Is Peak Oil a Tragedy of the Commons?

Economics Economics Questions
61

Oil isn’t a commons. It is mostly owned by thugs and mismanaged by bureaucrats, but that doesn’t make it a commons.

“Peak oil” is propaganda by people who don’t understand, or don’t want you to understand, basic economic principles. The only way it could make sense, and is not the way it is used, is to say that there is declining demand. That is not currently true in any long term sense. That may very well happen one day due to substitutes and changing technologies, but oil will NEVER run out so long as the price mechanism is permitted sufficient influence (and even if thugs forever tried to subvert the price mechanism it would be very unlikely to run out). In fact, oil most likely will one day be very cheap and relatively unimportant.

I’ve been waiting for “peak nonsense”, but so far it is nowhere in site.

62

Conversation has been over for some time, man. Nor do I think you’d find many here who disagree with you.

I do think the theory itself can and will do damage to the economy though. Specifically, politicians who take it seriously will do a couple things.

One, they will tax and redistribute money to research and companies for alternatives to petroleum, which means the market will never have a real price to deal with on those alternatives so substitutions may or may not be sustainable when people make them. For example, say the US government floods money into corn ethanol but given the underlying realities cane ethanol or bioldiesel would actually be better choices, we’ll still end up using corn ethanol thanks to the government and will one day hit the same problem with it that they were trying to avoid with oil because the subsidization will eventually not be enough. End result: we’ll be paying more for alternatives and likely be using the wrong ones to a large extent in any given application.

Two, they’ll try to ‘ease’ the transition for people by artificially manipulating the price of oil and gas downward, which means up and down the structure of production people will be making the choice to stick with oil when they should have gone elsewhere. A perfect example of how this could affect people is if they had to buy a new heating system for their house. Unscrewed with it might be to their benefit at some point to go with an alternative to oil, but given the subsidy some people will still choose oil when they should have gone for solar, or some kind of bio fuel, or maybe modifications to their house like reflective tiles on the roof or a heat sink tank under ground, etc. People will continue to invest in oil based solutions at all levels because of the subsidy to ‘ease’ their transition, and as a result simply will not transition. Meaning again, at some point the bottom will drop out and they’ll find they spent X amount on a new oil burner which is going to screw them in the long run when they should have bought the solar system, or the bio system, etc.

The government is going to use its power to at once push people towards politically favored alternatives and at the same time keep them on oil based solutions. This is going to lead to a boat load of distortions and malinvestments that we’ll have to deal with at some point in the future.

63

I apologize if this seems overly contradictory but I’ll give it a go anyway. I mean no disrespect for the one making this assertion. I just don’t accept it.

“Quite true but I would like to reiterate that you must first know two things - 1. What is the exact amount of fossil fuels on the planet and 2. How are fossil fuels created.”

I am not at all sure that you “must” know these things, for any reasonable definition of the term “know.” In fact, I’m pretty sure you don’t have to know either of these, at all. There is plenty of evidence that is perfectly relevant and should be considered. It’s not perfect, and it’s not complete, and it probably never will be. To treat this otherwise, to demand some form of conclusive proof, or absolute certainty - that would be unreasonable.

Like virtually any system where you don’t see all the inputs, you can nevertheless produce very good estimates, and proceed with a fair degree of confidence in responding to or dealing with the system, based on the outputs of the system.

Do we know with absolute certainty precisely how much oil there is? No. Can we prove that we have all knowledge of all possible methods of petroleum formation? No. And it doesn’t matter all that much either.

We don’t need absolute proof, or complete knowledge, or certainty. We have estimates, concepts, ideas, and approximations based on current experience and current measurement processes. They are sometimes off, sometimes refined - obviously, since it would take a refining of the estimates in order to show that a previous one was off!

Those estimates are perfectly adequate to form conclusions and directions for how to proceed. Absolute certainty is not needed. Reasonable confidence is.

Example from another field: my sons both have special health needs. We have been without health insurance the entire time they’ve been a part of our family (one for 9 years, one for 3 years), which is just to say that health is a big concern, and we spend perhaps more than the usual amount of brain cycles thinking about and being involved in promoting and protecting our family’s health. Our sons (and ourselves, to a lesser degree) are demonstrably sicker when they spend more time at home, and demonstrably happier and healthier when they spend more time away from home. One of our neighbors has lupus, developing symptoms at an unusually early age. Another of our neighbors has breast cancer even though she is from an ethnic group which has a much lower incidence of that disease. Do we have absolute proof of the precise extent of the problem? No. Do we have complete knowledge of how the problem is formed/created? No. Yet in this system where we don’t see all the inputs, we can determine with a fair degree of confidence that we will do well to move to a new home, and we are doing so. To wait for certainty would be foolish. Could we be wrong? Sure, we could. We’re not going to stay here on the off chance that we might be wrong.

Similar example: friends of ours moved into a home. From the time they moved into this home, they got sicker and sicker. They had multiple miscarriages, and a stillbirth. Eventually, neither could work. Some of their relatives moved them to another home to care for them. They recovered within a few days. Can we prove it was the home? No. But it probably was, and it was almost certainly a very very good thing that their relatives didn’t wait till absolute certainty.

Incomplete knowledge is almost always what we have to go on. Indeed, it’s the hallmark of most of human decision making. Only in some branches of mathematics can we reach something like complete knowledge, or certainty. The hallmark of science is that it is constantly challenging its own assumptions, constantly checking and rechecking, refining, and updating. No knowledge there, except in some provisional (soon-to-be-updated) sense.

So I don’t buy the ‘must know’ argument here. Sure, it’d be nice to know those things, and it would make things easier, but not knowing them doesn’t really mean we can’t study and draw very serious conclusions, pro or con, in the peak oil controversy.

64

This is the equivalent of saying that you do not need to know how much inventory your business has to make decisions on when the inventory will be running out and instead should just rely on the “feelings” of some guy who keeps repeating over and over that you are running out! When you ask the guy for a count of the inventory to prove this, he says “you don’t need to know these things”.

With religious faiths empirical measurement and science is never necessary since emotional belief is all that is needed. The fact that you attempted to use a an analogy of emotional well being based on subjective opinion only proves your lack of logic. We are dealing with a commodity that can be empirically measured. Making determinations of the amount of this community left without knowing how much exists or how it is created is an impossibility.

Very “serious” conclusions have been made in the past,

- 1885, U.S. Geological Survey: “Little or no chance for oil in California.”
- 1891, U.S. Geological Survey: “Little or no chance for oil in Kansas and Texas”
- 1914, U.S. Bureau of Mines: Total future production limit of 5.7 billion barrels of oil, at most a 10-year supply remaining.
- 1939, Department of the Interior: Oil reserves in the United States to be exhausted in 13 years.
- 1951, Department of the Interior, Oil and Gas Division: Oil reserves in the United States to be exhausted in 13 years.

Who wants facts and science when you can get fortune tellers who are perpetually wrong, like Peak Oil proponent Ken Deffeyes,

Oil Productions doomsday dates,

2000
2003
2004-2008
2004
Nov. 24 2005
Dec. 16 2005
Nov. 2005-April 2006

All come and gone.

65

"This is the equivalent of saying that you do not need to know how much inventory your business has to make decisions on when the inventory will be running out and instead should just rely on the “feelings” of some guy who keeps repeating over and over that you are running out! When you ask the guy for a count of the inventory to prove this, he says “you don’t need to know these things”.

Those are not at all equivalent. I claimed, and still do, and I think rightly, that the requirement for absolute/perfect/complete knowledge is simply not needful in almost every area in which we operate as human beings. I am not making any claim about the existence of peak oil, or current levels of oil reserves. I simply find your oft-repeated claim unsupported, and unsupportable.

In cases such as inventory, it is often knowable very well (thought not always perfectly, even then), and then when the information is knowable, it is most desirable to know it. This is not such a case.

My analogy had nothing at all to do with emotional well being, despite your odd and oddly unkind responses to the contrary. Actually, they weren’t analogies either. They were examples. Examples of real cases where incomplete knowledge is available and where it would be insane to wait on perfect and/or complete knowledge - the kind of knowledge you repeatedly demand, claiming it to be absolutely essential.

My examples had to do with health. In both cases, measurable, detectable, quantifiable health implications were involved. In both cases, the precise, complete source of these health problems was, alas, not known, and perhaps not knowable. In our own family’s case, we acted based on the best information we had, and we provided a measurable health benefit. In the other case I cited, the same occurred. Identifiable, measurable health benefits accrued, despite not having complete knowledge.

I am quite comfortable with the level of logic involved, despite your attempt to characterize the process as a lack thereof. I simply followed a rule I believe generally referred to as falsification.

“Making determinations of the amount of this community [sic] left without knowing how much exists or how it is created is an impossibility.”

Again, and I am sorry to have to contradict you once more, but this it not at all an impossibility. We can’t be absolutely certain. But being absolutely certain is simply not needful in almost any enterprise. Estimates, probabilities, and determinations that are below 100% in certitude - virtually all of life works this way. We all act, repeatedly, indeed, almost continuously, with incomplete information on which we must make some sort of decision and choose some path. More information is better, but sometimes not available because of time or other limitations.

As for the accuracy of these predictions you mention, doesn’t matter much to me. It means whoever made them was wrong. Estimations based on incomplete data often are, or are proved to have been later. Let’s stop making any determinations based on incomplete data because, after all, sometimes those determinations are wrong!

66

PT is right, without know how much oil there is, how much oil there should be(if you could even make such a claim) most of the argument is arbitrary. No matter what level of reasoning is used to justify not having that information.

PT’s example giving the inventory is more applicable then your health example which seems non-sequitur. I don’t understand how it relates tbh.

Another point though to bring up, if people are scared of oil consumption then why does everyone continue to support oil subsidies? The United states infrastructure was largely built thanks to cheap oil and cheap transportation. It’s entirely possible that the structure of cities as comparison to rural living would have been radically different had the cost of oil been left to the market. So again we are right back to an error in state intervention.

67

My examples are examples of making decisions based on incomplete information. They correspond to the case in point.

In the case in point, PT and you seem to be claiming that you cannot make any decisions or determinations at all without perfect knowledge of (1) the amount of petroleum in the earth; and (2) how petroleum comes about.

I grant that perfect knowledge does not exist in either of these two cases. Fine. Nevertheless, we all make estimates, and indeed, very important decisions, all the time, without perfect knowledge.

In virtually any health situation the source/cause of symptoms is almost never 100% certain. Indeed, I suspect it would be fair to say that the vast majority of health decisions are made without 100% certainty as to the causes of any set of symptoms. Yet we can form opinions, make determinations, and in some cases take actions anyhow.

Examples can be found in almost every branch of human activity including the hard sciences. Take materials and their use in engineering.

Materials engineering gives ideal strengths for materials, but keeping in mind that any particular specimen of, say, an I-beam of a given dimension and formulation, may vary somewhat due to variations in manufacturing processes, failures in quality control, and so forth. Materials engineers do not have perfect knowledge of the strengths of their materials, but they have pretty good approximations, and so they make decisions as to how to engineer products with these materials in them in order to handle design stresses. They have imperfect knowledge, yet make engineering decisions.

Materials strengths may be much more accurately known - overall - than, oh, specific peak oil estimations as to world reserves. Thus materials engineering would likely be more accurate - overall. Yet there are still instances of materials that do not meet engineering tolerances and will fail in use. There is still a bit of guesswork and uncertainty. Yet we can form opinions, make determinations, and in some cases take actions anyhow.

In the case of peak oil, we don’t have perfect knowledge about the amount or formation of oil. Yet we can form opinions, make determinations, and in some cases take actions anyhow.

I make no argument for or against claims for peak oil. I haven’t really assessed them, and don’t care to at this time. I claim, rather, that you can’t just wave this magic wand – “You can’t say anything because you don’t have perfect knowledge” – and thereby foreclose all discussion, estimations, recommendations, strategies, etc. on the matter.

If your and PT’s point is that some peak oil estimations and recommendations and strategies are inaccurate, well, that’s fine. I am quite certain they are. But that’s not what I’m talking about.

68

The difference is is their approximation can be argued is fairly accurate, where as the peak oil approximation is entirely arbitrary.

But they are opinions, not necessarily based in reality or fact.

Let me ask you, if you have a hotdog stand and you sold 10 hotdogs. How would you know if you were getting low on supplies or not?

It is almost certain.

69

I simply took issue with this simple, in my opinion unsupportable, claim (in paraphrase) - You must have perfect knowledge (of precise amounts, and formation processes, of petroleum).

Yes, there are opinions, in both peak oil, and in materials engineering, and in health, and almost every area of human endeavor. Some are better supported than others. Yet, we form them, and the claim that you must have perfect knowledge in order to form them is patently untrue.

Y’all can keep swing your axes at peak oil adherents. Fine with me. Not part of my argument, nor relevant to it. It is unjustified, however you may wish it effective, to keep waving this silly magic wand of “must have perfect knowledge” in the hope of making all those bad peak-oilers go away.

70

I would agree with you that both extreme’s are fallacious depending on their application. But my main response is that the market will, by it’s very nature, automatically ration off resources that are more scarce. And in that process people will gradually move into alternative fuels, methods, and more efficient technologies.

71

LOL

Actually they’ve been doing it since at least 1875. One of the Lefevre commentaries in the media section has Lefevre reciting from a congressional report from that year which calls on congress to nationalize all the oil wells and refineries - since oil is a military necessity, its supplies are limited, and the refining process is too expensive and complicated for private industry.

See What Others Have Said About Liberty. It starts around 7:10 .

72

“Peak Oil is an interesting concept, but as with any resource, the key rationing device is the price. Conservation of oil can and will be dictated by the price alone.”

i guess. are there people who can afford lots of gas than use sometign other than a personal car to get around because of some other factor?? too many cars in a space?? etc??

73

There are 200,000 Trillion Standard Cubic Feet of Gas in hydrates offshore and under permafrost we’ll be able to get at in the next 5-20 years. I don’t even want to do the math on how many thousands of generations this would fuel.

74

OH, sorry for double post.

I had an idea for a movie. Its about a rich greedy oil tycoon who discovers oil on top of an ancient indian burial ground. While drilling, the locals come and try to warn him not to disturb the indian’s sacred remains, but he ignores them because he wants money so much.

When they begin production of the well, the dinosaur DNA in the oil combines with the disturbed spirits of the native americans. For the rest of the movie, a giant T-rex and a gang of raptors all wearing moccasins and feather headdresses harass the oil tycoon.

At one point, he passes out and has an inward journey where he sees what the world would be like if everyone were capitalist. People are starving and the earth is barren. When he wakes up, he repents and agrees to shut in the well and build an ecological preserve on top of the plot.

The dinosaur indians can rest in peace, and all is right with the world. The movie closes as a nearby television shows a republican candidate, Donald Deagon, running for presidency. The dinosaur t-rex nods, and the oil tycoon quickly runs and speeds off in his prius. TO BE CONTINUED.

75

Mine was, I admit, probably too slender a point to make, too finely put. Thanks for the support though!

As for the price system working to help us deal with scarcity - absolutely. It’s the only system that helps us do much of anything, really, besides forcing people to act as we think they ought.

76

Sounds exactly like a lot of movies and plays that I’ve already seen.

77

Avatar was about iraq if ur referring to that

78

The “tragedy of the commons” is that the rich people stole them all from everyone else through acts of Parliament.

79

No this is something I thought up while working in an oilfield for a summer. I didn’t see avatar. I’m too cool and indi.

80

Great points - Peak oil is a myth…