Peak Oil is a Myth

or the “the peak oil cult exposed”

A poster to RunningOnEmpty2 writes that Peak Oil will cause a recession and thus curb demand.

His rant is posted on Geocities
The “Peak Oil” is a Myth message board

“Peak Oil” is a Myth!
3/11/04
The entire “peak oil” issue is purely psychological. It is created by those people who get a thrill out of scaring others. To me, this fact is painfully obvious. What we have here is a classic case of pseudoscience. All of the charts, graphs, and references to thermodynamics seem compelling at first glance. For the uninitiated, a first glance is all it takes to become convinced. I can see that an entire “e-culture” has been built up over the years by a handful of wanna-be prophets. For about a week, I, in fact, was taken in by the seductive arguments put forth by Jay Hanson and Company. For about a week, my hopes for the future were dashed. But then, a funny thing happened to me. It took me a few seconds to realize what a fool I had been. In “Good Will Hunting”, there was a scene in which Will (Matt Damon) had a field day by psychologically attacking his therapist, Sean (Robin Williams). For some reason, Will was able to take jabs at Sean’s subconscious, and this caused Sean to have troubles sleeping. But then, it took a moment for Sean to realize what a fool he had been, and he promptly feel asleep like a baby. The simple fact he realized was that Will was just a kid. He knew that Will had no first hand knowledge of the experiences that lead to true wisdom. This is exactly what happened to me yesterday. I suddenly realized how childish are the minds of those who ring the “peak oil” alarm. It comes down to this simple fact: these alarmists have absolutely no idea what they are talking about. I am not even talking about the issue of oil. I will whole-heartedly grant the thesis that global oil production will peak sometime this decade. However, all of the commentary that results from this thesis is pure propoganda.

I believe that this entire “peak oil cult” is caused by two things: 1) an a priori misanthropy, and 2) a fundamental ignorance of the realities of the market economy. To me, the first point is immensely apparent. The founders and followers of “peak oil” simply do not like being around their fellow human beings. This causes them to naturally seek out theories in which the human race will be horrifically destroyed. And as long as these theories hold up to their level of “scientific” scrutiny, then those are the theories that they will start to obsess over. But since obsessiveness always eats away at one’s insides, the “peakers” then set their sights on the public (who is seen to have caused the problem in the first place). The obsession then turns into scaring the daylights out of all of the “offending parties” (average people) who take the time to give the issue a listen. Once you combine the psychological disorder just outlined with an ignorance of the realities of the market economy, then there you have it: PEAK OIL!

The ignorance of the market economy hinges around absurd notions of the concepts of supply and demand. The mantra that I kept hearing goes something like this: “Demand for oil/energy will keep rising, and supply will not be able to keep up with demand.” Here’s my response to that: “Calm down, dear child, everything will be okay. Now let me tell you a story about something called the market economy. Whenever demand increases relative to supply (or supply decreases realtive to demand), the price rises. Rising prices send this signal to the consumers: you better start demanding less! Then magically, demand falls!!!”

The “Oil Peakists” are consistently muddled about the real world effects of rising prices. Whenever essential goods become too expensive (meaning “paper assets” fall in relative value), this has the effect of depressing all inessential economic activities. The simple concept to understand is that price directly affects demand. Price is what causes humans to be rational. When prices are too low, people don’t think too much thought about buying things. But when prices start to rise, this is what gives people pause and causes them to reflect. In the global marketplace, people just can’t demand things willy-nilly. They need hard earned money to be able to create demand. If they don’t have enough money, then they obviously cannot create demand. For example, most citizens of Malawi cannot demand/buy much in the way of anything. They can be said to be economically depressed. Increasingly, however, the Chinese have been able to start demanding things from the global marketplace. If, however, prices rise high enough, then they will no longer be able to create such demand, and they will hit an economic recession. When economies are in recession, the demand levels are less than they previously were at the height of the previous economic expansion.

So… once oil supplies start to come down, the price will rise accordingly. This will cause an economic recession, and viola… you have less demand! It is in this period of economic recession that people will start to re-evaluate where to invest their time, money, and energy. Obviously, one of the places people will invest in is sources of energy other than oil.

You see, the “Peak Oilists” are able to suck us in by diverting our attention from the reality of the economic order via seductive pseudo-scientific arguments. They say there is no rational order underlying the global economy, and then they throw around high sounding phrases like “the laws of thermodynamics” and “energy returned on energy invested” and the like. They draw a bunch of charts with slopes pointing straight down into oblivion in order to make us think, “Gee… that looks scary!” And then they use that good old Saganism: Billions and Billions (as in the numbers of us that are soon to horrifically meet our maker). Again, “Peak Oil” is all a matter of 1) an a priori misanthropy, and 2) a fundamental ignorance of the realities of the market economy.