Life After the Oil Crash: A Critique
by Joe Pulcinella
Just got this from a friend of mine:
This is very long, but very detailed and well-researched. Stand back and analyze the author's arguments and assertions individually and see if you don't think they're logical. This is a pretty scary scenario. I'm not sure if the price increases for oil will be as instantaneous as projected, but current trends point upwards sharply.
http://www.lifeaftertheoilcrash.net
I wanted to respond. I sent this back via email but I wanted to get some more feedback from others.
Sounds plausible but I don't think this guy takes into account enough general history. And by his reasoning, it would also seem plausible that with the increase in free markets leading to a decrease in worldwide poverty leading to an overall increase in food consumption coupled with a decrease in farmland due to an increase in building, we should eat the entire earth clear of food long before we run out of oil.
I also doubt the integrity of his sources. He refers to his scientific and economic sources as "physicists and economists" and only provides hard links to sites such as Community Solution which to the best of my reckoning is a group of communists. Want to see their example of a country who has sucessfully ended its dependence on imported oil?
Cuba – A Peak Oil Country
Cut off from trade by the United States, in 1993 Cuba lost its critical oil imports from the Soviet Union almost overnight. The country had to learn to do without it, and today has lessons for the rest of the world about how it can be done.
Ooooooh-kaaaaaay.
I searched the entire article and I didn't find the word "entrepreneur" mentioned even once. These guys can't be discounted. I don't have any more info than any of you have as to what my car will run on 40 years from now (if I'm not too much of a senile, old fart to drive), but I can find more than enough examples of how profit-driven people have gotten us out of pickles in the past. Fear of where current trajectories will lead mankind have spooked us throughout all of recorded history but for some reason, we haven't all perished. Reason is, entrepreneurs have shaped not only the supply of things in need but also our demand. A change in supply causes a paradigm shift. The net result has always been an increase in human prosperity.
He does a good job in understanding that the State (which is merely a class of self-interested individuals who live off the rest of us) does not have a legitimate cure. But this guy seems to have a preconceived notion and no one can possibly tell him that his reasoning is flawed. Not even a little bit. On top of that, he blows his cover in that before he signs off, he recomends that we all go back to being atomized and self-supportive agrarians. Even a rudimentary knowledge of early American history will tell you that 80% of the Pilgrims died in the first year after arriving in North America precisely because of that.
Savinar seems to put all of his faith into what physicists and economists tell him. Hate to tell him this but neither has contributed nearly as much to humanity and its progress as have entrepreneurs. Physicists and economists, for the most part, live off plundered taxpayer grants (or off schools which live off taxpayers funds) and are generally disconnected from the world you and I live in. Physisicts, in particular, from what I've seen on PBS, are so cloistered that it is possible to tell what year they entered grad school by the clothes they wear. So don't expect them to give you any useful info. Expect much less from lawyers who are trying to sell books.
Anyway, before this turns into a Savinar-like manifesto, I would recommend that you all just keep doing what you are doing for whatever reason suits you best. Drive until some other way of doing business is more economical (utility value). Individual actors will determine what actions to take and when by their habits. Entrepreneurs will respond. The entire universe is made of energy and someone will discover a way to sell it to you.
So, in other words, the doomsday scenario is not new and has been dispelled some time ago much like Keynsian economics. I thought as much. As a matter of fact, I've thought of a lot more to say since I wrote my last response but it gets way too broad and may make for a full-blown artilce...someday.
20-50 years is a long time horizon in the 21st century. I have read papers by equally qualified scientists and geologists that posit oil as being abiogenic - that is, not dead dinosaurs, but rather carbonaceous compounds produced at the border of the earth's magma, and thus, theoretically, not limited in quantity. Whatever. As the late Julian Simon taught us, human ingenuity is the most important resource. Simon had a longstanding bet with famed doomsayer Paul Ehrlich, who, back in the 60's predicted we would all be starving to death in caves by 1980 due to resource depletion. Simon asked Ehrlich to pick a list of 5 resources he believed were declining rapidly(scarcity measured by rising prices), and bet him that in 5 years those same resources would be relatively more abundant. Simon won the bet. He continually renewed the bet with Ehrlich, winning the bet each time. The real bottom line is that because of massive political interference in world oil markets by US, there is effectively no market mechanism to increase the exploration and extraction of oil the way there would be in a free market. We have been free-wheeling along on the low-hanging fruit (easy-to-get-at oil). But to say that government planning is somehow necessary to prevent a keg-spit is to fundamentally misunderstand and distrust the role of the market in resource allocation. Whether oil (or cheap oil) is really running out or not is completely irrelevant - as the price rises, smart people everywhere will be developing alternatives that, at some oil price, will suddenly be economic. We will continue to survive and prosper, unless the government gets us into a resource war with, say, China or Russia, or some other nuclear power (can you say "Iran"?). THEN we WILL find ourselves living in caves, waiting for death. It's our choice, and, time and again, we seem to choose military conquest over the market.
No one is unassailable. I do it every day! And I never claimed that oil wasn't going to run out. That isn't even relevant to my post. And I understand that entrepreneurs work in their own self interest. I have no problem with that and neither should you. After all, it isn't through the benevolence of the baker that we receive our daily bread. But unlike government, entrepreneurs can only prosper by giving you a product at a price you are willing to pay. Oil is a commodity just like any other. We have grown dependent on it since for a long time it was cheap and plentiful and we would have been fools not to exploit it. But it will not simply shut off all at once and smart people see the handwriting on the wall. Those smart people, not the ones at CalTech and MIT, will present the rest of us with options. And we, the consumers, being in full control, will pick the ones we like best. Will we still be driving cars as we know them today? I don't know. Will we simply shut down as a civilization? No. There is nothing in history since the advent of free trade that points to the lack of any particular commodity causing mass death. The only force that causes that is totalitarian government. In a free market, ideas prosper and goods flow. My advice is to do all we can to avoid allowing some brilliant politicians trying to "cure" the problem with some sort of grand scheme that will divert a huge percentage of human output toward an arbitrary goal. There is no reason to believe that it will not wind up as a huge transfer program benefitting the likes of AMD for producing methanol and forcing that on us as a solution.
Always take what you read via the net with a grain of salt, but he quotes from researchers at MIT and CalTech. I consider these sources unassailable. You can also google the terms Oil Peak, etc. and you'll find many white papers by geologists working for oil companies, various academics, etc. that all point to varying dates within the next 20-50 when the oil keg starts to spit. Oil is definitely a finite resource with no viable alternative thanks to 30 years of neglect funding research. There's no dilithium crystals in the future to replace crude, just more expensive ways to extract it. Our economy is entirely based on cheap energy and the climate in the most of the US dictates loads of it for survival. The only things "entrepreneurs" will do is find a way to exploit the situation for their own benefit. Regardless, I found the article thought provoking and oil prices are being bid up daily. How long before $100/bbl? I'm guessing 2 years. PS. RIP Johnny Cockroach
