by asdf
Wed Nov 16th, 2005 at 02:47:44 AM EST
From the front page ~ whataboutbob
There have been a lot of predictions here at ET about how the sky is falling as far as the global oil supply is concerned. Chicken Little is running all over the village announcing that we're all going to freeze to death in the dark--if we don't starve first--because in only a matter of weeks the world will run out of oil.
But what do the experts think? Is this something we should worry about? Or is it just a case of a hysterical extrapolation of irrelevant production curves that doesn't add up to anything?
Well, if you had been in Denver, Colorado, last week you could have gone to the Denver World Oil Conference, presented by the Association for the Study of Peak Oil & Gas.
http://www.aspo-usa.com/
A big flock of Chicken Littles got together here to discuss the topic, and came to the predictable conclusion that the sky is indeed falling, and that we had better start running around in circles.
http://www.denverpost.com/news/ci_3207731
First up was Denver mayor John W. Hickenlooper (I love that name) who quoted the world renowned technical journal The New York Times which recently printed a list of prominent scientists and analysts who "predicted" that oil production will eventually peak. Following his emminence the Mayor was a parade of Chickens who agreed with him and made significant pronouncements about how the end of the World As We Know It is right around the corner.
But does any of this make sense? What are we really talking about here?
We're talking about the balance of supply and demand for energy, and the fact that there is an inevitable balance between the two (regardless of politically driven attempts to change reality), and that as the supply of a given natural resource is gradually expended the price of it goes up.
D'oh!, as nuclear power plant operator Homer Simpson would say.
Bottom line? Oil gets more expensive, and gets replaced by other energy sources, like wind or tidal generation, atomic energy, coal, or solar photovoltaic. As these alternative sources become competitive with oil, the supply curve steepens and the price stabilizes at a new operating point--until that new source also becomes depleted. And if the new source is fundamentally undepleteable, then the price of energy stabilizes at that new point for a long, long time.
So if wind power, to pick a EuroTrib favorite, has an oil-equivalent cost of, say, $75 per barrel, then we should expect energy price stability at that point. For a long time.
