The problem with Oil…

Oil

Oil (© Scientific American)

I generally like to think that I have something to add to what another site says or shows. In this case, the best I can do is to link you directly to an essay on the Scientific American website entitled:

The essay asks the simple question: given the wars, the political and economic instability, the environmental damage and the potential climate consequences: just what will it take to wean America off oil? It’s an interesting piece, but IMHO, the answer – which the author skirts – is very, very simple. As I mentioned the other day, it’s just  price. As one learns in Economics 101: if we make oil expensive then we will use less of it. But it’s not a message the US – or indeed anyone outside of an oil producing nation – wishes to hear. Only when oil is more expensive than we can currently imagine, will we begin to really invest in the alternatives.

I appreciate that some people will say that raising oil prices is economic suicide. I disagree. I acknowledge that it’s a difficult decision – but at some point in the future we will need to kick the oil habit – we will need to live differently. The sooner we acknowledge that, and chart a rational course from where we are, to where we want to be, the better for everyone.

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2 Responses to “The problem with Oil…”

  1. Bernard Naylor Says:

    Oil is a finite commodity and its price is inevitably affected by supply and demand, though governments can also take steps to make it less or more expensive. There is some evidence that we may have already reached or even passed the point of ‘peak oil’, that is, the point at which extracting oil from conventional sources at an acceptable cost cannot keep pace with demand. (There is also evidence that countries with oil deposits may not always tell the truth about their reserves, but rather, say things which will affect the market in the way they want to.) Demand is set to increase as more major countries, especially China, India and Brazil, move in the direction of developed world countries in their pattern of private car use. So, once readily accessible resources are heading towards being exhausted, oil could move, perhaps even quite quickly, from being a relatively common commodity capable of being supplied in the quantity required at quite low unit cost (as now), to being a very expensive commodity for which there will be intense competition (not excluding war – is that what the invasion of Iraq was really about?) among potential users. Instead of being like coal, it will become more like diamonds. There are other sources of ‘fossil’ oil, such as oil shales, but, currently, extraction costs are very high and environmentally very destructive, even by comparison with current extraction practices.

    There is some potential in the production of ‘non-fossil’ oil, that is, from currently cultivated crops, but this already appears to be impacting on food supply, especially among some of the world’s poor communities. Will the desire of people in developed countries for the more self-indulgent forms of personal mobility make them completely deaf to the suffering they could cause among the poor of other countries?
    Lastly – in this over-long post – there may be scope for introducing a form of mobility rationing which I find interesting. In such a system, every individual could be issued by the government with tokens permitting them to travel, and these would have to be ‘spent’ – additionally to the usual monetary charges – by anybody who travelled. But the same distance travelled would cost more or fewer tokens depending on the mode of transport used, be it bus, coach, train, private car, or aircraft. And the tokens could be legally traded. So those who demand the most personal mobility, of the most costly and pollutant kind, would need to buy tokens, through a market, from those who do not travel or travel very little. Since it is usually poorer people who travel little or use more socially acceptable modes of transport, they would actually benefit personally from the rich people’s appetite for travel, and would be compensated financially for the greater environmental impact of rich people’s preferred life style. And of course, the government could easily adjust the amount of ‘personal mobility’ they allow the total community to have, and hence adjust the impact of personal mobility on the environment.

    Oil is a very special illustration of the two dynamics affecting some aspects of our lifestyles, namely environmental pollution (including climate change effects) and resource scarcity. In principle, they are fairly separate, the one from the other. In practice, they are converging in a pincer-like way, on some of our cherished ‘freedoms’.

  2. protonsforbreakfast Says:

    Bernard

    Well Said. I have just a couple of things to add.

    There is no physical shortage of hydrocarbon fuel. At current prices, it is already economic to turn shale and coal into petrol. My source for this information is Steve Koonin, formerly chief scientist at BP. You can see his talk on the subject here http://www.youtube.com/watch?v=wt_mluFK7xk See also the BP energy review which is a great source of data on hydrocarbon resources. So if people are hoping we will hit some physical limit which will force us to change, they are wrong.

    However doing this just makes carbon emissions even greater. We really don’t know the depth of the hole we are digging for ourselves by our carbon emissions – but the smart thing to do is to stop digging! Or at least slow down the rate of digging. I am reminded of the story about a man plummeting from the top of a tall building. Half way down someone shout to him – “How are you doing?” – He replies “Fine, thanks. Everything is just fine so far…”

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