Finite, and Living It

Normally I steer clear of posts that border on the political, because they accomplish little except to harden opinions and positions, and sharpen arguments, without leading to a solution.  But I make an exception in this post, for reasons I hope will become clear.

Especially in difficult times like these, we rely for perspective and direction on the supposed Wise Ones of our world, so it behooves them to be more cautious and informed in their public statements than this article by Tim Worstall in the U.K.’s Telegraph of May 16, 2012.  The article byline for the author identifies him as “Senior Fellow at the Adam Smith Institute in London, and one of the global experts on the metal scandium, one of the rare earths,” so you’d think he’d exercise more care in an international forum like this newspaper.  Here are his opening words, remarkable for their flippancy, misrepresentation and ignorance:

Apparently something terrible happens when we get to peak oil. I’ve never really quite understood the argument myself, but when we’ve used half of all the oil then civilisation collapses or something. I’m not sure why this should happen: we don’t start starving when there’s only half a loaf of bread left. But I am assured that something awful does happen.

That oil fields do get pumped out is obviously true – and also that you can have a good guess at when the ones we’re currently pumping will run out. The part I don’t get is the catastrophe. Some people seem to think that “peak oil” is when we can’t actually pump out a higher amount: that if we’ve got 70 million barrels a day, then that’s the most we can ever have, 70 million a day. Which is also called a disaster. Apparently this means that demand will move ahead of supply, which is simple sheer ignorance of the price system. There is no such thing as “supply” or “demand”. There is only either of them at a price. So, if there really is a limit on how fast we can pump the stuff up, the price will rise.

Worstall’s observations illustrate a confusion of realms, a common-enough misperception, and one we all make from time to time.  In the case of a recognized expert, though, we expect greater wisdom and sense — he simply isn’t thinking things through.  If you’re talking about the human economy of making brooms, say, or copies of DVDs of The Avengers, or oranges, or purebred Siamese cats, well and good.  Then Worstall is right, and supply and demand will play out pretty much as he claims.  Price is indeed the hinge between them.  Even in extreme cases of demand, say for parts to an antique car that went out of production decades ago, you can probably find a craftsperson who will forge and finish them for you.  Because they’re one-offs, they’ll cost you plenty.  But if you want the parts badly enough, and you have the necessary cash or other acceptable medium of exchange, someone will oblige and supply your demand. That’s Econ. 101.  It’s how modern economies are supposed to work.  We get it.

But turn to the natural economy of the physical environment and a different picture emerges.  The human and natural economies are NOT the same, and it’s dangerous to assume they are.  In the natural economy, many materials aren’t renewable, and they’re simply not subject to supply and demand.  A finite quantity exists, and when we use it up, there’s no more to be had, at any price.

Yes, we can grow more trees for wood, plant more fruits and vegetables for food.  Many metals and other materials can be recycled, and so on.  At least we’ve made a start on re-using and re-purposing.  But oil and natural gas, to name just two resources, exist in finite qualities.  Use more and we’ll run out sooner.  Use less and they’ll last longer.  Until we have replacements or other viable sources of energy, it’s only common sense to conserve and sip, rather than guzzle.  It’s not like running out of milk and going down to the nearest convenience store, or ultimately putting another 10,000 cows into milk production.  It’s rather as if I’m running out of air, trapped in a house-fire, or dragged underwater by a sinking ship.  My demand for air may become extreme, but if the supply runs out, I eventually die.  Life itself is finite, and no one has escaped its ending.  No extensions for love or money.  Demand for more hours or days has never obligated the universe to provide them, and no promise of payment or bribe suffices to keep our hearts beating a second longer.  They stop.

In the case of oil and gas, unknown supplies no doubt still exist.  Hydrofracking may prove helpful to buy us a little more time — or not.  It may well go the way of ethanol, which for a while looked like the next sure thing.  Yes, there’s petro-energy to be had, but if it costs more to produce than it’s worth, a different side of supply and demand switches on.  For the geeks among us, that’s EROEI — energy returned on energy invested.  We may have enough oil for 50 more years, or 75, or 100 or 200, but we will run out. At that point, demand won’t budge the simple physical fact of an exhausted resource.  At too high a price, it’s not worth it to anyone to extract a few more gallons or cubic meters.  As in the Monty Python parrot sketch, it’s kaput, used up, done, extinct, no more.

Unlike many peak-oil doomsayers, I’m willing to concede that down the road we may well devise a marvelous technological solution to our mammoth energy needs.  But until we do, it’s deeply stupid to continue using more each year, rather than less, now that production has recently peaked, even as peak oil historians predicted it would, six decades ago.  How high must the price of a barrel of oil rise, and how much must the economies and households and peoples of the world suffer, until that’s clear?

But good things will emerge from this crisis, too.  They may not be what we want, but as the Stones (almost) said, “we just might find we get what we need” in the moment. And there’s material for future posts.

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Image:  buffalo shortage

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