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234 comments on DrumBeat: August 20, 2006

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westexas on August 20, 2006 - 8:21pm Permalink | Subthread | Parent | Comments top
I may submit a guest opinion piece in rebuttal to this. The irony of course is his certainty that oil won't peak, even as the latest data show declining production.  
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Eskribage on August 20, 2006 - 8:30pm Permalink | Subthread | Parent | Comments top

Donlan is a serious right winger -- of the WSJ editorial page ilk. He's kind of the editorial voice for Barron's -- a fundamentalist on a number of fronts including that "markets solve all problems". At very least you should write a good rebuttal letter. They have a good and vigorous letters section.
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HongKong Trader on August 20, 2006 - 9:49pm Permalink | Subthread | Parent | Comments top
There is something to be said for this arguement. It would have once seemed almost impossible to pump 80 mbpd of conventional oil (I mean just try to imagine how much oil we are shifting daily - it's a massive operation). I am sure that all this unconventional oil will become viable on a larger scale eventually (it too will be a massive operation). The market does work the way this article suggests. Of course we all know that other energy sources will have to be part of the solution too.

However I think he is glossing over the fact that it takes time for this market force to play out and while we are waiting for the market to work it is likely to be painful from an economic point of view.

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Eskribage on August 20, 2006 - 11:01pm Permalink | Subthread | Parent | Comments top

If climate change were not (to my mind) an even more dire threat than production declines in petroleum, I'd be enthusiastic about the possibility that perhaps he's right. But $20 CTL would be a catastrophe beyond words. Our army of cars still running yet producing several-fold more CO2?

I mean, even entertaining the notion is bat sh*t crazy. Completely detached from reality. Unless... maybe the market will solve climate change too!! (yes, that's a joke. Though I'm sure there are plenty of people who would accept it on its face.)

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HongKong Trader on August 21, 2006 - 12:39am Permalink | Subthread | Parent | Comments top
I agree. I don't like CTL on enviro grounds. Would rather go straight to renewables. But a fact is a fact, on economic grounds alone CTL is cheaper. Personally I'd rather pay more and have a clean enviro. I just don't think the average man in the street feels like that and I am convinced most Asians dont think like that.
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toilforoil on August 20, 2006 - 11:06pm Permalink | Subthread | Parent | Comments top
"The market does work the way this article suggests."

No, it doesn't.  The discovery of oil is  historically inversely related to price for one thing, in complete contradiction to current economic dogma.  And you should take a close look at developments in the tar pits of Alberta, where the ramping up of production is small, slow and increasingly expensive.  Tar sand development, just like wind, solar and the rest, is built on a conventional oil and natural gas platform, and that platform is sinking, despite increasing prices.  And then of course there is the stress, or should I say kick to the head, that is coming from the accelerated destruction of infrastructure as the production of green house gases by the oil industry increases, due to the shift to the production of oil from degraded hydrocarbons (tar sands) and other energy intensive extraction and production efforts.  This destruction is no more than the consumption of embedded energy...gone gone gone.

What you are about to learn is that the 'free market' system is also built on a transitory platform: the increasing availability of higher and higher quality energy, a phenomenon that has marked the era from Adam Smith to about yesterday. The faster we increase the proportion of tar pit oil and coal, in particular, in our energy mix, the faster this platform will degrade and the faster the 'free market' system will erode.

The dogmatic fundamentalist writing for Barron's might have made an argument for the prolongation of the 'free market' system (do you think there is anything about our system that Adam Smith would recognize?)had he focused on the ability of creative people to leverage more goods and services from a given unit of energy.  But then, since creativity is so obviously dependent on socially provided goods such as education, I can see why he stuck with the core of his (and perhaps your) dogma.  

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fleam on August 20, 2006 - 11:39pm Permalink | Subthread | Parent | Comments top
Right-O

You know, sudden insight here, the whole Adam Smith thing is like.... growing up. You see, there's a portion of one's childhood that is a process of greater and greater resources. You get over the whole learning how to walk thing, your legs get longer and you're done losing teeth and getting your grown-up ones, and it seems like every day you can run a bit faster or climb that tree one branch higher. This is accompanied by more food, if for no other reason than you are now tall enough to see what's on the kitchen counter to snitch some, and you're enlarging your circle of friends and that means more moms to cadge from. You're learning new berries and stuff too. This is often what's considered the "formative" years, from about 8-12 years old, where much of your world-view is formed. From 13 to 19 or so, sex is a distraction but you're still getting physically bigger, stronger, and learning more. So, it's easy to see how the Adam Smith view of the world would appeal to a new American invader culture where one was an adult with adult responsibilities by age 17 or so.

Adam Smith and Ayn Rand and so on do not hold much comfort for the sick, the hungry, the old, the frail, etc. Like the modern high-tech culture, you're a superman or you're a "luser".

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234 comments on DrumBeat: August 20, 2006

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