The Peak Oil Myth

March 25, 2008

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!


Posted in: Economics Lessons, Subsidize This!, Taxation is Theft, environmentalism

Comments

4 Comments so far

  1. Francois Tremblay March 26, 2008 11:37 am

    Wow, I am so glad you posted on this, because this is one of the most common “leftie” Anarchist myths.

  2. NC Erickson March 26, 2008 8:11 pm

    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

    What alternative sources are you imagining?? There is nothing known that comes close to the energy profit ratio of light, sweet crude oil.

  3. David J. McCartney March 27, 2008 6:54 am

    Good day,

    The hope and/or assertion that the free market will allow another energy source to usurp oil is inherently flawed. The most difficult reality to comprehend and accept is that no combination of alternative energies can come even close to providing the energy density of oil, nor can any of them be used as the feed-stocks for our plastics, medicines, and over 500,000 other products and chemicals. Without oil, we cease to live the lives of comfort and convenience we have become accustomed to. Solar electricity can’t produce tires, clothing, or fertilizers. Hydrogen is not an energy source, only a inefficient storage device. And any alternative energy source is wholly dependent upon fossil fuels for it’s extraction, transport, and distribution, and ongoing maintenance.

    To better understand this critical limitation, review the concept of the Cubic Mile here: http://spectrum.ieee.org/jan07/4820/ncmo01 and here: http://www.theoildrum.com/node/2186 This work was done by the respected IEEE, the world’s largest professional technology association.

    The laws of thermodynamics ultimately constrain and limit us, and no combination of human inventiveness or money can make energy, only manage it.

    Thanks for the forum.

    Dave

  4. Francois Tremblay March 27, 2008 12:15 pm

    Bla bla bla, who gives a fuck? Oil might be more efficient, but that doesn’t mean people will keep using it even if the price skyrockets.

    Y’all are fucked.

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