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The Finite World
Paul Krugman, New York Times
Oil is back above $90 a barrel. Copper and cotton have hit record highs. Wheat and corn prices are way up. Over all, world commodity prices have risen by a quarter in the past six months.
Is it speculation run amok? Is it the result of excessive money creation, a harbinger of runaway inflation just around the corner? No and no.
What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story.
… Is it speculation run amok? Is it the result of excessive money creation, a harbinger of runaway inflation just around the corner? No and no.
What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story.
… So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.
(26 December 2010)
Comment by Kevin Drum at Mother Jones: “Oil plays a role in the world economy that’s far more important than any other commodity, so when I’m in a mood to worry I worry about oil prices. I don’t know if we’ve hit peak oil, but we have reached the point at which the growth of supply has reached the point where it can barely keep up with growing demand in a normal economy This means that whenever the economy is growing at a decent pace (and driving up demand for oil with it), the price of oil will inevitably rise sharply and slow down the global economy (at best) or throw us into another recession (at worst). In other words, oil has become a permanent limit to world economic growth.”
Economic Optimism? Yes, I’ll Take That Bet
John Tierney,
Five years ago, Matthew R. Simmons and I bet $5,000. It was a wager about the future of energy supplies — a Malthusian pessimist versus a Cornucopian optimist — and now the day of reckoning is nigh: Jan. 1, 2011.
The bet was occasioned by a cover article in August 2005 in The New York Times Magazine titled “The Breaking Point.” It featured predictions of soaring oil prices from Mr. Simmons, who was a member of the Council on Foreign Relations, the head of a Houston investment bank specializing in the energy industry, and the author of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.”
I called Mr. Simmons to discuss a bet. To his credit — and unlike some other Malthusians — he was eager to back his predictions with cash. He expected the price of oil, then about $65 a barrel, to more than triple in the next five years, even after adjusting for inflation. He offered to bet $5,000 that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars.
… What lesson do we draw from this? I’d hoped to let Mr. Simmons give his view, but I’m very sorry to report that he died in August, at the age of 67. The colleagues handling his affairs reviewed the numbers last week and declared that Mr. Simmons’s $5,000 should be awarded to me and to Rita Simon on Jan. 1, but Mr. Simmons still had his defenders.
One of his friends and fellow peak-oil theorists, Steve Andrews, said that while Mr. Simmons had made “a bet too far,” he was still correct in foreseeing more expensive oil. “The era of cheap oil has ended,” Mr. Andrews said, and predicted problems ahead as production levels off.
It’s true that the real price of oil is slightly higher now than it was in 2005, and it’s always possible that oil prices will spike again in the future. But the overall energy situation today looks a lot like a Cornucopian feast, as my colleagues Matt Wald and Cliff Krauss have recently reported. Giant new oil fields have been discovered off the coasts of Africa and Brazil.
(27 December 2010)
I and many others made the same bet. Except instead of doing it publicly with dollars, we changed the way we lived. We rearranged our lives to be more local, got involved with people in the community, learned how to get nutritious local food. The result was that we won. We’re healthier, happier and in better financial shapes. That’s the kind of wager I like: one wins no matter what happens. -BA
Energy: Can We Run Out of Oil and Other Natural Resources?
Bryan Walsh, Ecocentric (blog), TIME Magazine
Over at the New York Times, resident libertarian-contrarian John Tierney has a column about a bet he took in 2005 with the late energy analyst Matthew Simmons. Simmons—the author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy—was a prominent believer in peak oil, the theory that we’ve reached the end of the age of easily accessible petroleum reserves, and that the price of ever-scarcer oil would skyrocket in the future, with frightening consequences for the global economy.
… The reality is that we are in uncharted waters. The world has never, ever seen anything like the rise of major developing countries like China and India—over a billion people growing into the middle class, demanding meat, cars, planes, electricity. Just because we proved smart enough to innovate our way out of periods of past growth doesn’t mean we’ll be able to handle a world with 9 billion plus people by 2050, most of them richer than now. We may already see that impact on the U.S., which will likely have to dig its way out of recession with the added burden of high energy prices thanks to healthy demand from the developing world.
And that’s just economics—there’s a deeper story here for the natural world. As the ecologist Carl Safina points out in his forthcoming book The View from Lazy Point: A Natural Year in an Unnatural World, the global economic growth that we’ve witnessed since the Industrial Revolution has come on the back of ecological destruction. Humans are richer, longer-lived and healthier, but rainforests have been destroyed, species have been driven to extinction and the oceans have been spoiled. The planet is not infinite, and its reasonable to wonder just how much we can take from it, just how many people Earth can support. “It’s like your spending the capital in your bank account,” Safina told me today. “While you spend down that capital, spending more than you’re earning, you’re living pretty well—until you get to the end.” We may be closer to that end then we think—and if that happens, high oil prices may be the least of our concerns.
(28 December 2010)
The Dark Side of Young Adult Fiction: Craving Truth-telling
Paolo Bacigalupi, New York Times
What’s behind the dystopian trend in novels for teenagers, and why is there so much demand for it?
Paolo Bacigalupi is the author of “Ship Breaker,” a 2010 National Book Award Finalist in Young People’s Literature. He has also won the Hugo, Nebula and John W. Campbell Awards.
I suspect that young adults crave stories of broken futures because they themselves are uneasily aware that their world is falling apart.
… With “Ship Breaker,” a novel set in a future when oil has run out and New Orleans has drowned under rising sea levels, I was trying to illuminate the sort of world that we adults are handing off to them. In the story, child laborers tear apart ancient oil tankers and freighters, recycling the last valuable resources from “the Accelerated Age.” Quality of life is significantly reduced from our present circumstances, and judging from teenagers’ responses, they crave precisely that sort of truth-telling.
(27 December 2010)
Suggested by EB contributor JG.
New peak oil book: “Peak of the Devil”
Chip Haynes, press release
… Some people who previously had little interest or knowledge about the state of oil are now clamoring for details, not only regarding the economic and environmental impact, but the future of oil drilling, how much oil we have, what comes next and what can be done.
Author and environmental guru Chip Haynes sheds critical light on this subject by answering the most significant questions in his new book, Peak of the Devil: 100 Questions (and Answers) About Peak Oil. For a topic rarely discussed until now, the concept of peak oil is very simple.
Recently named one of the Top 10 books of 2010 on the subject, Peak of the Devil is “designed for those who have either never heard about peak oil, or have just been introduced to the topic. The easy to skim Q&A format plus a liberal use of (clean) humor help make an intimidating subject accessible,” says Erik Curren, publisher of Transition Voice.
Haynes addresses 100 of the most pressing questions with an educated and quirky sense of humor, making a harsh, unpleasant subject a little easier to understand, especially in light of the situation we now face. Haynes not only uncovers the realities of peak oil, but offers critical guidance on what individuals, families and the nation can do to improve the current and future state of affairs.
Peak of the Devil answers such key questions as:
• What is peak oil?
• Who should we blame?
• Why should I care now?
• Why can’t we just drill for more oil?
• Are we going to run out of oil?
• How bad is it going to get?
• What can I do to make it better?
• Is any place going to be better than here?
• What can we do as a nation?
• What can my family do?
• How will I know what’s really happening?
• It’s going to end up alright, isn’t it?
For many readers wondering “What is Peak Oil” and “Why Should I Care Now”, Haynes breaks the complex topic down: at some point the world’s oil supply will peak, and after that we will be moving more quickly than ever toward a world with extremely limited supplies. In fact, Haynes suggests, we may have already reached and passed this peak, burning through 80 million barrels across the globe daily.
“Peak of the Devil should be in every public library and recreation centre,” says Matthew Wild in an article in Energy Bulletin. “It’s a great introduction to the topic.”
… About the Author: Chip Haynes is a writer, speaker, artist, juggler and cyclist living in Clearwater, Florida, right on the Gulf of Mexico. After studying the global oil situation for over a dozen years, Haynes and his wife live in a modest home in suburbia, using far less resources than the average home, and recycling much of what they use. Haynes rides his bicycle to work, and they both walk to the store. He has written over 1,200 articles on bicycling and global resources including two works on global oil, Ghawar is Dying and 60 Days Next Year, which was also produced as a radio program for the State of Maine Public Radio. Haynes has also authored The Practical Cyclist: Bicycling for Real People and Wearing Smaller Shoes: Living Light on the Big Blue Marble. He is also the author of a blog at http://peakofthedevil.blogspot.com.
(28 December 2010)
