Sunday, January 15, 2006

Resource Insights: Demand Destruction: Who Gets Destroyed?

Kurt Cobb has an interesting thing to discuss about economics and the oil peak phenomenon. Economists like to claim The Market regulates resource availability much better than government can. That as oil availability declines, the price will go up, the higher price will discourage use, and voila the problem will be solved, and we'll start using other fuels to do our lives. As Kurt Cobb points out, that's a bunch of bullcrap.

Except he says it a lot more nicely than I am able to do.

I think, and Kurt Cobb agrees, that assuming market forces will solve the problem for us is just completely disengaged from reality. It's just nonsense, in other words.

It takes quite a long while for energy technologies to be developed. Just witness how long photovoltaic solar panels have been in development, and they still aren't well enough developed to where their cost is competitive with fossil fuels. Kurt Cobb points to a study of oil depletion curves in countries around the world, which shows that once a country's oil supply peaks there is a swift decline in production. This tells us that when the world oil peak occurs that "we" won't have enough time to for the market forces to come up with a solution. "We" won't have the many years that would be required to develop replacement technology, because the Mad Max scenario will happen too quickly.

This says that "we" should be proactive and develop the technology now, rather than wait for the crisis to be upon us.

But, I think this is just normal the way American policy is set. For decades American policy has always been driven by crisis, that change doesn't occur until crisis forces the policy makers out of complacency.

It doesn't have to be that way. One could take a mode of thinking similar to the tagline at the top of this page. If we considered the ramifications of our decisions for the next seven generations, would we let the obvious oil peak scenario looming before us to kill the society we have inherited from our ancestors?