oh noes, Peak Oil?

[T50_Omaha8]

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There is no feasible short-term alternative for oil.

[/ QUOTE ] And there is no forseeable need for a short term alternative to oil.

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Prices stayed low during the entire 20th century because production was constantly increasing. Demand is still increasing, of course, but the predictions are that "...production will now fall by 7% a year..." with no end in sight. If oil production peaked only last year and we're already flirting with $100 a barrel, we're going to need some serious creativity very quickly if we want to sustain the kind of growth economy we've been enjoying.

[/ QUOTE ]I'm sorry, I thought you meant short-term in the sense an economist would use it: over a time frame in which people cannot adjust their consumption habits in order to seek an equilibrium. All the problems you are pointing out are long-run problems, which inherently are solved by long-run, incremental solutions. Short-run problems are almost always caused by the unexpected; nobody discusses them in advance.

Also, how exactly should we encourage this "serious creativity" in energy thought? If the expected price of fuel is going to rise that dramatically (it's actually expected to rise and the interest rate + storage rate, per Hotelling's Rule and Rational Pricing Theory), then research and development has an expected rate of return high enough that it should already be in motion.

I can think of a few reasons it might need additional encouragement:
1) To decrease variance in future economic growth rates.
2) Using oil has negative externalities.
3) The market does not reflect expected price increases accurately.

#1 is sketchy; you're wasting huge amounts of resources on something that may or may not have a positive effect on a problem that may or may not arise in the future.

#2 is something more directly addressed in the present.

#3 is something private business should be able to profit from, and would need absolutely no input from the government to correct itself.

Come to think of it, I'm hearing more about breakthroughs in alternative energy sources now than I've certainly ever heard in the past. It seems like everybody is doing a surprisingly good job preparing to profit from the end of oil.

Am I missing something?

[drzen]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
There is no feasible short-term alternative for oil.

[/ QUOTE ] And there is no forseeable need for a short term alternative to oil.

[/ QUOTE ]
Prices stayed low during the entire 20th century because production was constantly increasing. Demand is still increasing, of course, but the predictions are that "...production will now fall by 7% a year..." with no end in sight. If oil production peaked only last year and we're already flirting with $100 a barrel, we're going to need some serious creativity very quickly if we want to sustain the kind of growth economy we've been enjoying.

[/ QUOTE ]I'm sorry, I thought you meant short-term in the sense an economist would use it: over a time frame in which people cannot adjust their consumption habits in order to seek an equilibrium. All the problems you are pointing out are long-run problems

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I don't think so. Even in economists' terms, they are intermediate term.

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which inherently are solved by long-run, incremental solutions.

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Or not solved. The system can change without anything being "solved".

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Short-run problems are almost always caused by the unexpected; nobody discusses them in advance.

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Unless some gain from pretending not to expect them. Jeez, it's tough talking to people who pretend that everyone is a rational self-interest bot.


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Also, how exactly should we encourage this "serious creativity" in energy thought? If the expected price of fuel is going to rise that dramatically (it's actually expected to rise and the interest rate + storage rate, per Hotelling's Rule and Rational Pricing Theory), then research and development has an expected rate of return high enough that it should already be in motion.

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Who will do the R&D?

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I can think of a few reasons it might need additional encouragement:
1) To decrease variance in future economic growth rates.
2) Using oil has negative externalities.
3) The market does not reflect expected price increases accurately.

#1 is sketchy; you're wasting huge amounts of resources on something that may or may not have a positive effect on a problem that may or may not arise in the future.

#2 is something more directly addressed in the present.

#3 is something private business should be able to profit from, and would need absolutely no input from the government to correct itself.

Come to think of it, I'm hearing more about breakthroughs in alternative energy sources now than I've certainly ever heard in the past. It seems like everybody is doing a surprisingly good job preparing to profit from the end of oil.

Am I missing something?

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I think that there's a gap between the end of oil and the beginning of whatever, caused by energy companies' thinking that they profit sufficiently from the end of oil and the increased prices that brings that it doesn't yet make alternative sources attractive enough.

[T50_Omaha8]

You're right; market forces are black magic and are never to be trusted.