The Oil Drum | Technology to the rescue

75 comments on Technology to the rescue - er, only perhaps.

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SJMStrategy on October 5, 2005 - 1:04am

One of the assumptions is that until peak oil hits we may not realise there is a problem and then WHAM, we will not have time to respond - trying to get new technology in place to weather the storm will be too little too late. From following this site, on this, I agree. I also agree we need incentives to address peak oil and soon.

However, I do not think actually reaching peak oil is even necessary to begin major financial dislocation. The capital markets assume future growth. This is nothing new. If the markets perceive the end of cheap energy and flat/no growth (let alone contraction) as a consequence, then we will see very nasty things with respect to equities and debt instruments (by the way, the comments on bundling mortgages is called securitization and this disperses risk very well, unless a severe systemic shock occurs - which may well happen when the crap hits the fan).

This problem could create a series of cascading events leading to a crash similar to the depression (90% drop in stock indices). It is true that we got out of that mess (WWII helped, as repugnent as it sounds) but I am not so sure we could get out of the mess if the cause is one that is chronic or is addressed by way of war given the nuclear weapons factor. What might help is a reorientation of what drives our capital markets.

If investors understand that performance will be greatest by those firms pursuing sustainability, rewards will be allocated to those that take steps to address the ramifications of the coming of peak oil. This is not the total solution but it can help (perhaps in a very significant way - one can hope). I have the ear of those that might, just might, make some difference in reforms on financial reporting that tells investors the prospects of a firm. I can assure you that sustainability and the issue of peak oil is on the radar (even if only privately).

For this reason, I would like very much your thoughts on how we can reorient our 'free market' system to promote addressing PO.

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Don in Colorado on October 5, 2005 - 2:21am

I wonder if the coming winter of 2005 will wake investors (and people) up to the problems of an unsustainable economy.

It's only October, and people here are scared because of what they've heard about natural gas supplies.

Of course, everything that happens now may be too late.

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Freddy Hutter on October 5, 2005 - 1:27pm

My current usa energy forecast is virtually spikeless based, not on supply concerns, but the fact that long term weather models are forecasting that this could be the USA's warmest ever Winter. As we are well above the five year avg in both oil and gas stocks, the contemplated supply should mitigate price shocks 'til Spring.

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step back on October 5, 2005 - 2:51am

No one in the USA has announced an "E- Prize",an energy independence prize similar to the X prize for commercializing space travel.

Who will do it?
Bill Gates?
Paul Allen?
Some other gizzilionaire?

Here are a series of lies:

The markets will provide.
Necessity is the mother of invention
"They" will come up with something, they always have.

info about the X-Prize:
http://www.xpcup.com/index.cfm

the Russians have an E-prize program:
http://www.yukos.com/Corporate_citizenship/Energy_Prize.asp

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Francois on October 5, 2005 - 9:23am

One example of hitting a problem before the peak is corn and wheat production - annecdotal evidence from friends and family indicate many midwest farmers have decided not to plant this coming season as the commmodity prices are too low (at the moment) and natural gas (for irrigation pumps) too expensive. I have seen some MSM reports on this but I think the extent is more pervasive than recognized.

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Chris on October 5, 2005 - 4:38pm

The Chinese are already noticing and responding to dislocations. The typhoon that interrupted supplies in August gave them a good taste of the future. Even before that, they seem to have stepped up efforts to acquire oil (as opposed to our inefficient method of acquiring countries that have oil!).

Now the Chinese seem to have pretty good cash reserves. So how forward looking are they? Are they also developing alternative energy? Are they importing technology to help them make a transition?

Another point about economic dislocations. The worst dislocations are likely to start in the third world in the sense that the third world will have difficulty competing for supplies. That might provide the U.S. more time but at the price of political instability in third world countries. However, dislocations in the third world also opens up the possibility of local alternative energy methods, something that is still undeveloped in third world terms (I'm thinking of the tendency of engineers to think up billion dollar projects that are difficult if not impossible for third world countries to fund when what's needed are more practical and doable million dollar projects).

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