Beyond the oil peak?

Orson Scott Card on the future of oil reserves.

People have been crying wolf about running out of oil for a long time. Back when I was in college, I was reading estimates that we'd be out of oil before the end of the 20th century.

After those predictions from my college days, vast new oil reserves were discovered -- Alaska's north slope, for instance, and the oil of the North Sea.

So it's tempting to think that because those dire predictions were wrong about when, we will never run out of oil at all.

....

Because oil comes from "ancient sunlight" stored in the carboniferous structures of long-dead plants (ironically, during a time when the earth was much warmer than it is today -- just one more proof that "global warming" is just another term for "good weather"), there is no more of it being made.

This may be true, although there are some who are claiming that a lot of petroleum is made through abiotic processes. I tend to doubt it, but I'm willing to let them make their case.

In the 2nd quarter 2006 issue of his newsletter Wealth Creation and Preservation, Charles W. Kraut pulled together quite a bit of information from various sources and reached the conclusion that we are past the oil peak and are on the downhill slope.

He spends some time ranting about how we're short-sightedly using up an irreplaceable reserve, and blaming our quest for status. The two biggest offenders: cars and houses.

For two installments of this column, I wrote about what it would require to make a serious dent in oil consumption. It would require government to stop forcing us to live car-centered lives, and then reverse their policies so that most new development would be car-free, or at least pedestrian- and bicycle-friendly.

....

...I share the common love of open spaces. Meadows and trees are pleasing to the human eye. We like to see green life around us. We weren't trained to want this, unless you consider evolution to be training -- the landscape the human eye generally finds beautiful to live in is precisely the savannah landscape in which predators can be seen from a distance, yet water and food are plentiful.

What we have been trained into is the need to own that space individually. It is a fact of social history that whatever only wealthy people can have, other people adopt as symbols of status.

Of course, the alternative to ownership is that someone else owns and controls the space. It's one thing if the owners have a vision for the space that is compatible with yours. As long as the public park can be used for picnics and recreation, that's great. But what do we do in a neighborhood where you don't dare enter the park because it's gang territory? What do you do when the government has declared (perhaps under pressure of lawsuits) that the gangs have as much of a right to use the park as you do?

One of the things that has trained us into the "need" to own space is the failure of non ownership models.

As for the coming shortage of petroleum, let's stipulate that it will run out. Let's stipulate that we're past the peak, and it's all downhill from here. What will that mean?

Well, first of all, it's not like draining a glass through a straw. You won't see full flow suddenly turn to a gurgle as the last drops are drained. Instead, you'll see the price steadily rise as the cheaper sources are used up. The rising price will make more expensive oil profitable, and that will be tapped. In some cases, the expense will turn out to be due to a barrier to entry, and the cost of continuing to extract oil will be much less than the cost of starting. In this case, the price will drop.

However, sooner or later, the price of oil will rise past $100/barrel. Indeed, eventually it would rise past $200, $300, even $500. At some point, I guarantee, other sources of energy will become cost effective.

Nuclear energy is already competitive for land-based uses. The use of nuclear power for transportation depends on good, reliable battery technology, and there are some interesting approaches in the works. Some might even be able to power aircraft.

The point is, Card's solution -- government intervention to force people into a low energy-use lifestyle -- is not the way to go. The better solution is to allow the market to do its thing. After all, it is the profit motive that has produced the alternatives we have now, and it's the profit motive that has made all this oil available in the first place.

If the government is to do anything, it should phase out any and all subsidies on oil. To the extent that the "real cost" of oil is hidden by a subsidy, let's bring it into the open. If the price of gasoline rises high enough, people will naturally move in closer to their jobs. People will sell their big houses and buy smaller ones, simply because they won't be able to afford not to.

Higher gasoline prices will also push people toward alternative fuels, since they will be more competitive with the real price of gasoline. This will also help us conserve.

But government pressure just isn't the way to go, even if it's for a "good cause".