One Trumps the Other
Exxon Mobil and ConocoPhillips [are] giving up their projects in Venezuela, rather than put up with any more guff from President Hugo Chavez — [reflecting] the troubles international oil companies are having as more and more governments around the world nationalize their oil and gas reserves. [...]
[The Wall Street Journal writes]: “One response is to move aggressively to find opportunities in politically stable nations. The wave of nationalization that swept the Middle East in the 1970s led to the development of the giant fields in Alaska and Europe's North Sea. Conoco pursued a similar path by creating a joint venture to tap Canada's heavy-oil deposits, which hold enormous reserves of oil, but are expensive to produce.”
The subtext here is subtle, but unmistakable: “Don’t worry about the stability of the world oil supply. And don’t worry about Peak Oil. Even if Chavez and Russia’s Vladimir Putin make it hard on the Western oil majors, they’ll rescue us with new finds in “politically stable nations.”
Readers given to paranoia might think this is part of some diabolical conspiracy to suppress awareness of Peak Oil. But that’s giving the financial media too much credit for ingenuity. After all, Peak Oil is already out of the bag — as I explained last month. It’s being debated openly on CNBC. BusinessWeek is giving space to guest columnists who take Peak Oil seriously. But among those in the media who’ve been familiar with Peak Oil for a while, the comfortable mind-set still prevails that further exploration, or new technology, or some other panacea will assure the continued steady supply of oil for the foreseeable future — because that’s how it’s always worked in the past...
~ Dave Gonigam
[The] world is full of X-factors, the unarticulated and unrealized knowledge that can be elicited only by experience and experiment. [...]
In his bet with Paul Ehrlich ... Julian Simon was able to predict confidently that the prices of five metals would decline from 1980 to 1990, [instead of there being catastrophic shortages, as Ehrlich maintained]. His prediction was based on a dynamic understanding of resource use; his mental model assumed increasing knowledge about alternative sources and applications, feedback from prices, and competitive pressures to do more with less. [...]
"Most experts believe that without deep changes in both industry behavior and government policy, U.S. microelectronics will be reduced to permanent, decisive inferiority within ten years," wrote MIT's Charles Ferguson in a famous 1988 Harvard Business Review article. He called for a government-directed policy to help U.S. chip companies threatened by foreign competition and denounced the "fragmented, 'chronically entrepreneurial' industry" of Silicon Valley.
Ferguson and his mandarin contacts just Couldn't envision an industry driven by microprocessors, software, and networks rather than memory-chip manufacturing. Instead, they assumed an essentially static world, anticipated disaster, and demanded industrial policy.
"Economists moved by the invisible hand," who understood the dynamic patterns of the industry but did not try to predict its exact evolution, knew more than Ferguson's "experts"-for the very reason that they recognized the limits of their knowledge.
Technocratic plans assume the very things they try to enforce: that the world is simple and easily controlled, that it changes only in predictable ways, that it can be mastered.
Predictions go wrong because there are many possible sources of error: environmental shocks, bad or incomplete models, bad or incomplete data, sensitivity to initial conditions, the ever-branching results of action and reaction...
~ Virginia Postrel, via Great Guys weblog
#####
"Peak Oil" alarmists' worldviews seem curiously static, as if Americans won't drive smaller cars and burn more coal when oil prices rise enough to put a real hurt on, and as if there were no more oil to be discovered, a patent absurdity.
[The Wall Street Journal writes]: “One response is to move aggressively to find opportunities in politically stable nations. The wave of nationalization that swept the Middle East in the 1970s led to the development of the giant fields in Alaska and Europe's North Sea. Conoco pursued a similar path by creating a joint venture to tap Canada's heavy-oil deposits, which hold enormous reserves of oil, but are expensive to produce.”
The subtext here is subtle, but unmistakable: “Don’t worry about the stability of the world oil supply. And don’t worry about Peak Oil. Even if Chavez and Russia’s Vladimir Putin make it hard on the Western oil majors, they’ll rescue us with new finds in “politically stable nations.”
Readers given to paranoia might think this is part of some diabolical conspiracy to suppress awareness of Peak Oil. But that’s giving the financial media too much credit for ingenuity. After all, Peak Oil is already out of the bag — as I explained last month. It’s being debated openly on CNBC. BusinessWeek is giving space to guest columnists who take Peak Oil seriously. But among those in the media who’ve been familiar with Peak Oil for a while, the comfortable mind-set still prevails that further exploration, or new technology, or some other panacea will assure the continued steady supply of oil for the foreseeable future — because that’s how it’s always worked in the past...
~ Dave Gonigam
[The] world is full of X-factors, the unarticulated and unrealized knowledge that can be elicited only by experience and experiment. [...]
In his bet with Paul Ehrlich ... Julian Simon was able to predict confidently that the prices of five metals would decline from 1980 to 1990, [instead of there being catastrophic shortages, as Ehrlich maintained]. His prediction was based on a dynamic understanding of resource use; his mental model assumed increasing knowledge about alternative sources and applications, feedback from prices, and competitive pressures to do more with less. [...]
"Most experts believe that without deep changes in both industry behavior and government policy, U.S. microelectronics will be reduced to permanent, decisive inferiority within ten years," wrote MIT's Charles Ferguson in a famous 1988 Harvard Business Review article. He called for a government-directed policy to help U.S. chip companies threatened by foreign competition and denounced the "fragmented, 'chronically entrepreneurial' industry" of Silicon Valley.
Ferguson and his mandarin contacts just Couldn't envision an industry driven by microprocessors, software, and networks rather than memory-chip manufacturing. Instead, they assumed an essentially static world, anticipated disaster, and demanded industrial policy.
"Economists moved by the invisible hand," who understood the dynamic patterns of the industry but did not try to predict its exact evolution, knew more than Ferguson's "experts"-for the very reason that they recognized the limits of their knowledge.
Technocratic plans assume the very things they try to enforce: that the world is simple and easily controlled, that it changes only in predictable ways, that it can be mastered.
Predictions go wrong because there are many possible sources of error: environmental shocks, bad or incomplete models, bad or incomplete data, sensitivity to initial conditions, the ever-branching results of action and reaction...
~ Virginia Postrel, via Great Guys weblog
#####
"Peak Oil" alarmists' worldviews seem curiously static, as if Americans won't drive smaller cars and burn more coal when oil prices rise enough to put a real hurt on, and as if there were no more oil to be discovered, a patent absurdity.
posted by Oroborous at 12:11 PM
4 Comments:
The nut room is why we'll never run out of oil.
Yes, that is so, but I guess that I've been imprecise in my postings on Peak Oil, because neither the alarmists nor I really mean Peak Oil, we're both really talking about Peak Energy, which is why I think that they're crazy and apocalyptical.
Of course there will eventually be a peak and decline in the production of petroleum, at some point*, but the nutty fringe thinks that it will lead to all kinds of doomsday scenarios, whereas any thinking person can see that it will just lead to using more of what is now called "alternative" energy - along with going back to coal.
* Some people think that it's already happened, but I strongly disagree. I'm certain that the lower output numbers are just a dip, as today's sources are declining before the new sources come on-line.
It will (and is)lead to much higher energy prices. If oil hasn't peaked, it is getting close. You have to remember that as the new fields ramp up their production, old fields are seeing declining production. Its not just about the total number of reserves, it is about how quickly they can be converted to oil in the pipeline. Newer fields are more remote and more energy intensive to extract.
But as the price of oil climbs, new sources will become economically viable. But at some point I think that energy consumption per capita will peak, as the new sources of energy will require large investments in land for growing biomass. Once the world population peaks sometime after 2050 we may well see a peak and then a decline in energy consumption. If it makes us more efficient, it would be a good thing.
I agree with the WSJ quote, "One response is to move aggressively to find opportunities in politically stable nations." Russia seems like a viable source for new oil.
I would recommend this report about Russian Oil Production, it lists the companies involved and some interested countries.
Russian Oil Production
Cheers!
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