Peak Oil?

A few weeks back I asked Whatever happened to Peak Oil? - and got a welcome comment from my ever-vigilant fellow blogger Boffy and from another reader. With some serendipity, an economics blog I follow posed the same question a few days later – and followed it up recently with an extensive answer which referred to an apparently famous bet that economist Julian Simon had made in the early 1980s with the famous environmentalist Paul Ehrlich that, over a decade, the prices of 5 raw resources would fall.

Ehrlich – having long argued the case that we were exhausting the earth’s resources – was emphatic that they would rise. The bet attracted a lot of attention – a lot was riding on it since each man represented schools of thought which had been locked in ideological combat. It was, surprisingly, the economist who won the bet – and fairly easily. The environmental cause has suffered massively ever since - for a typical article see this piece from “Wired”

The full story, I have discovered, was told in a book published in 2013 - “The Bet – Paul Ehrlich, Julian Simon and our gamble over earth’s future” by (academic) Paul Sabin  

The history of Ehrlich and Simon’s conflict instead reveals the limitations of their incompatible viewpoints. Their bitter clash also shows how intelligent people are drawn to vilify their opponents and to reduce the issues that they care about to stark and divisive terms. The conflict that their bet represents has ensnared the national political debate and helped to make environmental problems, especially climate change, among the most polarizing and divisive political questions.

Sometimes rhetorical sparring partners hone each other’s arguments so that they are sharper and better. The opposite happened with Paul Ehrlich and Julian Simon. Despite their respective strengths, both Ehrlich and Simon got carried away in their battle. The ready audience for their ideas encouraged them to make dramatic claims. Their unwillingness to concede anything in their often-vitriolic debate exacerbated critical weaknesses in each of their arguments.

I said the book gave the full story – but this isn’t strictly true since the author fails to mention that, as blogger Blair Fix puts it, 

“the switch from physical scarcity to prices is one of economists’ favorite tricks for dispelling concerns about sustainability”.

We tend to be fixated by short-term price fluctuations and forget that the issue is how this relates to more long-term income (which has, for past decade, been in decline). As Fix puts it, 

“the key is to realize that resources can get cheaper at the same time that they get less affordable”

I am painfully aware of how ignorant I am about this critical field of Energy and a blog by Gail Tverberg called “Our Finite World – exploring how oil limits affect the economy” looks exactly what I need – it’s run by an insurance actuaralist who now makes a good living from her work on the energy issue.

I’ve also started to read a new book Oilcraft – the myths of scarcity and security that haunt US Energy Policy; Robert Vitalis (2020) – with useful interviews here and here although, like many others, it looks to be more about geopolitics than scarcity but is so chaotically written that I have some difficulty in identifying the thrust of his argument. It does, however, look to be a very useful challenge to general beliefs about both imperialism and political control of oil prices – demonstrating, for example, that the prices of earth’s raw material move together,

Our Carbon Democracy is an earlier book which looks more at the geopolitics – as you will see from the author’s article in Dissent in 2015

Jeremy Leggett is a fascinating character who started in the oil industry but is now a mix of entrepreneur and activist who wrote The energy of nations in 2013 and has this website