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Want cheap oil? Reduce demand!
Richard Heinberg, Global Public Media
Richard Heinberg dips into the economic realities of oil prices. How do we reconcile oil industry claims that there’s plenty of oil out there with a lived reality of ever-rising prices?
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… high oil prices are already killing the airline industry, the automobile industry, the trucking industry, the fishing industry, tourism…the list goes on. In effect, the world is teetering on the brink of a Greater Depression because there’s not enough $30 oil to go around anymore.
So here’s the solution: We could reduce the price of oil just by reducing demand. If the world could be satisfied with the amount of oil that can still be produced cheaply ($30 is an arbitrary figure-by now $130 oil sounds cheap), then the price would fall to that level. We’d have to keep reducing demand to maintain that price since the cheaper oil continues to deplete.
But there’s a problem to that solution: the most likely way that global demand will be reined in is by economic contraction brought on by high prices. That’s a nice way of saying bankruptcy, unemployment, and industrial collapse. It sounds bad, but that’s not the problem; the problem is this: once the price falls by any significant amount, demand will just pick back up again and we’ll be right back where we are now-with prices aiming for Alpha Centauri.
Or, we could hope for a cheaper, more convenient source of energy that would reduce demand for oil painlessly. But since no one has invented one yet, we can’t really bank on it happening (though throwing a few extra tens of billions toward energy research is not a bad idea).
In other words, there is no existing market-based fix for the fix we’re in.
Which means there is really only one way to get the price of oil down over the long term. That is to implement some kind of global agreement to ration oil consumption by quota, so as to reduce demand artificially. Just reducing demand in one country won’t help much, because some other country will quickly take up the slack. No, we all go on a diet together.
Richard Heinberg is a Senior Fellow of Post Carbon Institute and the author of The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism and Economic Collapse. http://www.OilDepletionProtocol.org
(5 July 2008)
Cooling a fevered planet
Economics, policy, and vision for fighting global warming
Gar Lipow, Z Magazine
Nobody, except for a small lunatic fringe, still disputes that human-caused climate chaos endangers all of us. Further, most serious scientific and technical groups who have looked at the question have concluded that we have the technological capability today to replace greenhouse gas emitting fossil fuels with efficiency improvements and clean energy-usually at a maximum cost of around the current worldwide military budget, probably much less. The question therefore is: what’s stopping us?
To answer that we need to look at the causes of global warming-not the physical causes, but the economic and political flaws in our system that have prevented solutions from being implemented long after the problem was known.
One driver is inequality and the maintenance of power that keeps inequality in place produces perverse incentives in resource use. An example of this is a usual economic suspect behind global warming, the lack of full social pricing.
(1 July 2008)
Article may disappear behind a paywall soon, warns author Lipow on Gristmill.
Learning from past disasters, preventing future ones
Daniel Ellsberg, Common Dreams
Foreword to Flirting With Disaster: Why Accidents Are Rarely Accidental by Dr. Marc Gerstein with Michael Ellsberg
I have participated in several major organizational catastrophes. The most well known of them is the Vietnam War. I was aware on my first visit to Vietnam in 1961 that the situation there – a failing neocolonial regime we had installed as a successor to French rule – was a sure loser in which we should not become further involved. Yet a few years later, I found myself participating as a high-level staffer in a policy process that lied both the public and Congress into a war that, unbeknownst to me at the time, experts inside the government accurately predicted would lead to catastrophe.
… A major theme to be gained from this important book is that organizations do not routinely and systematically learn from past errors and disasters – in fact, they rarely ever do. This intentional lack of oversight can partly explain why our predicament in Iraq is so precisely close to the Vietnam experience, both in the way that we got into the war, deceptively and unconstitutionally, and in the way the war is being conducted and prolonged.
It might not seem surprising that after thirty years, a generation of decision-makers and voters would have come along that knew little about the past experience in Vietnam. What is more dismaying is to realize that much the same processes – the same foolish and disastrous decision-making, the same misleading rationales for aggression – are going on right now with respect to Iran, with little political opposition, just three years after the invasion of Iraq, and while the brutal and tragic consequences of that occupation are still in front of our eyes every day.
One reason for this folly is that many aspects of disasters in decision-making are known only within the organization, and not even by many insiders at that. The organizations involved tend not to make relevant and detailed studies of past errors, let alone reveal them outside the organization. In fact, the risk that such a study or investigation might leak to the outside is a factor sufficient to keep inquiries from being made in the first place. Making or keeping possibly incriminating documentation earlier, at the time of the decision, or later is similarly sidestepped.
This deliberate decision within organizations not to try to learn internally what has gone wrong constitutes what I have called, with respect to Vietnam, an anti-learning mechanism. …
Flirting With Disaster: Why Accidents Are Rarely Accidental, by Dr. Marc Gerstein with Michael Ellsberg, was recently published by Union Square Press (Sterling Publishing). Click here to see more about the book including a podcast by Daniel Ellsberg.
Daniel Ellsberg was put on trial in 1973 for leaking the Pentagon Papers, but the case was dismissed after four months because of government misconduct. He is the author of “Secrets: A Memoir of Vietnam and the Pentagon Papers.“
(7 July 2008)
Ellsberg is writing here about U.S. foreign wars, but the same analysis would seem to apply to to U.S. energy policy. Anyone who’s worked in a bureaucracy knows what Ellsberg means by an “anti-learning” mechanism. -BA
