The Oil Reserves issue, again.

[Beerina]

George Will, http://www.washingtonpost.com/wp-dyn/content/article/2009/11/20/AR2009112002619.html

Free log-in ID required.

In 1914, the Bureau of Mines said that U.S. oil reserves would be exhausted by 1924. In 1939, the Interior Department said that the world had 13 years' worth of petroleum reserves. Then a global war was fought, and the postwar boom was fueled. In 1951 Interior reported that the world had . . . 13 years of reserves. In 1970, the world's proven oil reserves were an estimated 612 billion barrels. By 2006, more than 767 billion barrels had been pumped, and proven reserves were 1.2 trillion barrels. In 1977, scold in chief Jimmy Carter predicted that mankind "could use up all the proven reserves of oil in the entire world by the end of the next decade." Since then the world has consumed three times more oil than was then in the world's proven reserves.

Emphasis mine.



With a bitter, pithy conclusion:

Such good news horrifies people who relish scarcity because it requires -- or so they say -- government to ration what is scarce and to generally boss people to mend their behavior: "This is the police!" Put down that incandescent bulb and step away from the lamp!"

Today, there is a name for the political doctrine that rejoices in scarcity of everything except government. The name is environmentalism.

I recall some of the previous "we're running out" scares to be due to misunderstanding the concept of "known reserves", and conflating it with "hey, that's pretty much all there is!" when it was, in fact, nothing of the sort and was never intended to mean that.

Other scares are due to a lack of understanding of generally accepted economic principles of substitution, which includes advancing technology, often driven by increased prices which precede scarcity -- and lessen it -- ameliorating it far more than rationing ever did. Actually, rising (or changing) prices are used by economists to define scarcity.

 

[Darth Rotor]

Waste not, want not.

 

[Sword_Of_Truth]

deleted

 

[uk_dave]

I recall some of the previous "we're running out" scares to be due to misunderstanding the concept of "known reserves", and conflating it with "hey, that's pretty much all there is!" when it was, in fact, nothing of the sort and was never intended to mean that.

Okay. So, at some points in the past the known reserves of oil have been so small that warnings have been given about the world running out of oil, which then motivates the oil companies and industry to find new reserves and develop more fuel efficient ways of using those reserves.

So what is wrong with people making those warnings based upon the available data at the time?
And do you really want to just sit back and trust that something which must be finite will not run out...... just yet?

 

[daenku32]

George Will, http://www.washingtonpost.com/wp-dyn/content/article/2009/11/20/AR2009112002619.html

In 1977, scold in chief Jimmy Carter predicted that mankind "could use up all the proven reserves of oil in the entire world by the end of the next decade." Since then the world has consumed three times more oil than was then in the world's proven reserves..

Well, at least we can always predict on George Will getting his facts wrong.

Here is the speech that Carter made:
http://www.pbs.org/wgbh/amex/carter/filmmore/ps_energy.html

Carter was speaking of the trends:

If it were possible to keep it rising during the 1970s and 1980s by 5 percent a year as it has in the past, we could use up all the proven reserves of oil in the entire world by the end of the next decade.

Since the 5 percent trend in demand didn't continue, naturally the prediction was no longer valid.

Of course the $4/gallon gasoline that is going to revisit us soon is going to ensure "plenty" of oil in the future...for those who can afford it.

 

[WildCat]

According to an article by Leonard Maugeri in the October 2009 Scientific American oil can last at least another 100 years as new technology increases oil field productivity. In fact, many oil fields once thought to be depleted are once again producing oil due to new extraction techniques.

And only a third of the surface of the earth's continental plates have been searched for oil with modern techniques. There is no imminent shortage of oil.

 

[Cain]

Gaia's strictly pump and dump.

According to an article by Leonard Maugeri in the October 2009 Scientific American oil can last at least another 100 years as new technology increases oil field productivity. In fact, many oil fields once thought to be depleted are once again producing oil due to new extraction techniques.

And only a third of the surface of the earth's continental plates have been searched for oil with modern techniques. There is no imminent shortage of oil.

Muhahaha, I laugh at Mother Nature; she's strictly pump and dump. Maybe a nice non-petroleum lube'll ease the pain, hon!

 

[WildCat]

Muhahaha, I laugh at Mother Nature; she's strictly pump and dump. Maybe a nice non-petroleum lube'll ease the pain, hon!

Is there an alternate universe where this drivel passes as an actual response to my post?

 

[rjh01]

I think the wrong question is being asked here. It is not a matter of how much oil, but at what cost? The price of oil was going up. It was stopped by the recession in most of the world and is now going up again. Not sure how much of this is due to USA currency going down in value and how much of it is a real increase.

Here is a useful link http://www.wtrg.com/daily/crudeoilprice.html
It shows the price of oil over time.

 

[Francesca R]

I recall some of the previous "we're running out" scares to be due to misunderstanding the concept of "known reserves", and conflating it with "hey, that's pretty much all there is!" when it was, in fact, nothing of the sort and was never intended to mean that.

Other scares are due to a lack of understanding of generally accepted economic principles of substitution, which includes advancing technology, often driven by increased prices which precede scarcity -- and lessen it -- ameliorating it far more than rationing ever did. Actually, rising (or changing) prices are used by economists to define scarcity.

I agree.

So what is wrong with people making those warnings based upon the available data at the time?

Nothing much, but the existence of a market price is even better. Except the price measures the intersection of cleared supply with demand, and "warnings" are usually only about supply. So price can change without there being any particular message about supply, and warners will be apt to jump on that and proclaim terminal supply tightness.

And do you really want to just sit back and trust that something which must be finite will not run out...... just yet?

I can't speak for anyone else but I did not read that attitude in this thread.

 

[Cain]

An exercise in wishful thinking...

Is there an alternate universe where this drivel passes as an actual response to my post?

Well, I suppose that depends on whether or not your doppelganger in this alternative universe possesses even the slightest powers of discernment.

 

[Lurker]

The easy oil is gone. As rjh01 alluded to, oil is still out there it is just in harder to reach locales. Deep water oil is much more costly to produce. Some of it cannot be reached by today's technology. We also have frontier plays in the artic but how do we account for ice heave and transportation? Another consideration is oil is being extracted from countries with questionable security. We have more oil in shale but it is very costly to extract it from the shale. To solve all these problems will cost more money which is why oil continues to rise in price.

Every oil asset has a break even price point. Some are not economical at today's price but may look better in the light of sustainable $150 barrel oil.

 

[Puppycow]

Is there an alternate universe where this drivel passes as an actual response to my post?

I don't think Cain actually believes in Mother Nature or Gaia as supernatural deities. I think he means that extracting and burning all that fossil fuel will cause a lot of harm to the environment, specifically global warming. I believe that there is some evidence for this position. But I don't know what the exact trade-off is or how to value the benefits vs. the harms.

 

[Beerina]

Okay. So, at some points in the past the known reserves of oil have been so small that warnings have been given about the world running out of oil, which then motivates the oil companies and industry to find new reserves and develop more fuel efficient ways of using those reserves.

So what is wrong with people making those warnings based upon the available data at the time?

The problem was that the definition of "known reserves" is not intended to mean "that's all there is, and that's that!" You, yourself, are still using it in that sense. It's meaning is "this is all that we've found, and we're hardly scouring for more because we don't need to yet."

And do you really want to just sit back and trust that something which must be finite will not run out...... just yet?

Yes, most certainly. Well-tested theories are on my side. Science: Theory, prediction, result. Remember? That this theory is counter-intuitive is also nothing new. That's the philosophical hump people like you keep stumbling over.


We won't "run out of oil" suddenly precisely because that's not how economics in a free society work. As it becomes physically more scarce, prices increase. This creates pressures that capitalism works to satisfy.

More searching. Cheaper extraction techniques. (Note the Will article points out how these formerly costly extraction techniques are now worthwhile. Yet their costliness was presumed, by environmental scare tactics scientists as being a wall we will run into. That is an error to presume that. Economics and capitalism and actual history do not support that presumption.)

Substitution -- other materials to fill the many slots oil does. New fuels for existing engines. More of the same fuel from bacterial genetic engineering. New types of engines. New types of materials to make things formerly made of petroleum. And most importantly, things nobody in government who wants to ration have ever thought of, yet. When an "expert" sits there and predicts calamity for society because "there will be no more oil to make all our plastic items", it is exactly this thing that he's faulty in judging. He's gone out of his area of expertise (how much oil is physically in the ground) to predict an economic situation that simply will not exist.

Free people will invent solutions all along the way to not just partially compensate, but actually overcompensate! A hundred years from now, even assuming there's no way to create oil products artificially, already known to be false, "oil" will be no more expensive, largely because most of what you think can only be done using oil will be done other ways. And greedy capitalists will be the ones to figure it out.

This is not just some arbitrary meme to support some political position, but rather the result of actual theories that make actual, measurable predictions that actually came true. Repeatedly.

Learning these things should not fill you with terror, and force you to run to buttress your long-held beliefs in an old man with a white beard in the sky long-discredited economic models. It should fill you with delight.

By the way, the "resource" in The Ultimate Resource is people. The more, the better, in free societies with capitalism (as derivative of freedom). Not just the more people to solve things, but the more people who demand things to buy, which drives capitalists to fill that monetary vacuum of money laying on the floor.

"Impossible, inconceivable" multi-billion dollar drilling vessels that drop through several miles of water, then drill down a mile, then make a 70 degree turn and drill another mile or two. Brought to you by greedy free people.

 

[Cain]

The problem was that the definition of "known reserves" is not intended to mean "that's all there is, and that's that!" You, yourself, are still using it in that sense. It's meaning is "this is all that we've found, and we're hardly scouring for more because we don't need to yet."

Yes, most certainly. Well-tested theories are on my side. Science: Theory, prediction, result. Remember? That this theory is counter-intuitive is also nothing new. That's the philosophical hump people like you keep stumbling over.


We won't "run out of oil" suddenly precisely because that's not how economics in a free society work. As it becomes physically more scarce, prices increase. This creates pressures that capitalism works to satisfy.

More searching. Cheaper extraction techniques. (Note the Will article points out how these formerly costly extraction techniques are now worthwhile. Yet their costliness was presumed, by environmental scare tactics scientists as being a wall we will run into. That is an error to presume that. Economics and capitalism and actual history do not support that presumption.)

Substitution -- other materials to fill the many slots oil does. New fuels for existing engines. More of the same fuel from bacterial genetic engineering. New types of engines. New types of materials to make things formerly made of petroleum. And most importantly, things nobody in government who wants to ration have ever thought of, yet. When an "expert" sits there and predicts calamity for society because "there will be no more oil to make all our plastic items", it is exactly this thing that he's faulty in judging. He's gone out of his area of expertise (how much oil is physically in the ground) to predict an economic situation that simply will not exist.

Free people will invent solutions all along the way to not just partially compensate, but actually overcompensate! A hundred years from now, even assuming there's no way to create oil products artificially, already known to be false, "oil" will be no more expensive, largely because most of what you think can only be done using oil will be done other ways. And greedy capitalists will be the ones to figure it out.

This is not just some arbitrary meme to support some political position, but rather the result of actual theories that make actual, measurable predictions that actually came true. Repeatedly.

Learning these things should not fill you with terror, and force you to run to buttress your long-held beliefs in an old man with a white beard in the sky long-discredited economic models. It should fill you with delight.

By the way, the "resource" in The Ultimate Resource is people. The more, the better, in free societies with capitalism (as derivative of freedom). Not just the more people to solve things, but the more people who demand things to buy, which drives capitalists to fill that monetary vacuum of money laying on the floor.

This looks like a ransom note. I wondered how long until someone mentioned Julian Simon. Was he tagged all along?

 

[Beerina]

I think the wrong question is being asked here. It is not a matter of how much oil, but at what cost? The price of oil was going up. It was stopped by the recession in most of the world and is now going up again. Not sure how much of this is due to USA currency going down in value and how much of it is a real increase.

Here is a useful link http://www.wtrg.com/daily/crudeoilprice.html
It shows the price of oil over time.

That's short term. Here's a longer one from the same site:

http://www.wtrg.com/oil_graphs/oilprice1947.gif

from page http://www.wtrg.com/prices.htm

It's precisely because of vagaries like this that Julian Simon requires a minimum of 10 year granularity when looking at data like this, and preferably, longer.


A good analogy would be it's the difference between weather and climate.


Note also the clownish failure of price controls in the US. They could do little but take advantage of a few percent difference. And note they helped lead to the false "shortages" and gas lines in the US. This lesson is not learned because it's counter-intuitive to command-and-control bleats that help people get elected, which are very simple-minded concepts indeed.

 

[McHrozni]

While this doomsaying has been going on for a very long time, I would like to point out that eventually, oil will run out, and we better see it as a useful, but far from critical product before that happens.

Another thing with oil is that it gives a whole lot of influence to people who really shouldn't have anywhere near as much influence. Surely we can all agree that reducing the importance of Saudi Arabia is a good thing.

McHrozni

 

[rjh01]

It will be a long time before we run out of oil (maybe in a 1,000 years?). However I expect it will get more expensive compared with other raw resources, in the long term.

 

[Cain]

While this doomsaying has been going on for a very long time, I would like to point out that eventually, oil will run out, and we better see it as a useful, but far from critical product before that happens.

Flawed time horizon. By the time oil runs out "we" will no longer be alive. Future generations may be screwed, but hey, life isn't fair. Intergenerational tyranny has never been so much fun.

 

[Skeptic]

Well, at least we can always predict on George Will getting his facts wrong...Since the 5 percent trend in demand didn't continue, naturally the prediction was no longer valid..

Not really. A 5% rise in demand for 12 years (from 1977 to "end of next decade", 1989) would mean total demand in 1989 would be 1.8 times what it was in 1977, and average yearly consumption being about 1.5 as much as "flat" (no rise) consumption would have been over that same time period. Which means that if running out of oil should have occurred, according to Carter, if not in 13 years, then in 18 or so -- even without any rise in demand. Will is substantially correct.