Re: Energy Policy / Junk Science Environmentalism

Don: I would like a copy of that paper. Thanks.

From CEO:
Most of the debate about whether peak oil is imminent...misses the point. Oil will peak - that is a geologic fact. But the new energy equation is not static. It is dynamic and variable.

AK: But the question is when will it peak? If soon, then the remedy is not going to be immediate. The people who will really get hurt are those who are living on the edge already. The poor are not going to buy new hybrids, buy new windows and insulation and new energy efficient applicances. Will we go to rationing so these people can at least sell their ration coupons to the wealthy, or will be just allow the price to go up and let the chips fall where they may?

Besides, most industry leaders are telling us that there are decades yet before oil peaks. Is that true?

From CEO:

Current prices, for instance, are moderating demand growth and will bring about increased emphasis on conservation - whether it is through changing individual or collective behaviors. There is still enormous potential to further reduce energy use through conservation. In many ways, it is the lowest-cost new energy we have.

AK:Agreed, but are we promoting this, or are we telling everyone to consume because there are going to be no shortages? Most of the predictions I hear now is that 2006 will be another year in which we can use and consume more.

From the CEO:
And as we begin to contemplate the future decline of oil resources, we are also beginning to contemplate where the next generation of energy will come from.

For the near future, extending oil production and expanding the global natural gas market will play primary roles. But we need to make sources such as coal and nuclear energy a larger part of the global supply mix for power generation.

And over the long term, the continuing revolution in technology and market forces will move emerging sources such as gas-to-liquids closer to the mainstream. They also will enable renewables such as wind and solar to become more competitive and economic.

All of which leads me to believe that peak oil, when it occurs, will actually resemble more of a long plateau - one in which transitions to new sources can be managed without major shocks or disruptions.
...

AK: I hope he is correct. He thinks just like almost all of the business people I interact with. With money, technology, and intellect, things will just grow, grow, grow. I am sure there are limits that will kick in at some point. Where that happens is the point of disagreement.

Don:What follow are a few of my friend's comments that, I believe, make a useful contribution:

Here in geophysics both [another colleague] and I are actively following this "debate", meaning reading whatever books and articles are published from both sides. Last year I gave a lecture to UC Berkeley's economic geology class along these lines.... One thing I'm absolutely sure about is that this is no debate in any [normal] sense of the word, as the "pessimists" and "optimists" view each other in very much the same way as do Democrats and Republicans. (This is no exaggeration.) The pessimists are mostly intelligent geologists who believe they understand the earth well enough, thank you, and don't have much patience for [economics] interlopers...nosing into their science. The optimists are mostly intelligent economists who believe they understand human nature and the allocation of scarce resources well enough, thank you, and pity their whining wimpy opponents. The pessimists maintain that the world is near peak, and further (as outlined in Matt Simmon's latest book Twili!
ght in the Desert), that the Mideast is very unlikely to remain a swing producer any more, since it's also in decline. The optimists, however, rightly maintain that we will never run out of oil, simply because the price will rise sufficiently to contain demand in a quasi-equilibrium state.... Their other main argument is that knowledge and technology (two aces in the hole) will always come to the rescue, at least until economics forces the world to transition into "the next energy source", among which are nuclear (electric power), coal..., etc.

What I stress in my talks to...students is that the optimists are entirely correct that we won't run out of oil, due to the corrective effects of the market, but I maintain that...the *rate* of economic adjustment... is the problem, not the adjustment per se. In other words, if economic readjustment happens in a quasi-equilibrium manner there will not be a shock to the system, but if adjustment must occur over a period as short as five years, the economic shock can be big. This is a subject for econometricians, but I've never heard any argument made for the rate of adjustment being the material factor. Both sides are too busy vilifying each other.

AK: I agree basically with everything said here. I think that is what Glenn has been saying for years now and also what I have been trying to say. The point is whether or not there is any reasonable chance that the "readjustment happens in a quasi-equilibrium manner". So when oil production starts dropping, the question is whether conservation, alternative energy sources, etc can just take up the slack with only minor ramifications.

I maintain that oil and fossil fuels are so embedded into our lifestyle that any significant decrease in their availability will not be easily absorbed. Certainly our leaders in government and business are not making it clear that will soon need to conserve. Again they are confident that with money, technology, and intellect this transition will happen in a relatively smooth manner. They really believe that the transition to alternative energies and conservation will be pretty easy. I hope they are right about that, but I predict they are not. That is where the disagreement lies.

 
Received on Thu, 05 Jan 2006 11:43:47 -0500