Some people find my blog by searching for “peak oil myth.”
Although I’ve previously said things like, “Oil isn’t running out, yet. And it never will,” I’d like to clarify here: peak oil is definitely not a myth. There will come a time when the production of oil will diminish at accelerating rates, and the price of oil will rise proportionally.
What I mean when I talk about the “peak oil myth” is the conclusions so often drawn from the concept of peak-anything. The presumption, mistaken of course, is that as oil becomes more expensive, mankind will be impoverished and perhaps cease to exist in a bloody armageddon over the last drops! This can’t be so, can it?
Of course not! As oil becomes more expensive, the opportunity costs of other fuels becomes comparatively less expensive. These are some of the same sources of energy which my callous inner-economist decries as socialist drivel, like solar power or hydrogen. These are only bad ides insofar as they’re economically unviable at the present, and therefore any State subsidization of these sources constitutes outright waste.
As other sources of energy become more viable, economically, investment in these resources will be stimulated. Competition among market participants will lead to technological innovations, and the accompanying savings brought about by competitive price reductions. Ultimately in real terms, the prices of these alternative energy sources will probably be lower than the current price of oil, because some alternative sources are economically abundant.
Because of this, there is no justifiable reason to make people pay more now (through tax-subsidies) for something that will ultimately be less costly in the future!