Tuesday, March 21, 2006

Debunking the "Peak Oil" hysteria

It has become a favorite slogan of those who want to force us into lower quality, overpriced, dinky and underpowered Electric Cars; "Peak Oil".

And yet, the exact date of "Peak Oil" has yet to be determined. "Doom King" Hubbert's day of reckoning has come and long since passed. From 1980 to 1994, crude oil prices (in real, currency inflation adjusted terms) fell 35 percent. Gasoline prices, in real terms, were 6 percent lower in 1991 than they were in 1972 before the OPEC price spike and embargo of 1973, and a full 25% less then they were in the massive tail-finned car year of 1963, before the beginning of more boxy cars.

And as it stands, real oil and gasoline prices (again, in real, currency inflation adjusted terms) are still lower than they were, although they have risen since the 1990's low.

It will probably prove cheaper to use synthetic fuel derived from shale or coal than it will to run electric cars with their expensive battery arrays, but you never know.

But for heaven's sake, let us NOT mandate going to Electric Cars, to say nothing of the Ethanol Boondoggle, until crude oil and gasoline prices rise enough. If we just let the marketplace do what it does, nanny statist eco-weenies, that may happen and we will be fine.

Or it may not happen. When a resource gets pricey, or cartel controlled, as crude oil and gasoline did from 1973 to 1979, we become more thrifty in our use of it. And alternative suppliers emerge to break the cartel, as oil firms in the UK, Norway, Mexico and Canada did in the 1970's. By the 1980's, the OPEC cartel had collapsed.

This might have happened *sooner* if the Nixon, Ford and Carter administrations *didn't* impose asinine wage and price controls on the USA oil industry! A short price shock, to which the marketplace and people adjust, is better than a long rationed decline.

Yet when I point these facts out to the ninnies, they respond along the lines of
"Peak oil *will* happen. I don't care if the prediction is inaccurate."
Two thoughts here:

1. You really *don't* care? You know, at some point in the future we will have "Peak Solar", and after that our sun will either supernova or burn out and life on this planet may die. Timing does matter. (I say may, because we have have figured out a way to interplanetary travel and colonize other worlds by then--who knows?). If something may not even happen in our lifetime or our children's lifetime, that does make a difference, at least in the Order Of Important Crises To Handle list.

2. Will it matter? You know, they did have a "peak whale oil" crisis in the 19th century--no kidding. But  much better substitutes were found and we went on.

To quote the brilliant pundit and humorist P.J. O'Rourke:
"We run out of things all the time. We're out of whale oil. Also, out of whalebone for women's corsets. Fortunately, the government of 150 years ago didn't have presidential commissions, congressional committees, Al Gore, and the other apparatus of worry our present government possesses, or Washington might have "foreseen" this problem. Whale oil would have been rationed. A black market would have been created. Whale oil prices would have soared. All the whales would have been killed immediately. And today we would live in the dim, lampless world where Judy Collins sang about the tuna fish and every woman had a waistline like Golda Meir. Instead, coal gaslights, coal and petroleum based whale-oil substitutes, electricity, and control top pantyhose were invented. When we "ran out" of whale oil, no one even noticed."
The same economic rules apply today. There are alternatives to the gasoline internal combustion engine--but they have to become market cost effective. And no eco-fiends can help "assist" that process.

What if "peak oil" isn't a myth? Then biodiesel, shale oil and tar sand extraction, and increased alcohol fuel mixes will all become economically viable. As it stands the proven reserves of shale and tar sands are nearly boundless, farmers can't get a good price for their crops, and are sometimes even being paid not to grow anything.

Perhaps even electric cars will become viable, although right now they are just too heavy and underpowered.

We will change or modify the fuels our cars use, and perhaps the cars themselves, but no, we will NOT give them up.

The price of gasoline will rise, but even at the height of the last price spike consumers were paying in real terms (cost of living adjusted terms) a lower price than they did in 1981, and the 1981 price was a lower real price than consumers did in 1950.

However, having grown up in the 1970's on dirgelike jeremiads from these same sorts of people, all of which turned out to be utterly wrong, I doubt that it will even come to that. Remember "global cooling", caused by the same forces now said to cause "global warming"? I do. I remember being told by the "Club of Rome" that the world would "run out" of gold by 1981, of mercury by 1985, tin by 1987, zinc by 1990, petroleum by 1992, and copper, lead and natural gas by 1993.

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