more substantial than a single word?

Also, no, the Hirsch report doesn't claim that oil will suddenly disappear. Neither does any Peak Oil theory. You'd know that if you had ever read about the theory. Like, at all.

Yes, you did. By demanding costly projects and social adjustments on the basis of an idea that may not materialize, you're calling for government to force people to drive certain types of cars and to build trains in order to subsidize assuaging your fears of peak oil which, erm may not exist and, erm, even if it does it might not be the disaster many are claiming it will be.

I did? When? I don't remember ever "demanding costly projects and social adjustments." At all. Let alone on the basis of anything. Feel free to quote me to show that I did.

Besides, are you really going to argue that no one should ever do anything costly or painful in response to something that hasn't materialized yet? Feel free to argue that one. Tearing it apart will probably make me giggle.

And so the solution to serious dislocation effects in the future is to mandate serious dislocation effects now?

See, you really should read the argument of the person you're arguing against. If you had, you'd know that question is moot. No, the argument is that the appropriate response to a risk management problem the size of Peak Oil is to begin slow, steady mitigation efforts very early, rather than begin serious, sizeable efforts very late, or too late. The key aspect of the argument that you have been objecting to all this time (which you seem to have forgotten) is that the scale of the problem most likely will require either massive changes, or minor changes over a very long period of time. I've been arguing for the latter, but the nature of the latter solution is that it has to happen before the market can respond instinctively. Why do I have to explain your own argument to you?

Or, gosh, we'll substitute away from petroleum as it gets more expensive and use other forms of energy that are currently viable but more expensive than petroleum. Will that adjustment be painful? Undoubtedly. Can government intervene to make it less painful? Probably not.

You are still missing the point. Oh, wait, that's not a surprise.
You have yet to demonstrate (at all, let alone conclusively) that the subsitution process will move faster than the requirement for it.

This is getting prolix.

It's an important philosophical question. You keep claiming that your economic theories are based on an assumption of scarcity, but you continually argue that there is no such thing as scarcity. Your entire point, such as it is, boils down to the idea that growth will never reverse because someone will always find a new resource (or a new way to use a resource) that will provide the necessary fuel for the growth.

So it is vital that you answer the question: how would you deal with actual scarcity? What would you do if you were starved for the resources you needed? Everything is easy when resources are enough to meet demand. But what would you do if resources WEREN'T enough to meet demand?

You do realize there is a factory that is producing #2fuel oil (the useful stuff) right now.

I'm aware of an awful large number of ways to produce petroleum-like products. And I am aware that many of them worked decades ago, and have only improved since then.

I'm not sure why peek oil people don't look at things like that,

They do, I do, but we generally don't think those processes will scale up sufficiently. It's not a matter of how cheap the resulting petroleum-like stuff might be, it's a matter of how much of it can be produced. Calculating the impact is a pain in the ass, because you have to take the whole chain of production into account, but when I've seen it done and done it in specific situations before these alternative sources of petroleum amount to about the same BTU input as other alternative sources of energy (solar, wind, etc), IE: around 2%.

They are viable in certain limited situations, but no one's ever come up with one that would actually make an impact on national oil demand, let alone global.

...and often don't mention shale oil.

That's just false. Oil shale is discussed all the time. Of course, it is usually brought up by someone who doesn't agree with the theory of Peak Oil and then shot down by someone who does agree with the theory. The problem is that the oil in the shale is just too hard to get to. It's equivalent to living on a glacier and having to chip out chunks of ice and melt them in your mouth to get all your drinking water.

The green river formation has about 1.5trillion barrels of oil. Lets say that we can only get about 1/2 of that in usable oil, and oil consumption in the US (let the other countries fend for themselves) is 20million barrels/day constant (which will not be true, but makes the math easier). Then that one shale oil reserve is enough to last the US about 100 years. A lot happens in 100 years, perhaps fusion.

Yup. That would be pretty cool. It would be even cooler if you applied that same "and then a miracle happened" thinking to the tar sands in Canada (more oil). The problem is in the huge leap required to make the assumption that we'll be able to get that oil out of the ground fast enough. I mean, it is there, and there is a lot of it, but getting at it is a huge problem. And it's not the sort of problem that can be solved with cleverness. There's no clever way to get to the top of a mountain. There are may ways, but every way requires a lot of time and energy.

Shale oil and oil manufacturing I believe is more than enough to offset rising energy costs in the long run.

I don't think it's appropriate to focus on energy costs. I think the focus should be on energy production. It will be the lack of production capacity that will cause the problems. Sure, it will drive up costs, but that will be a side effect.

Peak oil is real, but it won't matter. Once it shows itself, and supply plumets, prices will soar. There will be a point where it is so expensive that incentives for replacing it are irresistible. Someone will have an idea, a very simple idea, that makes them the richest man in the world within a period of a year.

But what if Superman DOESN'T save us? What if there's no cavalry to ride to our rescue? What if the monster really does catch up to us?

It's dangerously wishful thinking to assume that if a bear ever comes after you someone will hand you a motorcycle.

[Causa Mortis]

Good god. You win - I"m not responding to a 2500 word prolix debate. Give me some bullet points if you want to continue the discussion.

---------- Post added 04-20-2010 at 10:51 AM ----------

Actually there is so much charlatanism, disinformation, and straw-manning here that I'm going to respond.



Ummm. . .yeah. So, I, like, followed that link you provided and the conclusion undermines your assertion that whatever theory it is you're appealing to invalidates my position.

There are two take homes from endogenous growth theory:
1. Economic growth is the result of organizing existing resource in new and more valuable ways.
2. The organizing in new and more valueable ways results from increases in knowledge. Due to the fact that knowledge is a non-physical good with substantial spillover, government should subsidize.

THat government should subsidize education does not mean that endogenous growth theory recommends government intervention generally; its most credible advocate, Paul Romer, opposes public provision of roads, for instance.

Yup. But how painful (and abrupt) will the adjustment period be? How can you be sure it won't actually be an existential threat?

Gosh, considering the folks from your own camp claim that its going to be a secular decline, I'd say that we're not going to wake up one day and find that there's no oil in the ground, and the market can very easily handle these adjustments better than government can.

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That's hardly surprising, since you think the concept of Peak Oil is irrelevant and you've refused to look into the subject at all. There are probably a lot of terms I haven't heard of simply because I have ignored the people that use them.
Would you prefer "the age of petroleum?"
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Because I refuse to accept a strong-form of your perspective, and because I don't re-read the same arguments ad-infinitum, I'm ignorant. Got it.

Wait, what? So, just taking what you quoted as a problem literally and only in the context you provided it, what problem do you have with the statement "the consumption of natural resources is an important factor of economic growth"? Who would ever say it isn't an important factor? Are you operating under the assumption that the consumption of natural resourses ISN'T an important factor in economic growth?

Its not the driving force in growth. Ideas are the most important, with the related concept of human capital, as well as physical capital. If oil were suddenly to become much more scarce, we'd use less of it and there'd be a painful adjustment period, but this wouldn't change individual's capacity to solve problems.

So that objection doesn't even stand on its own. However, putting it back in context of the paper, you have apparently forgotten what you learned in high school science. The appropriate way to structure an experiment is to first state an hypothesis. The hypothesis must be falsifiable, so that the experiment will either succeed of fail. You can't have a question as an hypothesis; it has to be a statement. Declaring the hypothesis is in no way the same as being caught admitting to pre-existing biases that tainted the experiment.

This is total charlatanism. They state - from the outset - that its a presumption they make. Citing a paper that takes your so-called hypothesis as a beginning presumption is flatly a dumb argument.



Oh, wait, you're still being insufferable. I guess I still have some work to do. Feel free to explain where I go wrong. I don't actually think that your declaration that I'm wrong is meaningful. I just said that stuff before to mess with you.

I believe I've done that. That you're complaining that I'm trolling is a little silly in light of the massive wall of text that I just eliminated from discussion.

If it's so obvious it should be no trouble at all for you to provide at least one single, solitary source to back up your opinion. But you didn't do that. Hmmm. . .

Well gosh, you want a citation that the sky is blue? I can use google for you:

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While you're at it, feel free to explain how the market's risk-pricing mechanisms always result in perfect allocation of resources. You know, since, according to you, the market never makes incorrect predictions of the future. (man, I actually laughed a little to myself as I wrote that)

Well seeing as how that's a gigantic straw man, I'm not surprised that you'd find it gratifying.

The market is not perfect. The market - an aggregation of rational, self-interested individuals - is doing a much better job of making decisions about resource allocation than blueback or a handful of planners can.

I'm not sure how many more times I'm going to have to say that. It's like the forum is removing those sentences before you read them or something.

We know. You know more than the aggregation of millions of individuals about the relative scarcity of oil. Because its not like, you know traders are profit maximizers and so integrate expectations about the future into the price of oil.


Finally, how do you even manage to respond to my assertion that investments are made with imperfect estimates of the future, with the idea that stating that is the same as stating that I can personally predict the future? It's like you aren't even reading what's literally right in front of you as you type.

So investors expectations about the future are imperfect, yours are perfect and to be vehemently argued for, asserted with incredibly intellectually dishonest devices?

The appropriate way to describe the situation is with qualifiers, as you've finally done here. The issue under discussion is a risk management one, which means it is inherently uncertain. The difference between us is that you round the grey area off to white and I round it off to black.

Correct. And your argument is that you know more than the aggregation of millions of individual decision makers that manifests itself in the market price. My argument is that you're an (obviously) fallible individual and are not in a better position to make judgement calls about the scarcity of oil.

It's an important philosophical question. You keep claiming that your economic theories are based on an assumption of scarcity, but you continually argue that there is no such thing as scarcity. Your entire point, such as it is, boils down to the idea that growth will never reverse because someone will always find a new resource (or a new way to use a resource) that will provide the necessary fuel for the growth.

Another major straw man. People's capacity to solve problems - namely their own problems - trumps resource scarcity. Its been steadily doing so for 300 years, despite the ever-more-shrill tone of your camp, and per capita incomes keep rising despite the ever-present doomsday just around the corner. That is my argument.

So it is vital that you answer the question: how would you deal with actual scarcity? What would you do if you were starved for the resources you needed? Everything is easy when resources are enough to meet demand. But what would you do if resources WEREN'T enough to meet demand?

...

The demand for oil is not perfectly inelastic. As it becomes more scarce, its price rises. As its price rises, people demand less of it. More at 11. Your inability to understand this is why you're using so many intellectually dishonest devices in support of your position.


But what if Superman DOESN'T save us? What if there's no cavalry to ride to our rescue? What if the monster really does catch up to us?

Then, gosh, the price of gas will go to $20 per gallon to reflect its extreme scarcity and you'll take the bus.

Two notes:
1. Please keep your response under 1500 words.
2. You spend a lot of time freaking out about secularly declining production of oil, but you spend very little time on solutions. What are some?

[blueback]

Good god. You win - I"m not responding to a 2500 word prolix debate.

Yay!
And, technically, I only addressed 1700 words to you. Isn't it awesome that I can bang out 1700 words without repeating myself? That must be why I won.

Give me some bullet points if you want to continue the discussion.

Already did that. Use the scroll bar. That's what it's there for. Scrolling. It's like a little time machine :)

---------- Post added 04-20-2010 at 10:51 AM ----------

Actually there is so much charlatanism, disinformation, and straw-manning here that I'm going to respond.

Awww man. . .do I still get to say you admitted defeat? Lol, anywho, what is with your focus on winning? You do realize that no one's scoring this, right? I mean, every time you score a cheap point (how many times have you said "prolix" now?) you're the only one who cares. I certainly don't care. And it looks like Sunamon is the only one following the thread at this point.

See, what's great about this is that you seem to really really (really) want to tell me that I'm absolutely wrong. But you can't. Eventually you're going to have to admit that I could be right, even if only improbably. So all your self-righteousness is just for show; there's no substance to it. You're not valiantly defending the free market against the rape and pillaging of my ideas. You're just desperately clinging to conclusions you arrived at without properly researching the topic. That's why you keep ignoring the substance of my arguments and attacking their character.

I'm not one for enjoying the suffering of others. But in this case I think it's more akin to the pain of a good workout. I'm confident if you just keep putting in the reps you'll emerge stronger on the other side. If the motivation that keeps you going is to shame me personally that's okay, I can take it.

There are two take homes from endogenous growth theory:

Whoa there cowboy. What happened to that source you cited? Was I right that the authors only brought up your theory so they could demonstrate how wrong it was?

1. Economic growth is the result of organizing existing resource in new and more valuable ways.
2. The organizing in new and more valueable ways results from increases in knowledge. Due to the fact that knowledge is a non-physical good with substantial spillover, government should subsidize.

I don't care how creative someone gets with their one cup of water, it's still not enough to keep them alive in a desert. Existing systems require a minimum level of resources to sustain their existence, and more above that level to grow. Sure, you can replace an old, inefficient system with a new one, but that takes time, and resources.

So, please explain:
1) what part of that theory says that declining availability of resources will be offset by increases in creativity sufficient to not only sustain the system, but ensure growth?
2) what part of that theory guarantees the proces of adapting to changing circumstances (external) will be faster than the change demands?

It looks like your pet theory assumes growth is driven only from inside a system. What about the environment the system exists within?

THat government should subsidize education does not mean that endogenous growth theory recommends government intervention generally; its most credible advocate, Paul Romer, opposes public provision of roads, for instance.

I noticed that even your pet theory, which you seem to be convinced trumps the theory of Peak Oil, doesn't say that the government should stay out of the free market entirely. So, that must mean that the market isn't sufficient to guarantee growth all on its own, even according to your theory. Hmmm. . .and yet you seem to want to claim interfering with the market's allocation of resources, in any way, is totally wrong. How about you explain why there's no contradiction there.

Gosh, considering the folks from your own camp claim that its going to be a secular decline, I'd say that we're not going to wake up one day and find that there's no oil in the ground, and the market can very easily handle these adjustments better than government can.

I've got an idea. How about you argue against me. I'm the only one here. When I want to cite something someone else said in support of my argument THEN you can argue against that person. But invoking "your camp" as a legitimate opponent is absurd. Lets just add that to the list of ways you've invented to ignore what I'm actually saying.

However, it is a good sign that you've finally realized the theory of Peak Oil doesn't say anything about oil suddenly disappearing. That's a huge step. You should congratulate yourself.

Now, please explain how you can guarantee that "the market can very easily handle these adjustments..." That's pretty important. It sounds like you're saying you know for sure oil scarcity will never become an actual problem in the future.

Because I refuse to accept a strong-form of your perspective, and because I don't re-read the same arguments ad-infinitum, I'm ignorant. Got it.

Errm, no. You're ignorant because you are arguing a conclusion in a debate that you steadfastly refuse to do any research in. I mean, declaring your own opinion on the theory of Peak Oil while refusing to read something as basic to the discussion as the Hirsch report is truly impressive. It would be like running for president while refusing to read the the declaration of independence. That's just a metaphor. I don't want to see you jumping on that as if it was stated literally.

It would be one thing if you had already done the reasearch and could talk about the background intelligently (rather than asking stupid questions because you're ignorant), or if you read the FEW things I had suggested and came back with an informed opinion from merely skimming them, but you've refused to even look at the background material. That is what makes you ignorant.

You could easily become not-ignorant. Or you could again declare anything you havne't already read to be a priori useless. I wonder which option you will pick. . . .

Its not the driving force in growth. Ideas are the most important, with the related concept of human capital, as well as physical capital.

I dunno. That sounds like ideas are important even when there are no resources available. Bacteria colonies can grow just fine with no ideas, but plenty of resources. On the other hand, human colonies have an awfully hard time growing with great ideas but no resources. How exaclty are ideas supposed to manifest value when there aren't any resources to work with? And that's not even mentioning the idea that work can be useful when there are no resources to work with.

It sounds like your pet theory is assuming the presence of sufficient resources to meet demand. But the real world doesn't always provide sufficent resources. Which would retard, or even reverse, growth. So resources are required before ideas, which means resources are more important than ideas.

If oil were suddenly to become much more scarce, we'd use less of it and there'd be a painful adjustment period, but this wouldn't change individual's capacity to solve problems.

That statement is absolutely correct in and of itself. However, in context you're still way off. The issue isn't that anyone is claiming oil scarcity will render everyone stupid. That's your idea. The issue is that oil scarcity will render everyone unable to act on their great ideas. For example, micro loan programs have demonstrated conclusively that plenty of poor people in developing countries are very good credit risks. They always repay the tiny loans given to them, because all they need to get a business started is a little bit of capital (like $100). Without that capital all their ideas and human capital is useless. But with the capital (resources) required they can begin to grow.

The same principle is true about all systems. If you deny them the resources they need they will slow down and/or break. That's just a simple law of nature. It can't be argued with. . .except by economists apparently.

Your assumption that resource scarcity will cause pain, but has no chance of causing an existential crisis, is a pretty ballsy prediction. You're basically assuming that you don't need to pack extra water for a journey across an uncharted desert because you're absolutely sure an oasis will turn up right when you need it.

This is total charlatanism. They state - from the outset - that its a presumption they make. Citing a paper that takes your so-called hypothesis as a beginning presumption is flatly a dumb argument.

Nice SAT word.
You never actually addressed the question I posed to you. But I'm used to that.
There is nothing dumb about stating the hypothesis of an experiment up front. That's just how experiments work. I'm amazed that you're sticking to that argument. It's probably because you didn't actually read the paper; at all. So it's all you've got. I mean, it would be acceptable to declare that hypothesis wrong, and to then extrapolate that the experiment was flawed. That would be perfectly normal and acceptable. But you keep going off the deep end and declaring it wrong to have an hypothesis at all.

I believe I've done that. That you're complaining that I'm trolling is a little silly in light of the massive wall of text that I just eliminated from discussion.

He he. Another brief reply that is crippled by false assumptions and an incoherent presentation.
You haven't done much in the way of explaining why I'm wrong. Every now and then you take a break from insulting me to link to an article, or state something acceptable, but I think they're getting fewer and farther between.
Also, I never accused you of trolling. That's all your idea again. I just said you were being insufferable.
Finally, what does trolling have to do with ignoring your opposition's arguments? You can't just dismiss the stuff you don't want to deal with and pretend you're doing the world a favor. That's probably why your arguments (When they appear) are so bad. It's tough to be right when you keep dismissing reality as not up to your standards.

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Yay! That only took, what, like a week? That article is not only dated, it wasn't very good to begin with. It suffers from the standard problem of citing the highest undiscovered or unreported estimates available and then dismissing any possibility that they might be off. Plus, if you run some basic math you find that even the numbers they cite don't support the rhetoric they cite. Also, the rest of your links were just reports of estimates that oil prices might rise. What were those supposed to be for?

This article explains my view of your arguments pretty well, specifically the first half To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

And here are many good sources you should at least skim:
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The market is not perfect. The market - an aggregation of rational, self-interested individuals - is doing a much better job of making decisions about resource allocation than blueback or a handful of planners can.

Is that why America specifically, and to a lesser extent the world generally, entered a recession recently? Was that part of the plan? I suppose that was exactly what the market was going for? Also, isn't it true that the way we have always gotten out of recessions and depressions is by "individuals and a handful of planners" stepping in and pointing the market in the right direction? In fact, isn't it true that the way we attempt to avoid recessions and depressions is by "individuals and a handful of planners" stepping in and messing with the market?

Is there even such a thing as a truly free market? Anywho, I don't need you to tell me that the world is complicated. Of course no individual could ever understand every reductionist element of the global market. But what you are evading is the real discussion, which is about overall trends. And basic physical realities. Which individuals can understand quite well.

So investors expectations about the future are imperfect, yours are perfect and to be vehemently argued for, asserted with incredibly intellectually dishonest devices?

Seriously?

My argument is that the world hasn't taken sufficient steps to mitigate the risk of Peak Oil. All we would have to do is take risk management steps. The fun thing about this argument is that it in no way requires perfect knowledge of the future, because it ASSUMES we can only achieve imperfect knowledge of the future. That is the whole point.

On the other hand, your argument is the one that assumes we have perfect knowledge of the future because you are certain that nothing bad will happen. Since nothing bad will happen, it's guaranteed (right?), we can put the pedal to the medal and grow as fast and as far as our resources will allow (yeah I'm sticking to that idea). There's no need to save anything for a rainy day, or slow down as we approach a blind curve, because people like you know for a fact that nothing bad will happen.

Can you really not see the difference between those two points of view?

Correct. And your argument is that you know more than the aggregation of millions of individual decision makers that manifests itself in the market price.

Nope. My argument is that the people I get my information from have specifically studied a particular topic, and have very good reasons to believe it poses an existential threat to all the people who haven't studied it. Who, in fact, have ignored it.

Millions of individuals who aren't aware of a danger can't factor it into their decisions. Duh. Being aware that a topic exists and actually understanding it are two entirely different things.

My argument is that you're an (obviously) fallible individual and are not in a better position to make judgement calls about the scarcity of oil.

And I wouldn't argue with that. But I've never once asked anyone, including you, to take my opinion on the subject for granted. In fact, I've tried time and time again to get you to read the sources that I'm getting my information from. You can't refuse to look at the sources I provide to you and then accuse me of not having any support for my conclusion.

People's capacity to solve problems - namely their own problems - trumps resource scarcity.

No. It. Doesn't.
It never does. Ever.
If I pushed you out of a spaceship no amount of creativity would allow you to breath. If I parachuted you into the middle of a desert no amount of cleverness would allow you to drink. If I sank your boat no amount of stick-to-it-ivness would allow you to eat.

Your theory works only as long as sufficient resources exist. If they don't exist, they can't be conjured up with new patents.

The demand for oil is not perfectly inelastic. As it becomes more scarce, its price rises. As its price rises, people demand less of it.

Yeah. That's great. Now, moving on to the substance of the debate, please explain where you are getting your certainty that the rise in prices will be slow enough for people to adjust to without destruction to their standard of living, let alone continuting to expand their standard of living.

Then, gosh, the price of gas will go to $20 per gallon to reflect its extreme scarcity and you'll take the bus.

OMFG. I used this specific example earlier and you ignored it. You cannot use it again and pretend I haven't already specifically addressed it. Go back and try again. In the mean time, a point I didn't address the last time you brought up the "just use the bus" example is that an increase in the cost of oil will mean an increase in the cost of pretty much everything else. Not only will gas be more expensive, but so will food, and medicine, and electricity, and everything else people NEED.

You spend a lot of time freaking out about secularly declining production of oil, but you spend very little time on solutions. What are some?

Insufferable. But it's not worth going into detail about.

I'm going to hold off on specific suggestions until I see you respond to this post. If you have anything of substance to say, the discussion can move forward. But I have little interest in moving on to new topics which you will immediately dismiss without doing any research in.

[Causa Mortis]

Only quoting the actual substantive points, ignoring the thousands of words of flames and hubris.

I don't care how creative someone gets with their one cup of water, it's still not enough to keep them alive in a desert. Existing systems require a minimum level of resources to sustain their existence, and more above that level to grow. Sure, you can replace an old, inefficient system with a new one, but that takes time, and resources.

That's been the argument since Malthus. So far, because of birth control and individual's capacity to solve problems, we've avoided the impending disaster that's just over the horizon and massively increased per person wealth.

So, please explain:
1) what part of that theory says that declining availability of resources will be offset by increases in creativity sufficient to not only sustain the system, but ensure growth?
2) what part of that theory guarantees the proces of adapting to changing circumstances (external) will be faster than the change demands?

"guarantees"? We're in the real world. There are none.

If we were to wake up tomorrow and the oil wells would be dry, there would be a huge recession. And people would take the light rail and buy bicycles and do a hundred different other things to get around it. Growth would then resume after the adjustment.

It looks like your pet theory assumes growth is driven only from inside a system. What about the environment the system exists within?

Its not "my pet theory". Its the most satisfying explanation of economic growth. And it, erm, debunks your notion that the sky is falling.

I noticed that even your pet theory, which you seem to be convinced trumps the theory of Peak Oil, doesn't say that the government should stay out of the free market entirely. So, that must mean that the market isn't sufficient to guarantee growth all on its own, even according to your theory. Hmmm. . .and yet you seem to want to claim interfering with the market's allocation of resources, in any way, is totally wrong. How about you explain why there's no contradiction there.

That government can improve outcomes in some areas with perverse incentives like education, health care, and financial regulation, does not mean that government can improve outcomes over markets where individual incentives are aligned with social optimization.

That you promote de facto government control of the oil market does not mean, I assume, that you promote communist ideas, correct? Similarly, I am sure you can understand that while I do not think governments can improve outcomes in this area, there are other areas where government can. This is in no way a contradiction.


However, it is a good sign that you've finally realized the theory of Peak Oil doesn't say anything about oil suddenly disappearing. That's a huge step. You should congratulate yourself.

No, peak oil doesn't say that. You do several times above.

On the other hand, human colonies have an awfully hard time growing with great ideas but no resources. How exaclty are ideas supposed to manifest value when there aren't any resources to work with? And that's not even mentioning the idea that work can be useful when there are no resources to work with.

This is a flatly silly point. When oil runs out, that does not mean there will be "no resources" to work with. You're still forgetting substitution and innovation, which, along with ignorance of basic economics, is the entire issue. There's still hyrdrogen, there's still vegetable oil, there's still electricity, there's still synthetic oil, there's still a thousand other energy sources we have not thought up yet.

So resources are required before ideas, which means resources are more important than ideas.

Paul Romer, who is on the short list for the Nobel:

“Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. History teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.

Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. Possibilities do not add up. They multiply.”

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I'm going to hold off on specific suggestions until I see you respond to this post. If you have anything of substance to say, the discussion can move forward. But I have little interest in moving on to new topics which you will immediately dismiss without doing any research in.

[gestalt]

risk management

CausaMortis, I don't think anyone is a voice in the wilderness here. It is important to address a what if situation persuasively. The idea that economics and ideas multiply exponentially is optimism. That many people may die if a new resource is not dream-scienced into massive general consumption, or we become exponentially more efficient, is pessimism. Okay, that we deserve a "die-off" is pessimism more like. Hehe. Risk management is realism. The basis of strategic thinking. There are reasons to doubt the continuation of the enormous "progress" human beings have made in 200 short years. But it is just a theory. If one that might help people wrap their minds around different core values and lifestyles. It's OK to disagree agreeably.

By the way - is teaching billions of people in China/India/Africa how to use birth control a form of government???

[blueback]

Only quoting the actual substantive points, ignoring the thousands of words of flames and hubris.

So. . .you consider all of these sources...
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..."flames and hubris?" Really? Man, you aren't even trying to pretend to participate in a real discussion anymore.

So ...we've avoided the impending disaster that's just over the horizon..."guarantees"? We're in the real world. There are none.

So, there aren't any guarantees when I have an opinion, but when you have an opinion it is guaranteed?

Its not "my pet theory". Its the most satisfying explanation of economic growth. And it, erm, debunks your notion that the sky is falling.

No it doesn't. All it says is that given an environment with sufficient resources an economy can grow. Duh. That doesn't even deserve any special mention.

That government can improve outcomes in some areas with perverse incentives like education, health care, and financial regulation, does not mean that government can improve outcomes over markets where individual incentives are aligned with social optimization.

Blah blah. So basically YOU can make the rules and YOU can make random exceptions to them. Your model of the world is perfect and everyone else's is useless. Even when you admit that there aren't any guarantees you are still convinced that your lack of guarantees is superior to anyone else's lack of guarantees.

No, peak oil doesn't say that. You do several times above.

Prove it. Quote me.

You're still forgetting substitution and innovation, which, along with ignorance of basic economics, is the entire issue. There's still hyrdrogen, there's still vegetable oil, there's still electricity, there's still synthetic oil, there's still a thousand other energy sources we have not thought up yet.

That's true. Now explain why you are so certain that the market will conjur up enough of those other options to not only prevent economic contraction, but preserve constant growth. All you've said is that you are certain. You haven't actually supported the conclusion.

Paul Romer, who is on the short list for the Nobel:

“Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable.

The very first sentence in that quote establishes resources as more important than anything else. You can't rearrange what doesn't exist, and if you can't rearrange anything you can't create value.

[Causa Mortis]

So. . .you consider all of these sources...
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..."flames and hubris?" Really? Man, you aren't even trying to pretend to participate in a real discussion anymore.

Those wouldn't be flames and hubris; that would be about 70% of the massive text wall of your previous post.

Those would be "sources" which are used to support arguments. Those arguments were addressed in previous posts.

So, there aren't any guarantees when I have an opinion, but when you have an opinion it is guaranteed?

On the contrary. I'm admitting that with my perspective there's no guarantee.
\

Blah blah. So basically YOU can make the rules and YOU can make random exceptions to them.

Bullshit - this is a red herring. That I oppose government intervention into this market does not mean that I have to think government is always ineffective.

In the financial markets with too big to fail, you get perverse incentives generated by heads I win tails you lose. In the health care market, no one has any incentive in our current system to conserve. In the education market, human capital produces new ideas that aren't really valued in demand for education. So you get "market failures" in each case.

In the case of oil, all of the incentives are in the appropriate place. As its price rises, people use less. As its price rises, more production becomes feasible. As its price rises, alternative fuels become viable. Incentives aligned with efficiency.

That I oppose intervention here does not mean I must take an anarchocapitalist perspective. That you encourage intervention here does not mean that you must always take a communist perspective. To claim otherwise is flatly dishonest.

Your model of the world is perfect and everyone else's is useless. Even when you admit that there aren't any guarantees you are still convinced that your lack of guarantees is superior to anyone else's lack of guarantees.

My perspective is that individuals are in a better position to solve their own problems and their own scarcities than you are. Are there any guarantees? Of course not, this isn't the fucking habadashery business.

Your perspective is that you know more than the aggregations of expectations about scarcity as reflected in the market price. Which is, in its current form, hubris.

Prove it. Quote me.

THanks but my time is scarce and you've written probably 30,000 words on the subject in this thread. I'll drop the assertion rather than spend my whole afternoon re-reading your weak arguments.

That's true. Now explain why you are so certain that the market will conjur up enough of those other options to not only prevent economic contraction, but preserve constant growth. All you've said is that you are certain. You haven't actually supported the conclusion.

I've supported it with logic, references to credible authors and empirical evidence, and with anecdotal evidence. To claim that I've just made an ad-hoc, poorly supported comment is yet another flagrant dishonesty on your poart.

The very first sentence in that quote establishes resources as more important than anything else. You can't rearrange what doesn't exist, and if you can't rearrange anything you can't create value.

He takes your hysterical presumption as a serious assumption (I do not) in order to show why its wrong. And then shows, gosh, technology and substitution have trumped it in every generation since the 1500s.

"Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered."

And, fuck yeah, he proved it with, gosh, empirical economic evidence. And, like, he's got a PhD from UIC (in economics no less) and he's likely to win the Nobel for it.

[blueback]

Lets try something else. I want to help you get away from railing and cursing about your favorite economic theory and back to rationally discussing Peak Oil (I'm being charitable by using the concept of "back to").

What is Peak Oil?
"The peak of the global oil supply refers to the uncontroversial observation that the world’s yearly production of conventional oil, a finite resource, will reach a high water mark, then probably remain in a plateau for some period before declining thereafter. What is controversial is figuring when the peak will occur...The peak oil theory does not state that the world is running out of oil...The peak oil theory does not state that conventional oil production will peak and decline when exactly half the assumed global endowment has been used up...The peak oil theory does not state that the world oil production has reached its high water mark now..."

Why would anyone think about Peak Oil?
* Depletion is relentless, and eventually leads to production declines as natural reservoir pressure decreases and can not be maintained by water or gas injection
* For over a decade now, the world has discovered 10 to 15 billion barrels of new oil each year, but now consumes 2 to 3 times that much
* Conventional oil production outside of OPEC (non-OPEC) is very likely to peak in the forecast period [2015], a conclusion shared by such divergent organizations as ExxonMobil, PFC Energy and ASPO-USA. Higher levels of production from OPEC are not guaranteed for a variety of reasons
* 4.The average worldwide recovery factor for all oil fields is about 35%. This means that almost 2/3rds of all the oil in place is effectively stranded...There is no applicable “miracle” technology, a silver bullet, that will increase production rates enough to offset natural declines
* All thoughtful analysts of the future oil supply can agree that it is at risk, but it unwise to assume that all will turn out well
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* between 2004 and 2008, we experienced a long-term rise in oil prices...Oil production was in fact quite level during this time period, with only a slight uptick in production in 2008, about the time prices hit their highest point...Oil production hit its highest point ever in July 2008, the same month that oil prices peaked
* Dave Cohen of ASPO-USA shows in Figure 10 that growth in global GDP seems to be highly correlated with growth in global oil consumption. This would tend to mean that if oil production actually starts declining, the world economy is likely to begin declining as well.
* Buying goods on credit works much better in a growing economy than in a shrinking economy...In a shrinking economy...Paying back the loan would be much more difficult, and would leave less for other needs...Our monetary system is a credit-based system, in which money is loaned into existence. Our international trade system is based on credit.
* Figure 15 shows that US consumer credit peaked at the same time as oil prices. The amount of mortgage debt also began falling about the same time.
* One factor that has helped to confuse the matter is the optimistic reserve numbers published by the Organization of Petroleum Exporting Countries (OPEC). These reserve amounts are unaudited, and are quite likely overstated...it is very questionable whether OPEC can really ramp up production hugely in the next few years—or that they would want to, if it is clear that some of the world’s buyers really are not very credit-worthy
* Figure 8 compares something that most of us wouldn’t think of plotting together—monthly oil production (crude and condensate in million barrels per day) versus oil price. What one can see from the graph is that oil production just barely increased, even as prices rose rapidly. One gets the impression that oil supply is extremely inelastic—no matter how much price rises, supply doesn’t increase by much. This is what one might expect if oil production is reaching its limit. To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.


Here is an introductory overview to many of the key points that support my conclusion Peak Oil is something to be taken seriously and mitigated. If you'd like to contribute anything at all to the discussion, you should start with these points. I provided links to the sources of these quotes, and those sources provide emperical evidence to support the argument.