Whatever happened to peak oil?

Where did it all go wrong for peak-oil alarmists?

Plenty to go around
Peter C. Glover
On 15 August 2012 11:44

You might have thought: great news for those around the world being forced into increasing fuel poverty through having to pay for national green taxes to subsidize expensive, poor-generation, renewable projects.

Not so it seems for social engineers like leading eco-activist and erstwhile Brit columnist, George Monbiot or ‘Moonbat’ to his critics. Newly convinced by Maugeri’s study, and already having recanted his views on nuclear power, Monbiot has now recanted also his alarmist views on peak oil, claiming “the facts have changed”. (Actually George they haven’t, rather you’ve just become acquainted with them.)

For the naive Monbiot, as for all peak-oiler scaremongers, rising oil and energy prices provided proof positive that oil scarcity was just around the corner – a fact, they said, presaging the end of industrial civilization as we know it. This was supposed to be the key ‘frightner’ for our technology-loving society to agree to subsidize ridiculously expensive, poor-production, renewable energy.

What the Guardian’s Moonbat and his colleagues failed to understand, however, is a basic economic fact of energy life: high prices are also the market’s way of incentivizing new investment and greater human ingenuity. Necessity being the mother of invention, industry entrepreneurs duly came up with the goods, including the energy game-changer of the hydraulic fracturing of shale deposits.

Once again, the ‘end-is-nigh-ists’ like all false prophets, shifted the prophetic goalposts. Instead of peak oil presaging social “disaster”, now the lack of a prospective peak for oil production quickly became the disaster.

“Peak idiocy”

So where did it all go wrong for peak-oil alarmists? Interestingly, for better ‘experts’ than Monbiot, it was their abject failure to understand either energy or the economics of energy. A double failure that led inexorably into a state which economist Mike Munger rightly terms: “peak idiocy”.

Munger’s thesis bears repeating:

“Of all the idiotic things people believe, the whole “peak oil” thing has to be right up there. It is literally impossible for us to run out of oil. We have never run out of anything. And we never will.

If we did start to use up the oil we have ... three things would happen.

1. Prices would rise, causing people to cut back on use. More fuel efficient cars, better insulation on houses, etc. Quantity supplied goes up.

2. Prices would rise, causing people to look for more. And they would find more oil, and more ways to get at it. Quantity demanded goes down.

3. Prices of oil would rise, making the search for substitutes more profitable. At that point alternative fuels and energy sources would be economical, and would not require government subsidies, because they would pay for themselves. The supply curve for substitutes shifts downward and to the right.

Well put and accurate. And precisely the argument posited in Huber and Mill’s seminal book, The Bottomless Well, which states: “Energy supplies are – for all practical purposes – infinite”.

So why don’t more allegedly informed pundits grasp the basic economics of energy? In a word: ideology. In this particular case, the ideology of the leftwing, social engineer prepared to politicize any issue for their personal ‘higher’ purpose.

“The facts” were widely known well before the likes of George Monbiot and co. were forced to admit the jig was up, with Moonbat lamenting, “We were wrong on peak oil. There’s enough to fry us all”. True – and on both counts.

But a much more positive and factually-based perspective might conclude: “there’s more than enough oil, coming from much friendlier countries, that turbo-boost the economy and create millions of jobs for decades to come – and at a much cheaper rate, too.”

And which has the merit of more consistent “prophetic” insight? Depends on whether a vacillating Moonbat/Guardian-esque ideology trumps the intellect, I guess.

Peter C Glover is a British writer & author on international affairs and energy. For more: www.petercglover.com

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