Saturday, October 30, 2004

Peak Oil

One of our customers noted that I had provided for the 9th Year (20th Century) program a kind of overview "Events and Trends" summary for each of the first three decades of the century, but then forgot to provide them beginning in the 1930s. So for the last couple of weeks I have been trying to provide summary "Events and Trends" items.

In the midst of that project, which I finally completed yesterday afternoon, I got thinking about the emotional tenor of different eras.

Of course, we are all familiar with the emotional tenor of the 1930s. No question: that was the Great Depression.

But what about the 70s? The 80s? (Not to mention other eras.)

I realized the 70s were, no question, a very bleak period. I'm not saying everyone was feeling depressed. But that was the era in which the U.S. suffered stagflation (stagnant economy, great inflation). It was the era in which the environmental movement was beginning to bite and Paul Ehrlich's The Population Bomb held sway. (According to Ehrlich, hundreds of thousands of people the world over were going to die of unavoidable starvation due to overpopulation.) That was also, by my recollection, the peak of the buzz, among Christians, about the Great Tribulation and the Rapture. Hal Lindsay's The Late Great Planet Earth sold 15 million copies over the course of the decade. . . . And there were plenty of other people who were predicting the End of the World as We Know It.

But then, during the 80s, the emotional tenor seemed to turn around. I forget Reagan's term for it. But there was a renewal of hope.

One of the more pleasant stories from that period is the result of the bet between Paul Ehrlich and Julian Simon. The latter wrote the books The Ultimate Resource and The Ultimate Resource 2--both of which argue that, instead of being destructive bombs, human beings, with their imagination, spirit and inventiveness, are, in fact, the ultimate resource.

In 1980,
Simon offered Ehrlich a bet centered on the market price of metals. Ehrlich would pick a quantity of any five metals he liked worth $1,000 in 1980. If the 1990 price of the metals, after adjusting for inflation, was more than $1,000 (i.e. the metals became more scarce), Ehrlich would win. If, however, the value of the metals after inflation was less than $1,000 (i.e. the metals became less scare), Simon would win. The loser would mail the winner a check for the change in price.

Ehrlich agreed to the bet, and chose copper, chrome, nickel, tin and tungsten.

By 1990, all five metal were below their inflation-adjusted price level in 1980. Ehrlich lost the bet and sent Simon a check for $576.07. Prices of the metals chosen by Ehrlich fell so much that Simon would have won the bet even if the prices hadn't been adjusted for inflation.

Julian Simon was the person who inspired Bjorn Lomborg, a radical environmentalist, to do some research . . . become "converted" to a far less bleak perspective, and write his controversial The Skeptical Environmentalist.

So why am I writing this morning?

Because among many other items I uncovered during my most recent two- or three-week study, I ran across the concept of "Peak Oil": the world is running out of oil. And not slowly. But "no one"--certainly no political or social/cultural leader--is talking about it.

In essence,
Peak oil is the point in time when extraction of oil from the earth reaches its highest point and then begins to decline. We won't be able to say with certainty when we have reached peak oil until after the fact. Many experts say we have already reached the peak. Others say not yet, but within the next few years.

What does Peak Oil herald? It heralds the end of cheap energy.
What else does it herald?
As oil production begins to decline . . . , countries will take an every-man-for-himself attitude. Political tensions will run high. . . .

See also, and (on a spoof page, but well-written, and including good information)

Have we "finally" gotten to a point where Mr. Simon will be wrong or, as Glenn Morton says at "Laissez les mal temps roulez"?