Eh? Dave is off on another Malthusian rant...
A great post by Robert Bradley Jr. over at Master Resource:
Dear Peak Oilers: Please Consider Erich Zimmermann's 'Functional Theory' of Mineral Resources
The peak oil movement, now trying to turn itself into a pro-government-intervention political movement, draws the wrong conclusion by logically progressing from the wrong assumption.
This post revisits this wrong assumption: fixity. From mineral fixity, it is concluded that every act of production and consumption leaves less supply. In this Harold Hotelling world, costs must go up and prices must go up.
But going from the natural science, perfect knowledge, hypothetical world to the real world, just the opposite is true. There is not a fixed supply, known or unknown, from which extractions leave less supply for the future. Costs do not have to go up, and neither do prices.
Try answering this question to see how the peak oilers have it wrong for the business/economic real world. Do we have more or less oil today than when the nation was founded in 1776? Does the world have more or less oil in 2010 than in 1910?
The natural-science answer is that in a physical sense, there is less oil today that then by the amount of extraction. But in a social science sense, we have much more oil today than in 1776 or in 1910 because today's supply is inventoried and produced from known reservoirs. The same promises to hold true in the future in a consumer-driven, entrepreneur friendly world.
This fixity problem is the same problem that is plaguing the economists who have the ear of the current administration. Capital is fungible -- there is no fixed pool of money whose unequal distribution is the root cause of the world's social ills.
A single mom living in Scotland was able to create a muti-billion dollar industry by jotting down the bedtime stories she told to her children. All of this wealth created out of thin air. Someone who wanted to read the Harry Potter stories or see the movies, if they did not have the capital, they would spend more time working to accumulate the capital and then enter into a transaction with a local book seller or movie theater. Work was directly transformed into wealth.
Toss into the mix the wonderful advancements in drilling technology that allow for deeper and deeper exploration and the finding of large reserves that simply do not fit the model, we then have a strong case for abiogenic oil production -- that the natural hydrocarbons of the earth's core are 'cooked' into petroleum products.
A crackpot idea back in the 1980's but it fits the findings today -- our planet loves us and want's us to be happy. It doesn't make beer but it makes the next best thing: OIL
