A question of oil futures

Titan's picture
Submitted by Titan on Fri, 2005-12-30 19:32

I've been grappling with the world 'oil' situation for a while. Do you think it prudent that a private company ,or the Fed's, invest in a thorough and comprehensive study to measure as best they can the total amount of oil supply both in currrently operating facilities and those that are prospective sources? What about alternative energies, i.e. bio-fuels such as hemp and corn, solar cells, hydrogen, etc. Is another John Galt motor on the horizon? Obviously, supply side economics is a big factor in where the energy dollars are allocated. The total amount of oil on earth isn't infinite, even though it's possible that huge cache's may be found extending oils life thousands of years more, since earth itself is a finite sphere. Which source of energy do you see as eventually 'replacing' oil in the furure?


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35 years of age. Atlanta, GA

R.T.Brooke's picture

35 years of age. Atlanta, GA USA

Let's get back on premises here....

Noone should be forced to pay taxes.  If you choose to use the services of the government then you shall pay.

Tax policy is, and has always been a mechanism by which the governments manipulate the populace, and this is not surprising really,  power is the aim .

 

The question reasonably is 'how do I get a society that I want'?  Without compromising those principles...

Lay it on the line...What IS IT we/I want?....Obfuscations by minutie are not conducive to this aim.  If we think further and deeper...how is it different from the rest of the idealogues that peddle this 'solution' over another for a different crisis (any crisis will suffice as an excuse)

 

Picture the goal...frame it in the mind...form an IDEALOGICAL framework for it and work toward it.  There is so much cherished work to be done from a philosophic point of view.

That is where the aims are met. 

We basically agree

Pete L's picture

Ross,

I basically agree with you. As long as the market is allowed to function like it's supposed to, there will be no doomsday related to the depletion of the oil resource. My only point is that given our dependence on oil and the fact that access to and control over it has become a matter of national (read: collective) interest, big oil and big government have a strong overlap that makes me a little uncomfortable. I fear that oil interests, at least as long as they can get away with it, will use their clout to delay the development of other sources of energy so they can milk their cash cow as long as possible, particularly when prices rise as supply becomes more scarce.

Pete, don't be silly. What

Ross Elliot's picture

Pete, don't be silly. What I'm claiming is that Man's ingenuity & a strong desire to insulate himself from the caprice of nature coupled with the free market will mitigate any real or perceived shortage of a given resource.

Excellent point, Ross.

Titan's picture

Excellent point, Ross.

Erik, I don't know what will

Ross Elliot's picture

Erik, I don't know what will "replace" oil. I don't think anyone can reasonably say. There sure are a lot of alternatives, some more expensive than others, some less acceptable, some only in the highly theoretical stage. Finding something with the bang to buck ratio of oil that is as cheap and readily available will be a neat trick. And a profitable one.

I have no doubt that given a massive financial incentive (which will certainly be the situation that obtains under even minimally restriced oil supplies--inelasticisty of supply and all that), a replacement for gasoline will be developed in much the same way as mass-energy conversion technology was developed from Einstein's seemingly esoteric theory.

As I said, the real challenge will be keeping the meddling hands of the state out of the development-supply cycle. Most people wouldn't have a clue how the price system functions to achieve satisfaction of demand so it's easy to see that there will be a clamour to "fix" the problem by artificial means (read:regulatory) instead of letting things take their course. As liberals it's important for us to direct our energies, be they theoretical or practical, to influencing "solutions" from the market side.

Rick, take it easy. You seem

Titan's picture

Rick, take it easy. What gives? I KNOW how the law's of laissez-faire economics work! -the question is; which energy source do you see (due to economic factors)will eventually 'replace' oil?

oil supplies

Rick Pasotto's picture

What do you mean by "oil supplies"?

Of course the physical quantity of oil is limited at any particular moment. Just like all economic goods. It's called scarcity. Scarcity is one of the requirements of prices — only scarce resources have prices.

"Supply", in economics, is the quantity offered for sale at various prices. Want more oil (or anything else)? Offer a higher price.

Worrying that oil "supplies" are limited is a waste of time and ignores the laws of economics.

Perhaps you're concerned that changes in the price of oil will require changes in your spending allocations. Well, duh! That's the function of prices.

Reality never promised you a rose garder — or a full tank of gasoline.

Oil is recycling

Robert Malcom's picture

It is not likely to run out any more than whale oil ran out... if liquid oil gets too high, shale oil and tar oil look feasible, as well as turning plastics back in to hydrocarbon usage... there's long life ahead on this...

And yes, it is recycled plantlife [unless one holds to the theory of it being primordial leftovers from planet formation..

Are oil supplies infinite, Ross?

Pete L's picture

Ross,

Are you claiming that oil supplies are infinite and unlimited?

By the way, here is Wikipedia's entry on Hubbert Peak Theory:
http://en.wikipedia.org/wiki/P...

Mmm, "peak oil" is a

Ross Elliot's picture

Mmm, "peak oil" is a catchphrase of the Greenie left and as liberals we should not fall for it. It's imputation is similar to that of any consumption of resources that the left see as "at risk" due to a greedy, rape & pillage (capitalistic) attitude.

Enron came out quite staunchly against criticism of it's recent profits. That's good to see. Most corporates try to limit their press exposure at such times with denials of gouging and anti-social behaviour. I hope Enron keep it up Smiling

Who know's what will happen

Pete L's picture

I've read a few things here and there about peak oil theory, and I still don't have a formed opinion on the subject. That said, I haven't seen anything that leads me to conclude it's all junk science.

In any case, if and when oil supplies start to dry up, consumers will start to feel some economic pain. It's precisely this pain that will create demand for alternative technologies. You can bet that the oil industry will do everything in its power to squeeze every last dollar out of the market (which is their right). Unfortunately, I fear that in order to do that they will stifle and block innovations and use government to accomplish this, at least as long as they can get away with doing so.

Erik, you may just be

Ross Elliot's picture

Erik, you may just be shooting the breeze but semi-seriously, the Stone Age didn't end because we ran out of stones Smiling

The market will out and prices will be your guide.

Danger is of course that we end up with "partnerships" between the oil companies, energy explorers, etc & the government. The resulting distortions would see not a smooth, price-guided transition from oil to something else but a stagflation type scenario where oil prices rise but no alternatives present themselves. In that case, the Mad Max oil wars are entirely likely.

On a related note. Here's the situation that obtains in my country, New Zealand, re energy.

NZ is the size of California. It ain't tiny even by world standards. Yet, we only have a population of four million. We have mountains, lakes & rivers coming out our asses but yet we have a slowly developing electricity "crisis".

Most power in NZ is generated via hydro and as we all know, trying to get a new hydro station built anywhere in the western world is like finding a flying pig. Damn a river? Fill a valley? Hell, no!! And the Greenies not only have the will to stop you but in NZ they have the law as well. So we have this crisis. An artificial one. Completely fixable. Not a problem at all. In fact, power should be far cheaper than it is now due to our abundant hydro capability. Just over the Southern Alps from me is the West Coast of the South Island. Lots of rain. Lots of very deep valleys. Lots of rivers that thunder through those valleys. But it also has rainforest. It's also nearly all a national park. Which means that the very resource that would solve our non-existent problem is essentially prohibited to that end.

Instructive thing is this: most Kiwis actually believe that we have a power problem. We build windfarms (using government subsidies, of course). We burn coal, which is apparently not as bad as flooding a remote valley that nobody ever sees. And, we are even seriously discussing nuclear power. It's like nobody has the guts to stand up and tell it like it is. Yet power prices keep rising and the regulators keep regulating and the planners keep planning.

Same may very well happen with oil and it's alternatives.

Beware the dead hand of government.

Cornahol

Joe Idoni's picture

I reasearched bio-fuel a little while back. It is clearly a replenishable fuel source, but it has a few drawbacks. One is that per liter, it doesn't produce nearly as much energy as gasoline. Therefore, you'd actually have to consume more to get the same amount of energy. Also, as of right now, it is fairly expensive to produce and you have to modify vehicles to use it effectively. On the bright side, it has almost zero emissions.

There is also the diesel alternative. There are several groups that advocate the use of cooking oil from fast food restaurants as fuel. It's often obtainable for free, or at minimal cost, requires just some basic filtering, and if I remember correctly, it's what diesels were originally designed to run on.

Idoni

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