Thursday, July 17, 2008

It's not peak oil, it's peak politics

Those economics ignoramuses in the Greens are still attempting to make political capital from "the end of Peak Oil" -- and Helen Clark, being nothing if not desperate, has been continuing the cry.

They're either ignorant, or desperate for attention. "It is not the earth's capacity to deliver more oil" that is at threat, points out Jérémie T.A. Rostan, "but our capacity to extract more oil from it." The worldwide problem isn't too little oil, it's too much politics.
With about a half-a-century's worth of proven oil reserves, the problem is not in bringing on new production. Resources are ample. "The problems are not so much below ground as above it," i.e., "not geological, but political." The problem is that governments forbid access to resources that they themselves fail to manage properly, and they impose barriers on private companies' investments in surplus oil production capacity — i.e., to the satisfaction of consumers' energy needs.
The political problem effects both supply and demand.

Demand is rising in developng countries, true, but it is rising fastest in places that actually subsidise fuel prices -- "those emerging nations that also subsidize fuel prices, such as China, India, and — increasingly — the oil-producing nations themselves." In contrast, the data in BP's review show that 'consumers in Europe and North America are already responding to high prices by moderating demand'." (The same demand story is recorded here in NZ, where the price of petrol rose 7.3% and diesel rose 16.2% over the three months to May, while the value of fuel sales only rose 0.1% [ref, TVHE], and fuel taxes fell not a jot.)

Meanwhile, in the face of all this demand, and contrary to Economics 101 which tells us that all thing being equal greater demand leads to greater supply, worldwide supply is actually falling.
The recent upward trend of oil prices, [explains BP's chief executive Tony Hayward] is mainly accounted for, not by speculation, but by falling production. "Production by the Organisation of the Petroleum Exporting Countries," he writes, "fell by 350,000 barrels of oil a day last year."

In fact, global oil production started a downward trend in 2005.[3] Now, the question is, how on earth is it possible that global oil production responds as weakly as it does to such strongly rising prices — $135 for a barrel of oil in 2008 being nearly twice the price of a year earlier.

No, it's not peak oil. It's peak politics. Notes Rostan,

Sadly, far less than 10% of the world's oil reserves are in countries that allow private companies to operate freely. This means that the latter and, through them, consumers, are denied access to far more than 90% of the world's oil reserves. State-owned companies control more than 65% of the world's oil reserves — e.g., in Saudi Arabia. As for the 25% left, they are mainly situated in countries such as Iran, Russia, Venezuela, etc., where, because of above-ground political factors, private Western companies have the greatest difficulties working efficiently...

This is the reason that Economics 101 is not able to work. All things are very far from being "equal." It's not Big Oil that's screwed the pooch, it's big politics. Oil companies are being prohibited from exploring and drilling for new oil, and the production of 90% of the world's existing fields is controlled by thugs like Chavez, Putin, Ahmedinejad and the House of Saud.

The thugs have different, if not perverse, supply incentives. The incentive for politically-driven oil producers is not to produce more oil when demand rises, but to produce less. The less that's produced, the more power the thugs have. All things in politics are very much not equal -- like Winston Peters on steroids, they like being the centre of attention, however they have to do it.

Just to conclude, then, with your lesson for today: It is not the earth's capacity to deliver more oil that is at threat, but our capacity to extract more oil from it." In other words: it's not peak oil, it's peak politics. The market can solve the energy crisis, but only if it's allowed to work.

Tell Jeanette and Helen next time you see them.

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33 Comments:

Blogger Rich said...

Wouldn’t it be better just to develop an alternative to oil in the west and let those dodgy middle eastern regimes collapse under their own bureaucratic weight?

7/17/2008 03:09:00 pm  
Blogger Ruth said...

The end of easily extractable oil is in sight. There is no doubt about that - and possibly some of those who talk of Peak Oil mean easily extractable oil.

Again you assume Big Oil actually WANT a purely capitalist/free market solution. They don't.

A couple of weeks ago world banks told oil cartels that if oil goes to 200pb the world economy will collapse.

We see the pullback already - they are not going to shit in their own nest.

7/17/2008 07:03:00 pm  
Blogger PC said...

"The end of easily extractable oil is in sight. There is no doubt about that..."

And you know this because ... [searching in vain for any evidence adduced]

7/17/2008 11:45:00 pm  
Blogger PC said...

Rich, better for whom?

Answer that, and you'll be on your way to understanding why your trust should be in entrepreneurs, not politicians.

7/17/2008 11:46:00 pm  
Blogger Luke H said...

"The end of easily extractable oil is in sight."

Absolutely. Thankfullly, the era of easily extractable yellowcake is nigh!

7/18/2008 02:02:00 am  
Anonymous LGM said...

Ruth

"The end of easily extractable oil is in sight."

Bullshit!

You clearly have no idea how oil is extracted and processed, nor what needs to be done to recover known resources. You need to find out the facts rather than spouting errant nonsense of the type you have been vomiting up recently. Time you stop being such a turd head. It is recommended you do some research for a change.

Try looking up some of the technologies employed and learn how they operate. That would assist you in avoiding repetition of such crass shit as you are presenting on this occasion.

Now if it is the more "difficult" to reach resource you are worried about, how about you research the newer technolgies presently under development. As is usual, such technology starts out expensive, as more money needs to be invested to complete the development and initial deployment. As more experience is gained, the technology gets refined and becomes cheaper. Once the initial investments are made, and the new oil field recovery equipment installed and bought into scale production, costs drop. Further applications become a lot easier and cheaper. "Difficult" extraction becomes run-of-the-mill, feasible and economic. Soon enough it is considered conventional.

What you realy need to address you attention to is that your beloved big govts take the bulk of the revenue from the oil business. They also (as PC explains) restrict what oil can be recovered and processed. So what they are doing is ensuring scarcity and high cost. The miracle is that inspite of the impositions of Big Government the oil companies are able to supply oil at all! All goes to show what could be possible if the Big Governments were to get out of the way. Imagine buying gasoline for a fraction of the price it is now.

Time you defended the little guy's interests for a change.

LGM

7/18/2008 02:33:00 am  
Blogger Elijah Lineberry said...

The end of easily extractable oil is in sight..

We have been hearing this for around a Century, Ruth...usually just before the discovery of a major oil field...(mind you, this is in line with your usual accuracy)

7/18/2008 07:49:00 am  
Blogger Rich said...

My trust would be in free market ideas out of the US to come up with a solution to the future energy issues of our global economy, and substitute an oil based economy with a hydrogen based economy. Don’t you think we are in slightly precarious situation, in that we have a hyper complex global civilisation that gets a large chunk of its energy needs from a non renewable resource (oil). If there are current alternatives to oil for transportation, agriculture etc I’d sure be interested to know what they are.

7/18/2008 10:05:00 am  
Blogger Rich said...

Is peak oil a myth or a reality that could happen in the not too distant future? Try arguing against it with these folks.

http://www.theoildrum.com/

Some excellent information on the site though.

7/18/2008 10:44:00 am  
Anonymous The Optimist said...

Well said PC. Also remember that oil being so cheap for so long effectively killed what little new exploration the non-dodgy brigade could be bothered to muster. At $10-30 a barrel it was better to invest in pig farming than oil wells.

7/18/2008 11:06:00 pm  
Anonymous LGM said...

Rich

Hydrogen is a piss poor fuel. It is expensive to make. It is extremely difficult to store. It has low specific energy capacity (compared to the volume and weight of equivalent liquid and solid fuels). It stores MUCH, MUCH less energy than it takes to make it by electrolysis. It stores MUCH, MUCH less energy if manufactured from natural gas than if the gas were consumed directly. It is unstable and dangerous to handle, especially if you do not know what you are doing. It has wide falmmibility limits (from 2 - 98% rich). It has extremely low ignition energy requirement (making it less than ideal as fuel for an internal combustion engine and problematic on board a vehilce- even a fuel cell one with lots of electricity handily available to make things interesting). It has the nasty effect of being able to treat many, many materilas as porous and leaks through them readily. It embrittles metals. That means it makes them fail... think pressure vessel or pipeline. The flame speed is very, very fast (several kilometres per second). It is odourless and colourless. It burns with a clear flame. YOu can walk into a hydrogen fire without seeing it until you are on fire yourself...

Then there are the issues of no infrastructure or logistics chain to distribute it. There is no means of producing it in the quantities required presently. There is no army of highly skilled technicians to keep a hydrogen fuel economy operating, even if all the equipment were present. We are discussing very highly trained and motivated people here, akin to boiler certification engineers in terms of discipline and attitude to detail (one small leak is all a disaster would require). There are very few people in NZ who fit into this category these days.

The slack arse Kiwi attitude and sloppy work demenour guarantees accident after accident with many incinerations. As an example, imagine filling the car at a fuel station. In goes the hydrogen either under considerable pressure or at -270 degrees C or so. Have you any idea of how thorough and complex that proceedure is? Imagine getting it wrong. Let's say the cell phone goes off or the car isn't grounded properly so that a spark discharge occurs at exactly the inopportune moment. It'd be interesting to say the least.

In the end boondoggles like the hydrgen economy completely ignore what people need and what they'll use. It's known as making products that are "fit for purpose". People do not want or need ever more complex, unreliable and over sophisticated lab experiments with decreased utility. They want practical products they can use safely and conveniently. They just want a car to drive around in or a stove to boil the kettle on etc.

I submit that as intersting as hydrogen technology is, it is not the way forward for the general public. Far, far from it in fact. It is another big government science boondoggle. Flush it at once. Give the money back to the people.

LGM

7/19/2008 07:02:00 am  
Anonymous Anonymous said...

"It must be lonely being Tony Hayward. As the oil price continues to soar, there is a gathering consensus that global production of the black stuff is nearing fundamental geological limits. Yet BP's chief executive continues to argue valiantly that the causes of the current oil shock are "not so much below ground as above it, and not geological but political".

Since his company's Russian joint venture, TNK-BP, is under ferocious assault from both its Russian shareholders and the Russian state, Mr Hayward can be forgiven for thinking the industry's problems are man-made rather than natural. But this is a false distinction, and closer analysis suggests BP's predicament is itself evidence of looming geological constraints to global production, or "peak oil"."
http://www.independent.co.uk/news/business/analysis-and-features/hope-springs-eternal-but-the-oil-wont-a-russian-lament-851834.html

7/19/2008 11:33:00 am  
Anonymous Mo said...

I think the question is what will we be using while research is being dumped on alternative fuel sources. I certainly support this research and we have oil billionaires like Pickens planning to build big wind farms and solar is slowly getting better but for now it seems we are stuck with oil,coal and nuclear energy.

Is nuclear a vaiable option for NZ by any chance? or is there too much social stigma surrounding its use?

7/19/2008 02:07:00 pm  
Blogger Truth Seeker said...

Demand is rising. Supply is falling. Sure, there most definitely is a political element, just as there are also market elements. As you crawl along the oil supply chain and look at each link in it, not ONE of them has any incentive to reduce price or increase supply. Why is that? It's because supply can't be increased for whatever reason....and they aren't all political. Many oil-producing countries are simply producing less oil each years as their reserves are run down.

A tight oil market is the current, undeniable reality. Prices are reflecting that reality.

You can't wish OPEC away. You can't wish US oil refiners who have deliberately not built new refining capacity (scapegoating environmental laws) in order to improve their profits. Just a few years ago, they had too much capacity and retired a lot of it in order to manipulate the market more easily. This was reported back in 2001 just after Bush took office. Surprise! (I've blogged on it.)

Criticising people who don't sign up for your "If only...." approach to avoiding the reality of oil demand and supply isn't fair or accurate.

The reality is that the world today wants to buy more oil than is available now. This is new. It's real and measures need to be taken to provide alternatives.

Denial isn't an option. At least it isn't a useful one.

7/19/2008 07:54:00 pm  
Anonymous Kevyn Miller said...

PC, You're really not thinking straight on this issue. The oil is under Saudia Arabia, Venezuela, Russia, Iran, etc, etc. Therefore the oil is the private property of the Saudis, Venezuelans, Russians, Iranians, etc. If they don't want to sell the oil you can't make them. That'd violate the first principal of Libertarianism. The answer, of course, is if they wont sell us their's then we'll just have to make our own. Lets face it, the above mentioned countries are not excatly the world leaders in high tech so if they've worked out how to make oil by the shipload then it can't be that difficult for clever people in the west to work out how they're doing. See - problem solved. With oil at current prices I'm sure if the government wont do it private enterprise will do it just for the profit motive.

7/19/2008 10:13:00 pm  
Anonymous kevyn miller said...

lgm. What newer technologies? Improved seisic surveys? Horizontal drilling of the Bakken Field? The former technology has quantified the Bakken Field as having the same reserves as all of Saudi Arabia. It has also identified some pockets where the viscosity of the oil is suitable for current and emerging extraction technologies. The industries own estimates are that these technologies are only capable of accessing 2% of the known reserves in the Bakken Field. Therein lies the problem, 95% of the world's known oil reserves can't be extracted using any of the technologies currently being developed. You are betting on a maverick miracle. The rock drill bit was invented at the same time as the Model T. Surprisingly, the oil industry majors saw no potential in either of them until it was almost too late. Today the situation is almost the exact opposite. The oil industry is well aware of potential demand growth but they aren't aware of any technology that can increase supply at more than a fraction of the required rate.

Many commentators compound the poorly researched new technology argument by reversing the cause and effect for lack of refining capacity and claiming that lack of refinieries is limiting the amount of oil that can be extracted. In reality the oil industry isn't building more refining capacity because they know its a waste of money. This might be where they are making another Model T/rock drill mistake but only because modest increases in extraction are possible over the next couple of decades. But that's too short a period to maximise returns on new refineries.

7/19/2008 10:56:00 pm  
Anonymous LGM said...

Mo

Pickens wind energy farm is a scheme to get hold of a whole pile of welfare money from the US Federal Govt. If the govt gives the go ahead he'll make a guaranteed profit of hundreds of millions of dollars AT NO RISK. Whether the emergent "farm" is viable or makes economic sense or even produces useful electrical energy does not matter a whit. Basically the whole deal is a scam which US taxpayers and consumers will fund (by compulsion) for generations to come. The scheme is an example of insider cronyism.

LGM

7/20/2008 06:45:00 am  
Anonymous LGM said...

Kevyn

An interesting point you raise is that the vast majority of oil in a field is left unextracted by present technologies. For example, a colleague from Midland, Texas, always takes pains to remind everyone that over three quarters of the oil originally present under those ubiquitous nodding ducks, surrounding his home town, has yet to be extracted. This is a common occurance for many fields. Most of the oil remains even after a well is classified as a "stripper". He is being conservative. Your comment of over 90% is closer to the mark.

Plenty of newer technologies to choose from. The trouble is to identify which ones to employ.
Without giving too much away, means include horizontal drilling (we cut through rock at around 1m in 27 seconds maintaining full directional authority) and most importantly the harnessing of certain microbes for specific tasks (such as opening up microporosities, defeating skin effects, compensation for exposure to atmosphere, relief of residual stresses, fracture repair, creation of favourable micro-gradient etc). Most of these technologies and methods are not being developed by the major oil companies but by specialist firms. Just as General Motors does not manufacture tyres, the oil majors do not engage in non-core activity to a great extent. Easier and far more economic to buy in what they require. If you are looking for the new stuff, cast your search towards the specialist suppliers.

---

New oil refineries have not been built in USA and elsewhere because of govt restriction. An ironic example I recall is Saudi 'Ramco offering the US Fed Govt a brand new state of the art refinery to be built in the US free of charge provided the Feds got all the consents. That was the deal. The US gets for free a huge new refinery which they could operate or sell as they saw fit. All they had to do was deal with their own regulatory restrictions and the like. The US govt said, "No!" They couldn't control their own regulators and bureaucrats let alone get congress or the senate to agree. That's but one example.

It is a waste of money, time and resource to battle with governments. No private organisation is going to succeed at it in the long run. So it's a matter of continuing with what you have BAU and adapting to the arbitrary distortions the governments introduce. Pretty much ALL business is forced into this situation unfortunately. What it causes is an impossibility of longer term planning and asset management. That has consequences. It tends to concentrate management on short-termism and lobbying various govt strongmen. Eventually dislocations of resource, investment and effort occur widely enough to result in prices escalating to compensate for the inevitable shortages. This is the final expression of the opportunity cost of malinvestment in response to govt interference. The oil majors know about this and set themselves up to exploit it as best they are able. The source of the problem is not that action by the oil majors but rather various governments successively distorting the market in the first place.

BTW you should look up the myriad of separate independent specifications required for motor spirits by each authority, state, reulatory outfit etc. across the USA. They vary by region (county in some cases), by season and even have price controls applied. Some are required to have grain alcohols (from the farms) mixed in with them! This all goes a long way towards increasing prices, reducing supply and eliminating many benefits of standardisation and mass manufacture. It is a logistics nightmare. Try telling the refinery guys who have to deal with that mess that govt isn't THE problem (actually, beter you don't- those guy'd likely get so annoyed you'd be physically attacked!). Anyway, go look up all the standards. That's a real eye opener. The pity is that it's just one small part of the interference...

---

"The oil is under Saudia Arabia, Venezuela, Russia, Iran, etc, etc. Therefore the oil is the private property of the Saudis, Venezuelans, Russians, Iranians, etc."

That is incorrect. The oil belongs to the people who located it and got it out. That is, it belongs to the oil companies that originally negotiated concessions with the various rulers/governments and owners of the land in order to get what lay beneath it. Subsequently the governments you listed stole the resource (nationalised it) and the infrastructure that had been installed by the oil companies. The Western Governmnts failed to defend the private property interests of their citizens and their oil companies and so now we are in the situation where the thugs who stole the resource are calling the shots in regards to that resource.

Libertarian principles were violated by the nationalisations and also by the refusal of Western Governments to respond.


---

"Lets face it, the above mentioned countries are not excatly the world leaders in high tech so if they've worked out how to make oil by the shipload then it can't be that difficult for clever people in the west to work out how they're doing."

For fuckssakes! Are you serious? Your comment is so misguided and ignorant of reality. Have you even been over there to see for yourself? Better take a holiday and go see.

Basically it is "Westerners" who "worked out how to make oil by the shipload" and it is Westerners who are still doing it. Without them, those "countries" would "make" absolutely NOTHING.

The fields are operated by an army of ex-pats. For example, go to the Mid-East and you'll find all the critical positions occupied by Brits, Americans, Aussies, Krauts, Kiwis, more Americans, some Russians, Canadians, Scots, Irish, some Frogs, Italians, yet more Americans.... The 'rabs do fuck all. Most of 'em are useless, even for straight labouring tasks (which is why there are so many Pakistanis, Indians, Phillipinos etc. undertaking all the blue collar work and remitting cash back to their families at home).
In short, the technology is Western. The expertise is Western. Without it the fields would cease operation in well under a week. In Russia the situation is a little different, but there is a considerable Western presence there now and plenty of Western expertise responsible for re-establishing sensible production operation (for example, Baku was a real ruin just after the fall of the Berlin Wall, not anywhere near as bad now). It would have been best if those fields were returned to the people they were stolen from by the Communists.

The trouble is that the property of private individuals and companies have not been defended by Western governments. This remains a problem for anyone bringing in a new energy resource. They have got to consider that the huge investment they make can be stolen ("nationalised", "regulated", "legislated" etc) at any time. In such a case it is EXTREMELY RISKY to do other than BAU and extract short profits while investing little or nothing in the future.

The track record of governments is vile. The results of their activities are vile. Direct your opprobrium at those who are responsible.


---

Anyway, I hadn't intended to get into discussing business other than to state that peak oil is bullshit- another socialist collectivisation myth.

LGM

7/20/2008 08:32:00 am  
Anonymous LGM said...

truth seeker (!)

What you have writen is superficial and naieve. It is incorrect. You need to do a bit more than read the rubbish portrayed in the popular media. The elements at each step of the oil supply chain that mitigate against increasing production and reducing proce are the direct result of various government interferences in the market. The distortions introduced restrict competition, eliminate new market entrants by pushing up the cost of entry, create malinvestment, misdirect resource allocation and reduce productivity. The opportunity costs are titanic. A more thorough analysis on your part would reveal this. OK, I admit I have considerable experience in this area but still, the facts are not all that elusive. You should be able to locate them should you try to.

PC is spot on. One of the few commentators who has it right.



LGM

7/20/2008 08:50:00 am  
Anonymous Anonymous said...

PR's also clever Bull Shit.

7/20/2008 08:52:00 am  
Blogger bigblu said...

LGM is correct in all his comments about a 'hydrogen economy'. The whole accent on hydrogen as the saviour of the planet is a mirror image of 'who killed the electric car'. The large oil companies and other cohorts are trying to fox us all into believing that hydrogen is the next universal fuel but it will prove to be a dead end. A classic case of short term gain in front of long term thinking on their part. Profit at any cost, including the planet's.

7/20/2008 10:16:00 am  
Anonymous Anonymous said...

Do insiders really say "Saudi 'Ramco"?

7/21/2008 08:18:00 am  
Blogger bigblu said...

LGM - You really are the limit.Just because you very occasionally come up with a gem of truth, don't get carried away. Your diatribe about Picken's investment in Wind Power is complete crap. Where do you get these so-called facts?
Your comment about a poster being niave and gullible is also completely wrong. Their assessment of the current supply/demand situation for oil is pretty well spot on.vcoxixud

7/21/2008 10:41:00 am  
Anonymous Sally O'Brien said...

http://westhawk.blogspot.com/2008/06/bakken-oil-formation-and-national.html

Bakken oil example with more interesting comment

7/22/2008 07:26:00 am  
Anonymous LGM said...

bb

So now you're an expert in US Federal and State tax/regulation/legislation. And pretending to be familiar with US energy policy as well. In reality you're one of those sorry wee imbeciles who make assertions in the absence of any real knowlege, confusing wishful imagination with reality. You don't know ANYTHING about wind farms and the present situation regarding them in the USA or even just within Texas.


1/. Windfarms are primarily a tax credit and subsidy generation device. In the absence of such legislative devices wind farms schemes do not get erected. Whenever senate and congress allow the loopholes to expire the number of windfarm erection schemes plunges to about zero. There things stay until lobbiests secure another round of loopholes. Check the record. Look up the alphabet soup of schemes, subsidies and regulations directed at windfarm energy. Read and learn.

2/. Credits accruable to wind farm erection and operation are available to on-sell to other companies. That is most convenient for TBP as he will be able to transfer many millions of credits direct to his other interests (such as certain large natural gas interests- you didn't know about those did you- read the TBP proposal and then work the scheme out, follow the cash flows).

3/. Federal Loan Guarantees, which the scheme is eligable for (and conditional upon, among other things), mean that capital "borrowed" is underwritten by the taxpayer. Taxpayers have no choice in the matter. They are merely there to pay and pay and pay (which they certainly will be required to, one way or another). The "lender" has no risk (now go work out who is the "lender" and who is going to be the "borrower").

4/. There is significant activity to set up schemes with a whole raft of interest free loans to be supplied courtesy of...the government. Taxpayers paying again! That was only announced during the last few weeks (but I guess it is asking too much to expect you to be up-to-date about current affairs). In the meantime it is possible to exploit existing regulation by utilising an aggressive depreciation deduction allowance to effectively receive interest-free loans courtesy of the taxpayer.

5/. State legislation in Texas mandates the erection of transmission capacity to take wind-electricity from windfarms to centres of population. The legislation directs that costs be charged to electric consumers in their monthly bills. No options, ifs, buts or maybes. So TBJ builds a wind farm and then billions of dollars of transmision capacity to attach it to the grid are erected.... and regardless of whether anyone buys electricty from him or not, EVERYONE is levied to pay him out.

6/. State legislation in Texas mandates a percentage of electricty sold in that state must come from "renewable" sources. In addition, state govt schemes ensure that windfarm revenues exceed normal market electricty prices. That is, distribution comanies are forced to purchase wind-electricty at above market cost, at inopportune times and in fixed quantity (set % to meet). Extra costs thus incurred are passed on to taxpayers and consumers.

7/. TBP is lobbying for legislation of new mandates and compulsions to be applied against consumers, conventional generators of electricty and distributors. That is, he is promoting in favour of yet more govt interferences and distortions in the market. Interestingly enough they involve getting other people to pay more money into the system so that, coincidentally, he gets more out (one way or another). It appears the whole windfarm scheme is conditional upon at least some of these schemes and mandates being enacted.

8/. State govt legislation and regulation sees to it that a direct subsidy of several cents per kW.hr is paid to wind electricity generators. Taxpayer pays again.



Now you didn't know any of this. Not a whit.

Your problem is that you accept any myth or idea, so long as it is emotionally satisfying to you- fitting with your wishes, whims and dreams.

Before making your silly comments you really need to familiarise yourself with fact. Go do the research.

LGM

7/22/2008 08:00:00 am  
Blogger bigblu said...

LGM - yes I was aware of all this - you're not the only one on the planet who 'keeps up'.

All these tax breaks are but a drop in the ocean compared to the massive breaks that the oil industry has been getting for eons.

Tax breaks for alternative energy schemes are a GOOD thing and will only help to accelerate the conversion to carbon free energy that is essential for the survival of the world economy. Concentrate on the wider picture and forget for a little while your obvious predjudices.

Talking of 'market intervention' think a bit about the recent fiasco of Fed intervention in the market to 'save' the US economy. It will only serve to destroy what remains of US credibility on the world stage.

Your crap is tantamount to drivel spoken by Bush and his cronies on every subject, as has been proven by world events. Roll on November when we might again see some sanity enter into the thinking of the US establishment and electors.

Your type of thinking is just what the world doesn't need. We've had it with you, and may you be relegated to the waste-bin of history.

7/22/2008 11:50:00 am  
Blogger Rich said...

LGM if hydrogen is not the solution for the west’s future energy needs, what is?

Do you agree with these comments?

"Today, the energy used by people around the world is equal to the work of some 280 billion men. It is as if every man, woman, and child in the world had 50 slaves. In a technological society such as the United States, every person has more than 200 such "ghost slaves."

“Most of this energy comes from fossil fuels, which supply nearly 75% of the world's energy (see note 5). But fossil fuels are being depleted a hundred thousand times faster than they are being formed (Davis, 1990, P. 56). At current rates of consumption, known reserves of Petroleum will be gone in about thirty-five years; natural gas in fifty-two years; and coal in some two hundred years”

And

“It should not be supposed that additional reserves, yet to be discovered, will significantly alter these figures. Recent advances in the geological sciences have taken much of the guesswork out of locating fossil hydrocarbons and the surface of the earth has been mapped in great detail with the aid of orbiting satellites. Moreover, these figures are optimistic because the demand for energy will not remain at current rates; it can be expected to grow at an ever-quickening pace. The more concentrated a resource, the less energy it takes to make use of it; and the less concentrated a resource, the more energy it takes. Consequently, the richest deposits of any resource are used first, and then lower-grade deposits are exploited, at an ever-increasing cost. As high-grade mineral ores are worked out, more and more energy is needed to mine and refine lower-grade ores. As oldgrowth timber vanishes, more and more energy is necessary to make lumber and paper out of smaller trees. As the world's fisheries are worked out, it takes more and more energy to find and catch the remaining fish. And as the world's topsoil is lost -- at a rate of 75 billion tons a year (Myers, 1993, p. 37) -- more and more energy must be used to compensate for the diminished fertility of remaining agricultural land.”

What is the Libertarian solution for energy use for a growing population (9 billion by 2050) and a rapidly increasing industrial population and a decreasing resource base?

7/22/2008 11:51:00 am  
Anonymous LGM said...

bb

You got yourself caught in a lie. You clearly DID NOT KNOW the nature of the wind rort. Had you possessed specific knowledge you'd not have responded to my comment to Mo in the manner you did (unless of course, you were utterly dishonest- but let's be charitable and assume you weren't a complete con).

Interesting how you now try to change the subject to wriggle and slime your way out. What a fool!

Anyway, the rest of your comments represent yet more ill informed and superficial drivel- more wishes, emotions and dreams. Socialist muck really! You do not know what you are on about.

LGM

7/23/2008 07:55:00 am  
Anonymous LGM said...

Rich

Hydrogen is not a "solution to the West's energy needs". Even in the most optimistic scenario it is a means of energy storage (and not really a very good one). It is not a source of energy. Hence, in the sense that you ask your question, it is no more a solution than is copper (as used to conduct electricty).

Anyway, as written your first question assumes a collectivisation of tens of millions of people, their actions and transactions and even values. An implication of this is the notion that special someones (super-planners, gifted technocrats, chosen genius scientists, etc.) are urgently required to wrestle with super-mighty problems of titanic scale on an international stage with the rest of the commoner people commanded to pay-up & comply (by selfless politicians and ever concerned bureaucrats) with whatever arbitrary schemes are pronounced. Meanwhile cronies and insiders stand ready to cash in on the pull and favours they trade with their political buddies. That, as I'm sure you'd agree, is not a valid way to deal with matters and certainly not this topic.

Whichever sources are chosen (to meet energy needs) is a decision best left to consumers and suppliers to determine for themselves. That means leaving them alone, without hinderance or restriction, to do what is best for themselves on an individual basis. If new sources are developed (and they will be), they will be developed as the result of entrepeneurs marshalling resource and taking the necessary risks to so do. They are the ones who'll perceive opportunity and act to exploit it. It will be up to those served by those entrepeneurs, the consumers, to decide on an individual basis (man by man) whether or not the new product/service/energy source is acceptible to them (the consumer) and meets their needs. If they so decide, then the entrepeneur's business activity will survive and prosper. If not, he'll go out of business and the resources formerly at his command will be reallocated. What this relies on is the ability of people to think and act for themselves unhindered by a coercive orthodoxy.

Libertarians often discuss the Individual Right to Liberty. This is an application of that. Interestingly, Objectivists take this line of enquiry even further. They regard Man's ability to use his faculty of reason to be his primary means of survival. Therefore they regard the Individual Right to Liberty as incredibly important. Initiating force, fraud or coercion to negate it is an attack against a man's means of survival. Now apply this to the business of energy and you can see that in order for continued civilisation and the acquisition of greater quantities of energy and better energy quality, it is an absolute necessity for individuals to retain the ability to think and act for themselves. That is, they should not be coerced or forced etc. to act regardless of their own preferences. One reason is that it is presently unknown which individual/s (which entrepeneurs) are going to be the ones who'll introduce the improvements that will be embraced by consumers. Applying the burdens of restriction and super-planers, chosen scientists etc. etc. etc. is a sure method of destroying progress and hindering survival.

---

A few comments:

"But fossil fuels are being depleted a hundred thousand times faster than they are being formed"

This is a myth. The sources and processes responsible for the formation of underground hydrocarbons are not definatively known. It is likely that the conventional theory of formation is either incomplete (and does not explain the source of the bulk of the finds) or utterly false. Therefore statement is unsupported.

"At current rates of consumption, known reserves of Petroleum will be gone in about thirty-five years; natural gas in fifty-two years; and coal in some two hundred years”

This is what the sky-is-falling doomsdayers have been singing since I was at school some thirty five years ago. My father once told me that he was told the same thing when he was at school in the '30s. Grandfather was told the same thing in his youth. Conclusion: ignore this sort of prediction. It's worthless.

Anyway, so what? If people are left unhindered to work on their own interests over the long term there are those who will develop alternatives to acquire market. The pay-offs for such entrepeneurs are immense (even better than what Bill Gates or Rockefeller were able to achieve). It is likely that the bulk of oil, coal and natural gas resource on the planet will be left unexploited. Newer means and methods to provide what people want will be developed soon enough.

An aside: one of my personal favourites is the molten salt nuclear reactor. There are plenty of alternatives about though, so it is hard to be absolutley certain.

---

As far as the last quote you posted is concerned the point to consider is this. The World's resources are unthinkably immense. Man's present activities have barely extended to fractions of a percent of what is available to explore, let aone exploit. For example, the deepest mines that have been sunk do not even extend beyond the crust. The ocean floor lies unexplored. Huge sources of energy remain untapped. As technologies improve so the availability of resource improves. It gets easier and easier to get at resource that was previously too difficult to extract. Similarly, yet more new resources are discovered. Most importantly is that as new technologies are developed, resources that were previously unrecognised or considered as useless become useful. Rresources are not diminishing- as Man gains more technologies, and knowlegde of reality, resource available to exploit increases exponentially.

---

Re energy. I have no idea what people will be doing in, say, 50 years time. I don't really mind. For the remainder of my lifetime it is likely that most of the energy I use will come from hydrocarbon sources. Still, I do expect that other technologies/resources will start to open up. Some will be immensely useful and successful. Others may find a niche of limited size. Some may fail to catch on.

The Libertarian "solution" to the non-problem of "diminishing resources" is to recognise the three Individual Rights consistently and leave people unhindered to develop their own lives and make their own decisions as to what is the most appropriate resource for them to develop and to use.

I assume you are interested in resources and energy. Why not seek a professional career in the area? It is a rewarding business with great activity and many interesting people. If you get in now you'll be assured of doing and knowing that which interests you directly. In fact you'll be able to contribute to the future well being of millions of people. Doing stuff is much more interesting than talking about it!

LGM

7/23/2008 08:00:00 am  
Blogger PC said...

You might recall I posted on Boone Pickens's windy boondoggle here.

7/23/2008 08:29:00 am  
Blogger bigblu said...

Frankly LGM I have more important things to do than exchange insults with the likes of ignorant, rude and crude you, who are obviously part of the lost generation who will go down in flames shouting, give me more oil.Enough.

7/23/2008 11:25:00 am  
Anonymous LGM said...

bb

You started it and now you're crying after being caught out- trapped by your own fibbing. You're piss weak intellectually and you position has been blown completely out of the water. I know it and now you know it as well. The question is, what are you going to learn from the experience.

For a start, what you ought to do is remember not to make bullshit assertions regarding topics you lack specific detailed information about. Regurgitating some superficial muck you may have come across in the media or heard from some chum just doesn't cut it here. If you don't know about something it is better to ask and it is definately best to do research. As with anything worth doing, seeking fact requires expenditure of effort. Don't think you can rely on mass media entertainment to spoon feed you. That's analogous to being on welfare.

On this occasion you revealed a great deal about your position and intellectual method. You started by arbitrary assertion without an understanding of the underlying fact (the nature of the windfarm rort). When challenged it was quickly revealed that there was nothing to back your outburst. Once it was demonstrated that you didn't have possession of specific detailed fact your position became completely untenable. That was when you tried to slime out by changing subject and attempting to shift the focus of the debate (over to oil companies, saving the world's economy, the Federal Reserve, carbon mumbo-jumbo, President Bush, the US Federal elections, collectivising a generation of peoples- anything to escape being held to the fire). "Wriggle, wriggle, wriggle, wriggle-wriggle, wriggle, slime-slide, wriggle." You're not much of a Houdini. A piss poor effort on your part really. Very weak.

What is far worse for you was that you proceeded to vomit forth more arbitrary assertion. All of it was mindless socialist drivel. It is easily demolished to demonstrate you have no intellectual substance whatsoever. If you like I am ready and able to demonstrate.

BTW to avoid being classified as a hypocrit you should give up using oil based fuels and products. Bet you won't though....

Finally, the site is hosted by an Objectivist gentleman who is an active member of the Libertarianz political party. It is recommended you go find out what the Objectivist position on government actually is. That would be a sound first step towards understanding how the energy sector (or any portion of the economy) should be treated. Also why it is that windfarm schemes, as presently constituted, are all about farming OPM (other people's money) through coercion, rorting and "receiving" rather than being legitimate businesses.


LGM

7/24/2008 07:30:00 am  
Blogger bigblu said...

My goodness - I have upset you. Truth hurts as they say. Have a good one !

7/24/2008 08:33:00 am  

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