by egoldstein » Thu 08 Sep 2005, 19:51:00
Cartels generally don't work very well if there is an abundance of the commodity in question; cartel-like behaviour (if true, and if actually effective) would tend to suggest that the commodity in question is not super-abundant. The reason being is that with any cartel (OPEC included), there is always a strong incentive to cheat and break the compact. Unless the commodity was naturally limited anyway. The Saudis keep saying they'll ramp up production to 20 bil a day. Maybe they will (though Simmons thinks they can only get to 15 bil a day): but in order to do that, they'll have to be doing primary, secondary, then tertiary recovery all at once - they'll ruin their fields in the process. Maybe the Saudi bluff is losing it's power to convince.
In any case, major companies do not have an incentive to invest billions of dollars into refineries that may become redundant if they are waiting for prices to make new production technologies viable. In other words: why would you be building buggy factories if you believe automobiles are the wave of the future?
Another thing: Chevron is advertising "the end of easy oil." BP is styling itself an "Energy Company."
Also: I actually believe Julian Simon is ultimately correct: humans have a tremendous capacity for inventing more complicated patterns of matter and energy, for using pockets of low entropy gifted to us by nature, ever more efficiently. In the long term, this canadian fellow is quite correct in believing that higher prices will make alternative oil- and power-production technologies (e.g. biofuels) economically viable - IF the lifestyles of people change as well.
I believe that environmentalists and peak-oilers leave themselves hostage to fortune by constantly making alarmist and catastrophic predictions of doom.
So in the long-term, everything can actually work out even better. Golly gee for me.
The one, wee problem these free-marketeers seem to neglect however, is that, in the long term:
WE ARE ALL DEAD.
<rant>
In the SHORT to MEDIUM term in which we mortal, non-ivory-tower-economists live in:
Suburban sprawl, the attendant hyper-automobilisation of the population, and related life-styles and modes of work and living, will be non-economic. This is only the simple working out of the free-marketeers own logic. If the market will provide some solutions in the long-term, and indeed it was government policy that led to this, SO WHAT? The free-marketeers somehow magically jump from right now to 50 years hence, without all the messy interval.
Well how jolly for them and their time machine! What an intellectually sterile, blinkered cop-out.
PS: I have experience in conventional agriculture. There is a saying that "modern agriculture is the use of land to turn petroleum into food." 80-90% of a farm's income can go into inputs - most of which are petrochemicals. Let me reiterate: fertilizers, pesticides, herbicides (and of course fuel) are all basically different chemical forms of petroleum. By the time the food gets from farm to fork, it has travelled hundreds, indeed often thousands of oil-fueled miles through supermarket and distribution networks, by road, sea, and air.
People who live in huge, spread-out suburbs, then drive miles in big cars to big-box stores to load up on supplies.
I do believe it's possible to feed 10 billion on this planet for the next thousand years. Not wishing to advocate the government of Cuba, but its organiponico urban agriculture certainly could be a view of things to come (90% of vegetables in Havana are grown there, mostly with organic and hydroponic systems).
But, it is simply a load of crap to imagine that present lifestyles (detailed above) can continue as is, based on oil consumption as is - no matter what technology or food production methods come about.
These new technologies are economic only if oil is more expensive, and only if economies, societies and people change to adopt them. That has real-world consequences for all of us who don't exist with the elect in the ethereal realm of newspaper columns, perfectly preserved by the mental formeldahyde of comfy ideologies, apparently insulated from free-market things like "prices".
<self="righteousness">
For the free-marketeers (oh, just humour me): the oil-production and consumption patterns of the present, will be as obsolete as buggy-whips in the future. If you cannot figure out why this is of concern to people, considering that much of our economic, political, and social infrastructure and foundation is currently predicated on and sustained by abundant, cheap oil, then you are guilty of the very cardinal sins so often heaped upon fluffy liberals and lefties: failure to plan for the future, failure to think of unintended consequences, failure to link responsibility with freedom.
</self="righteousness">
</rant>
"Blessed are the meek: for they shall inherit the earth..."
- Matthew 5:5
"... but not its mineral rights."
- J. Paul Getty
