Sorry about the late post (you could have seen it on YouTube earlier if you subscribed there). Had to get up the Qbase lawsuit first.
Today, Greg and I talk about the real cause of the financial crisis- $4 a gallon gas, and how it steamrolled. The camera cut us off at 4:30- so we didn’t say goodbye- or it’s to be continued.
If you don’t know about “peak oil [1]” it’s a concept near and dear to Greg’s heart. To me, it’s a call to smarter live/work/play communities that are more compact.
[youtube]https://www.youtube.com/watch?v=2tQB7a9d6zA[/youtube]Enjoy.
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The Age of Oil has driven our growth over the past 100 years. The entire basis of our modern civilization is built on oil and other fossil fuels. It has enabled the industrial revolution, a massive increase in population, and our current standard of living in the West. One way or another, the passing of this Age will change us forever.
<a href=”http://www.watchinghistory.com/2009/12/age-of-oil.html”>http://www.watchinghistory.com/2009/12/age-of-oil.html</a>
If you want to understand rising energy costs you need to look at our currency. As the dollar loses values commodity prices become higher. We have a fiat money system where the value of the currency is backed by the federal government’s promise that it is legal tender. As for the Chinese they are likely hedging themselves by buying commodities with their treasury notes. Can’t blame them for that.
It sounds like Greg blames the free market. I disagree. It’s the manipulation of the free market that is the problem, and that involves corporations lobbying the government. Please tell me he is not going to advocate cap and tax energy policies as the answer. Government helps make the problem and then gives us a borked solution. The free market needs to be deregulated and let it take care of itself. It cracks me up that none of us trust the government as far as we can throw them and we could all point out their multiple failures and follow the money trail by sniffing the corruption. But somehow we think the government is going to regulate out of this mess. They need to quit meddling in the economy and they need to quit taking it over. They are way outside of their constitutional limits.
Here, read about our monetary system. I don’t agree with her on everything no more than I agree with you guys on everything but her works are very well documented.
http://www.webofdebt.com/articles/dollar-deception.php
Further more, America is sitting on top of a boat load of oil but we won’t extract it because we don’t want to damage the wildlife preserves. Gimme a break. That oil could be responsibly extracted w/o damaging the environment. And here is the kicker, I am a proponent of pursuing cleaner, cheaper, better energy sources. I just question a lot of the propaganda surrounding the topic. Especially when the government proposed solutions involve an expansion of government powers and increased taxes.
The idea that every single person needs to take 4,000 lbs of metal everywhere they go whenever they want to go and the infrastructure that is required to support it is the greatest misallocation of resources in the history of humanity.
We shall rue the day we bought into the car scam.
@Drexel – Here’s on you may enjoy:
http://history.sandiego.edu/gen/soc/shoppingcenter.html#01
Car = development with automobile in mind = suburbs = shopping center / malls = hollowed out downtown core’s across the nation with only a few exceptions = propagation of sprawl and advancement of automobile society.
Nothing new there. I like how our leaders – local and national – don’t even acknowledge a problem exists.
DDS drives a school bus for a living…. the irony. Fat lazy kids being shipped all over town in the name of integration.
Walk to school……
@Gene – Let’s take it a step further. So, kindergartners should walk to school across the city? If kids ride a school bus they are fat and lazy? If DDS happens to drive, or work a driving related job, he shouldn’t have a point of view that recognizes obvious problems and wants solutions?
Geeeene….you trolling today?
What does that have to do with me personally Gene?
I also made the Dean’s list at WSU last quarter, but that has nothing to do with peak oil.
But I do have my views on school transport and how it relates to our greater politics and peak oil. But what that has to do with my personally, goes in the troll bin.
I am not trolling. I think it is funny that someone that is anti-car drives a bus….
and yes, a lot of kids are fat. I am fat. so what? I love my cars. Americans love their cars. That is part of our culture, our identity. A drivers license is like $15.00. In Italy it is like $600.00. Less people would drive if it were $600.00. But then you would whine about screwing the poor.
The things we buy are cheaper bc of oil. We have more choice, Everyone takes part, yet the typ lib here wants to ban cars/oil. Unreal.
We love to rail on oil, but we use are cars all the time. The other guy has to get rid of their car.
DDS, how do you get to WSU?
I agree with Will. Less government. Here is a great article for everyone that is a recycling fan, it is quite informative:
http://mises.org/daily/3887
Enjoy
@Gene – For the record I oil’s high price is from a sinking dollar. Dollar is the world’s reserve currency, for now, and commodities are pegged to it. Then it’s spun to say that there is heightened demand, which may be true with developing economies, but that isn’t the reason for the high prices. As for the environment, global warming and such, read this.
http://online.wsj.com/article/SB10001424052748703499404574558070997168360.html
Global warming may be all a lie. Ask NASA.
@Gene – That’s basically what the Wall Street Journal acknowledges.
Greg and David: “…planes, tanks and trucks…take a lot of fuel…long supplylines…OMG, peak oil!!!”
The logistics / petroleum requirements of a mechanized fighting force provides a good illustration of why ‘peak oil’ concerns tend to be overblown. When the price gets high enough to take it out of the ground, we’ll start making the stuff, see Fischer-Tropsch process and Germany’s synthetic petroleum efforts in WWII. So far, nobody has come up with a battery that can pack the energy density (by mass or volume) of liquid hydrocarbons, until that happens planes and trucks will still be burning petroleum even after we take it all out of the ground (we will manufacture synthetic tranportation fuels because something with that sort of energy density has significant ‘value added’).
A human’s standard of living is directly proportional to the cost of energy, lower energy costs raise it, higher energy costs push us towards the ‘solitary, poor, nasty, brutish, and short‘ end of things. That’s one reason I think taxes on energy (read: carbon) are not very progressive.
Cap and trade = FAIL
http://www.cbsnews.com/blogs/2009/09/15/taking_liberties/entry5314040.shtml
This is the tip of the iceberg. David E. and Greg, what do you propose to transition us to alternative energy? All I find the federal government pushing at the moment is cap and trade, which is essentially a thinly veiled tax that would be passed on to citizens via industries that produce the carbon. Please tell me this isn’t what you guys are after. If so I would recommend reading a lot more on the subject. Check Spain to see how it has gone for them:
http://www.realclearpolitics.com/articles/2009/06/25/tilting_at_green_windmills_97168.html
It doesn’t matter what or how we get to WSU, etc…the fact is that we have to get there by car. If you want to get anywhere in the U.S., if you don’t have a car, you’re screwed because everything is set up to accomodate cars. Case in point: Two summers ago I worked for a buddy near the Dayton Mall. I would bicycle from Wayne Ave. to the Dayton Mall about four times a week. It was a faster ride than taking the RTA.
There’s nothing funny or hypocritical about having to deal with the cards one is dealt with. That’s where I, and everyone else in our country is at. Because we use cars doesn’t mean that we cannot wish for a better way.
Good commentary on this subject:
http://www.youtube.com/watch?v=1xi0Xbb8WW0
“Because we use cars doesn’t mean that we cannot wish for a better way.
DD – Better way? That is your dream, not the collective American dream. Most people would say they love their car, love short dives to the mall and such, and absolutely have no problems with where they live and the proximity of their home to certain things, like a mall. People DO NOT want to live on top of each other in the Mid West. People want a little land, a little privacy. That is why people move to suburbs, along with schools and safety. The point is the there is a personal utility, a factor economists wish they could measure, that every person has. Our collective personal utility is what we have, in every city, every state. NY is crowded, and the collective personal utility of people who live there is that they want it crowded, they want corner stores, they want subways. In Dayton the collective personal utility is that we “have more” utility with suburbs, with cars, with a little land. If it were different than that we would look like NY city. But people in this city, in this part of the country have a different set of priorities and likes and dislikes. You, by saying a better way, should move to an area that accommodates you, and where you have the get the most personal utility. I am not sure why you think there is a “better way.” Explain that and maybe I can begin to understand. Your “better way.” is in NYC, Boston, Philly, DC, etc. You have options to move, I suggest you do.
Much better Gene. One doesn’t need to attack someone personally to make a point. More on this subject later.
@Will:
Here’s an interesting read (don’t let the silly headline stop you, it’s actually a solid article), this physics prof doesn’t think the transition can happen at a rate anywhere near what would be needed to make a difference:
http://www.sciencedaily.com/releases/2009/11/091123083704.htm
It’s about the direct correlation between energy consumption and economic growth. Food for thought if you think that conservation (see Jevons paradox) and the next bubble ‘green industry’ are the ticket to good jobs and a sustained economic prosperity.
Thanks for the link jstults. My sense of humor is such that while reading the article I couldn’t help but compare his findings to people not eating beans to cut down on methane emissions not having any meaningful results. My twisted sense of humor aside, I enjoyed the article and found it informative. Thanks again.
Cap and trade is now called energy independence. Maybe if they rename it enough they can pass this horrible legislation.
http://blogs.abcnews.com/politicalpunch/2009/12/diction-watch-energy-independence-legislation.html
One more link for the road.
http://www.campaignforliberty.com/article.php?view=413
Peak Oil is a reality and if we approach this issue like we managed COD then we are rightly and truly screwed.
Everytime, I deal with the Peak Oil, which should be a very easy concept to present as it does not require any fancy climate models all I get is climate change discussion. It is very easy to see that oil production is peaking in every country that is ever produced oil and in spite of Gene’s belief that suburbanites have “made a choice” to live all sprawled out, belief does not power this choice – OIL DOES. So to continue happy motoring we better start killing a lot of people or change our lifestyle (No matter what, market forces will dictate that the auto age is over as the military will require the gas to do a lot of killing, unless we are really stupid and get out the nukes). Man Speaks – Nature Acts. Voltaire.
PS James Hansen nails the appropriate response to “both issues” climate change and peak oil as a Carbon Tax would apply a replacement cost for oil/coal.
@Greg – Energy consumption, peak oil, carbon tax are related concepts. Never the less, I started talking about how oil prices and commodity prices are pegged to a devaluing dollar. Any thoughts? BTW – the COD story seems like a fable.
Greg:
I don’t think anyone denies that there’s a pretty well defined (and empirically validated [1]) theory for exploiting a finite resources that depends on the amount of stuff you know about, the cost of extracting the stuff, and the rate of discovering new stuff. The fact that this is so well known means that the market has already factored it into the price of oil. The thing that is silly is taking the next step and assuming that peak oil means there will be a crisis. Arguments that make this leap neglect to consider that as we go down the ‘backside’ of that curve the costs for each barrel goes up, and the more expensive alternatives become more and more attractive (proof of concept: Germany went to synthetic petrol alternatives because the Allies made the natural stuff too expensive through persistent application of their B-17s and B-25s).
This is the sort of optimal resource allocation problem that markets are very good at handling (when and how much to fund development of alternatives). What they aren’t good at handling is externalities (goods that need to be subsidized and bads that need to be taxed), unallocated property rights (tragedy of the commons) and knowledge asymmetry (insider trading). I think you need one of those things for a crisis or a market failure, am I missing any? Do these exist when it comes to Pessimistic Peak Oil Prognostications?
[1] http://en.wikipedia.org/wiki/File:Hubbert_US_high.svg
Not quite so well known really as OPEC will not divulge any of that data. Reserve data, decline rates are mere guesses or historical artifacts from those in the “know”.
Hydrogen/Fischer Trope are all obfuscation as in order to make liquid fuel you must start out with carbon and coal is also a declining resource, so this process will be used but the happy motoring and unlimited growth based on cheap energy is rapidly coming to an end and the market is giving the signals, but just like the COD, the tragedy will be played out without any thought to what is the best way to address the issue. The current situation where America thinks we can motor around or that a replacement energy source will allow the continuation of this lifestyle is ludicrous.
A discussion of reserves from my daily read.
GH:
So are you saying that there is a knowledge asymmetry (Saudi insiders) that’s going to lead to a market failure, or that the market may work just fine but it’s going to be really painful adjusting to the price of driving that SUV all over suburbia?
To me, painful adjusting (downsizing the ride, moving closer to work, moving away from the rising sea-level) is not a crisis, large chunks of the population suddenly displaced or not able to eat is a crisis. Knowledge of biases in stated reserves sounds more like a profit opportunity than anything else (as if that’s not already discounted…).
(thanks for the reserves link)
Data always data…….
Smells like opportunity.
I have been fighting longer than Ferdinand Foch with less success, so maybe I am unskilled at fighting the fight? Not enough Sun Tzu?
Besides who wants to win? as Nicholson says “You cannot handle the truth!”