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96 comments on Big Oil and Alternative Energy

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Nate Hagens on May 3, 2006 - 7:27pm Permalink | Subthread | Comments top
Hi Robert,

Looked at in another way, its not "Big Oil" that is making these decisions, but our financial structure which rewards current performance and extrapolates it forward via discount rates or other financial models.  What we really need is an overhaul of how wall street values companies shares - this would require an ubiquitous understanding of net energy. Its also counter to human nature, which is to focus on the present -the future is discounted heavily.

Also, oil is very high quality energy, so as it gets scarcer, it will still be higher quality than wind or solar, so the companies that can pull it out, will be getting multiples of what they get now.

Ive said for a long time that the market only prices at the marginal barrel and was not designed to properly value a scarce resource that has a very large fixed usage in society.

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jokuhl on May 3, 2006 - 8:25pm Permalink | Subthread | Parent | Comments top
"Its also counter to human nature, which is to focus on the present -the future is discounted heavily."

That's pretty bold classification of Human Nature.  Even those posts that make this claim of short-sightedness as the basic 'American Human Nature' are being extremely general.  Sure, there are countless examples of it, as there are also examples of people building well-designed infrastructure meant to last for generations, just as these Renewables that we should be installing ought to be.  NYC water tunnels, Brooklyn Bridge, Holland's great Dikes, Terraced Irrigation systems.. etc..

What you might have said was that this is counter to the 'prevailing business-models' that we have since allowed to run some (most) of the systems that we rely upon to survive, without also retaining a limber mechanism (Government?) for looking any farther ahead to our developing needs than these businesses do, so that someone can step in in a timely way and say 'some new preparations have to be made now'.. As it stands, business leaders can 'legitimately' say that they cannot let their love of Humankind force them to make 'Irresponsible' business decisions.

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kjmclark on May 3, 2006 - 10:53pm Permalink | Subthread | Parent | Comments top
TheLastSasquatch wrote: "Its also counter to human nature, which is to focus on the present -the future is discounted heavily."

Jokuhl wrote: "That's pretty bold classification of Human Nature."

Actually, IMHO it isn't too bold.  This is the way the entire rest of the animal kingdom works.  AFAIK, humans are the only species that gives any thought whatsoever to the future.  So I would adjust the original statement to say, "It's also counter to all nature, which is to focus on the present."  

It's a real credit to humanity that we give any weight to the future at all.  It's strong evidence that we really are smarter than yeast.  The next question is, are we smart enough to avoid the outcome of all yeast?  So far, we have several thousands of years of track record in our favor :-)  Of course I've never heard of yeast going to war :-(

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Nate Hagens on May 4, 2006 - 10:39am Permalink | Subthread | Parent | Comments top
thanks kjmclark. I think the reason we give any weight to the future is because of the sunk costs of capital, infrastructure, agriculture, etc. if we hunted and gathered our discount rates would  be about as steep as my dogs.
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Backstop on May 4, 2006 - 10:39am Permalink | Subthread | Parent | Comments top
As an ecologist, if I could spare the time, I'd list some of the myraid species of terrestrial and marine life that put effort into developing, storing & conserving resources for future well-being.

What some Americans now claim to be human nature is no more than what they've been taught to believe by the propagandists of consumption. The conduct they claim to be universal is actually no more than a relatively recent materialist ideology.

regards,

Backstop

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Nate Hagens on May 4, 2006 - 11:15am Permalink | Subthread | Parent | Comments top
are there any examples where they set aside resources for more than one season/generation?
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pbrewer on May 4, 2006 - 11:44am Permalink | Subthread | Parent | Comments top
Bees will store vast amounts of honey--enough that humans can take large amounts and still leave the bees with enough to make it through the winter.  Bees also build hives that last for many generation of bees.

Of course it's also true that bees don't "think" about putting honey aside for the future.  Bees just do what bees do.

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AlanfromBigEasy on May 4, 2006 - 11:45am Permalink | Subthread | Parent | Comments top
Yes, massive civil structures that take almost a generation to build.

The Swiss voted in 1998 to do a twenty year, 31 billion Swiss franc (= to $1 trillion for US) upgrade of their rail system.  The keystone of the entire project will take 17 years to complete (from memory).

Miami wants to build a 103 mile elevated "subway" over 25 years.  90% of the population will be within 3 miles of a station, over half within 2 miles.  They are taking themselves a 1/2 ¢ sales tax to pay for it.

Large dams, etc.

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odograph on May 4, 2006 - 11:20am Permalink | Subthread | Parent | Comments top
well, i think modern "behavioral economics" is more biological (and scientific) in its footing than past generations armchair musings on human nature.

and i think behavioral economics does document a discounting of the future ("intertemporal choice," etc.).  such discounting may be an advantage because it is statistically correct ... but that's the whole point of the "black swan" argument, that we are less prepared (by nature) for the statistically infrequent.

... and peak oil is a classic black swan

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odograph on May 4, 2006 - 11:23am Permalink | Subthread | Parent | Comments top
"The Black Swan: Why Don't We Learn that We Don't Learn?"

http://www.fooledbyrandomness.com/blackswan.pdf

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The Real Mike on May 4, 2006 - 6:51pm Permalink | Subthread | Parent | Comments top
It's got nothing to do with human nature, it's to do with the way our currency systems work. Look into demurrage or Bernard Leitaers "Future of Money" book for a good discussion of this.

If you want an example - in times of negative interest (when money was not a good store of value for instance due to taxes upon money levied by local lords) long term thinking was order of the day. Hence the construction of cathedrals in mediaeval England. Building a cathedral took generations but guaranteed income (via pilgrims) for even longer ...

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96 comments on Big Oil and Alternative Energy

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