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Economists are from Mediocristan
Kurt Cobb, Resource Insights
Mediocristan is a mythical land inhabited by economists (and other social scientists) who believe that the world’s events fit neatly beneath a bell curve of outcomes. Economists live in this land not because they are mediocre–in fact, they are decidedly less than mediocre in their prognostications–but because they accept one very crucial idea. They believe that extreme outcomes such as market crashes and other major discontinuities in our economic life are so rare that we can all but ignore them.
Mediocristan is an invention of the mind of Nassim Nicholas Taleb, a hedge fund manager and self-styled philosopher of uncertainty. His most recent book, The Black Swan: The Impact of the Highly Improbable, provides an entertaining and thoroughly readable critique of how most of us have been taught to think about risk.
Taleb doesn’t address oil depletion, global warming or other resource or environmental issues directly. But much of what he says turns out to be useful for those trying to assess risks in such areas.
Economists often like to insist that risk can be easily quantified and that future economic scenarios will be played out within the bounds dictated by models. But risk cannot be easily quantified except in cases where the possible outcomes are already known. An example would be a game involving dice. There are only six possibilities on each die so the range of outcomes (assuming perfect dice) is already known. As for economic models, they are usually backtested which means that they are tested using historical data. First, historical data, probabilistically speaking, represent only one possible outcome among many outcomes. Second, historical data are very unlikely to reflect the dynamics of world peak oil production or global warming since peak by definition happens only once and the effect of global warming on the economy is a wildcard for the future.
(27 May 2007)
Oil – Past the Peak
Orson Scott Card, The Ornery American
People have been crying wolf about running out of oil for a long time. Back when I was in college, I was reading estimates that we’d be out of oil before the end of the 20th century.
After those predictions from my college days, vast new oil reserves were discovered — Alaska’s north slope, for instance, and the oil of the North Sea.
So it’s tempting to think that because those dire predictions were wrong about when, we will never run out of oil at all.
There are even indications that a few more discoveries are still possible. That’s good news — it means we have some breathing room.
…Some of those giant oil fields are running out. All the others will, too — eventually.
What is obvious is that we have used up almost all the easy oil and the “vast reserves” remaining in shale and other such marginal deposits are very expensive to extract.
There are promising technologies that may make the extraction of that oil cheaper and cleaner. Great! What will that buy us? Another thirty years? Fifty years? What then?
How short-sighted do we have to be? We have been burning oil for only a century and we’ve nearly used up all the easy, high-quality stuff. What if we last another hundred years before it’s all gone?
Do you know what that means? Six thousand years of recorded human history, and in only two hundred years we wipe out a precious resource that can never be replaced.
(6 May 2007)
Science fiction writer Orson Scott Card is firmly in the peak oil camp, as is shown by this essay from 2004: Who Was On Watch As the Dark Age Approached?
Recently he’s been criticizing the car culture and examining the alternatives:
Life Without Cars
Walking Neighborhoods
But this independent thinker has some unpredictable positions. He is a believer in the “War on Terrorism”: The Crisis of the Islamo-Fascist War).
And he’s not a believer in the concept of global warming: Don’t You Dare Ask for Proof!
-BA
A Gas Crisis 30 Years in the Making
Warren Brown, Washington Post
Embrace the memory of the average $3.21 cents we’ll pay for each gallon of regular unleaded gasoline purchased this Memorial Holiday weekend. The chances are we’ll pay a lot more next year and the year after that.
Abandon your conspiracy theories, your worries that global oil companies are gouging us at the pump. For the record, they are. It’s the kind of profiteering that accompanies any crisis — war and rumors of war, hurricanes, or other actual or imminent disasters. What the oil companies are doing isn’t moral. Nor is it illegal. But it is business.
Crises usually are profitable for people positioned to exploit them; and they usually are costly for those who aren’t. When it comes to oil and the motor fuels it provides, we’re in a crisis. We’ve been in a crisis for nearly 30 years now. ..
There is not an inexhaustible supply of oil. There is not now, nor has there ever been, and nor will there ever be an inexhaustible finite resource. Get over it. Let’s start withdrawing now. Let’s face, share, and manage the pain. Let’s deal with our own greed either by using only what we need or paying more of the real price for using more than what is needed. Yeah, carbon and horsepower taxes, and congestion pricing to control the egregious fuel waste in urban rush-hour traffic jams. When it comes to oil, it’s not going to get much better than this.
(27 May 2007)
ODACs Doug Low comments: This is one of the best summaries of the problem I have seen in a while – one that might appeal to the unconverted. Short, non-alarmist, non-technical, and does not mention the words oil depletion or Peak Oil.
ODAC News for May 27
Doug Low, Oil Depletion Analysis Centre (ODAC)
1/ A Gas Crisis 30 Years in the Making (TheWashington Post, Sun 27 May) [as above]
2/ UK paves way for new nuclear plants (Financial Times, WED 23 May)
3/ BP scraps green energy plan (The Herald, Thu 24 may)
4/ Austrian deal will extend Gazprom grip on European energy market (The Times, Fri 25 May)
5/ UAE airport spend to hit $19bn (Arabian Business, Wed 23 May)
6/ Petrol to hit £1 a litre within weeks as oil supply strains show (The Guardian, Fri 25 May)
7/ Battle for the Barrels [new book – feedback] (Duncan Clarke, Feb 2007)
(27 May 2007)
