Economist on Peak Oil Myth
The Economist cites that oil is now nearly five times as expensive as it was in 2002, which leads the Peak Oil theorists to conclude that oil is running out. It’s not, and any serious economist can explain why the world will never run out of oil: at some price, alternative energy sources become profitable and more viable than oil. If the price of oil crosses this threshold, investment will begin to be directed towards these (and other yet undiscovered) means of producing energy. Russ Roberts uses pistachios to illustrate this point in one of his books.
One component of the rising prices is that oil is increasingly being found in hard to reach places, like the tar-sands in Canada. Another is increasing global demand, as countries like India and China industrialize. But the Economist notes that:
The biggest impediment is political. Governments in almost all oil-rich countries, from Ecuador to Kazakhstan, are trying to win a greater share of the industry’s bumper profits.
We’ve seen these efforts in the U.S., too, where many politicians want to increase the taxes levied on Big Oil companies. These taxes do not provide Americans with more affordable oil, instead, they reduce the incentive to invest in a commodity that is becoming increasingly more difficult to extract. Furthermore, the taxes levied on businesses are always passed on to individuals in one form or another, such as smaller returns on investments in corporate stocks, or higher prices at the pumps, to name a few.
Oil isn’t running out, yet. And it never will.
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Not only does the increased taxation of oil companies reduce the incentive to invest, but it is also worth noting that companies themselves dont pay taxes, only individuals do, so that burden will be passed on to the consumer, not the company.
Exactly. The current idiocy we have surrounding this is what happens when we frame the problem badly. Instead of “how will we have enough oil to continue powering our cars,” we need to ask “how will we continue powering our cars?” There are better questions than my proposal, I’m sure, but the basic idea is the same.
Proving that oil (even a weak proof) is not the same as disproving the peak oil hypothesis. The peak oil theory is simply that the amount of crude oil produced by the world will ultimately hit a peak and then decline. Many believe the time is near. And it really doesn’t matter why the peak occurs … political problems are just a troublesome as the fact that oil deposits are becoming more sour, deeper, and mixed with sand.
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I believe that Hubberts peak is true and that we are now past the point of peak oil. I think many of the current events have to do with this downturn and it won’t be long before the main stream media and population wake up and understand what is going on. For me and my family, we are preparing for the next era.