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Page added on February 25, 2013

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Belief In Peak Oil Logically Implies Failure Of Alternative Energy

Alternative Energy

One of the most persistent beliefs among proponents of alternative energy is that we are in danger of running out of fossil fuels. This economic theory, known as “Peak Oil,” was first articulated by geophysicist M. King Hubbert in 1956. It states that for any geographic region–indeed, for the world as a whole–the extraction of fossil fuels follows a bell-shaped curve that eventually hits a maximum and then must inevitably decline. It seems like a commonsensical, compelling theory–except for a few small problems. It ignores the role economics plays in shaping supply and demand, it completely discounts the power of human ingenuity to come up with novel ways to solve problems, and it has been repeatedly refuted by the facts.

Every prediction over the last half century–and there have been many–that global oil production has or will soon hit a peak has been proven wrong. In fact, Peak Oil advocates have been so thoroughly debunked that they seem to now inhabit an alternate reality–one where fracking and horizontal drilling were never developed. Today, U.S. oil production is soaring, and the International Energy Agency predicts that the U.S. is on track to become the world’s largest crude oil producer by 2017.

Yet the Peak Oil theory lives on, like a zombie that refuses to die. The Wikipedia entry on the subject still states “Hubbert’s Peak was achieved in the continental US in the early 1970s. Since then, it has been in a gradual decline.” A new report published by the Post Carbon Institute, A New Era Of Energy Abundance? reprises Hubbert’s arguments and dismisses the current boom as a bubble destined to fizzle out. No word from the report’s author, David Hughes, on whether he is willing to reprise Paul Ehrlich’s famous wager with Julian Simon that the price of a basket of scarce minerals would rise due to resource exhaustion and overconsumption. (I can’t wait to see the look on his face when teachers from the bankrupt state of California begin marching to allow drilling in the Monterey Shale so their underfunded pensions can get paid.)

The purpose of this column is not to review the laundry list of reasons why neo-Malthusian theories like Peak Oil consistently fail to predict reality–many others have done so in impressive fashion, especially Julian Simon in his classic opus, The Ultimate Resource. Rather, it is to point out that if somehow fossil fuels were to start to “run out,” that would necessarily imply that solar, wind, biofuel, algae, and any other politically favored alternative energy source that got a seat at the subsidy table could not possibly have captured a lion’s share of the market. For had any of them done so, the reduced consumption of fossil fuels would keep fossil fuels from running out!

This is not a complicated concept, but grasping it requires forever abandoning the static analysis that so distorts the debate over energy and natural resources. Every school kid understands the basic law of supply and demand and the role that changing prices play in balancing the two. And yet Peak Oil promoters and alternative energy zealots seem to believe that increased oil prices will not bring about increased exploration, innovation, and discovery (never mind that they brought us the current fracking boom) and that decreased consumption due to a massive switch to alternative energy will not lower fossil fuel prices, making it ever harder for alternative energy sources to gain market share.

Through its seemingly automatic adjustments–not directed by any commissar or central planner–the oft-maligned invisible hand has an uncanny way of upsetting economic experts’ carefully devised predictions of what the market will look like a few years hence, along with politicians’ cleverly designed government policies to distort it. And while these distortions can certainly influence markets at the margin, the energy industry is way too large for bankrupt governments to support economically unsustainable energy schemes for long. Just look at the solar investment bubble’s spectacular collapse in Germany and Spain.

So next time you hear a Peak Oil alarmist prophesying doom, calm him down by pointing out that if natural energy resources were to ever run dry, we would already be living in an alternative solar-windmill-algae cheap energy nirvana.

HuffPost



13 Comments on "Belief In Peak Oil Logically Implies Failure Of Alternative Energy"

  1. J-Gav on Mon, 25th Feb 2013 9:26 pm 

    Good Lord, what a load! Almost every idiocy imaginable regarding energy condensed into a few Huffy paragraphs. That’s quite a feat but it doesn’t de-feat the second law of thermodynamics (that’s a nasty one, otherwise known as the Entropy Law). Beyond that, I won’t even attempt to extricate this supposed ‘science/economy writer’ from his contradictions …just let him dream on about nirvana. “If natural energy sources were ever to run dry …” Ha-ha-ha,Holy-Moly,what a simpleton.

  2. dave thompson on Tue, 26th Feb 2013 12:37 am 

    The idea of technology saving humanity needs to be rethought.

  3. LT on Tue, 26th Feb 2013 12:55 am 

    Even men’s muscle power is not renewable!

    No food no muscle power!

    And it takes significant amount of time to produce food:

    1. Rice/wheet takes about 6 month per crop.

    2. Chicken take about 1 year to raise.

    3. Cows take, I guess, 3 years to raise.

    But these works themselves requires huge muscle power to produce, too.

    Therefore, “renewable” is basically a fancy word originated from a wishful thinking.

  4. Plantagenet on Tue, 26th Feb 2013 12:58 am 

    Its quite true that Peak Oil advocates mostly ignore or dismiss the new oil production from frakking. Maybe the new “unconventional” oil from shale oil will turn out to be insignificant—-or maybe not.

    Time—and the market—–will sort this out soon enough.

  5. BillT on Tue, 26th Feb 2013 2:04 am 

    The Market is going to be the defining limit to oil, not resource. There will always be oil and natural gas, just not economically recoverable.

    Yes, this article above, pretending to be a real discussion of renewables, is the Mount Everest of bullshit.

  6. graham on Tue, 26th Feb 2013 3:34 am 

    The denial is strong with this one 😀

  7. John on Tue, 26th Feb 2013 3:46 am 

    Written by a fellow at the libertarian Competitive Enterprise Institute.

  8. Mike in Calif. on Tue, 26th Feb 2013 6:16 am 

    “It ignores the role economics plays in shaping supply and demand…”

    This is indeed Hubbert’s greatest mistake, but not for the reasons the author thinks. Hubbert’s predictions were generally accurate for region, state and country. The wells didn’t “dry up” (exactly). Instead, there were other regions or countries where the ‘cheap and easy’ could still be had. There was no business incentive to use more expensive methods for smaller results in failing areas.

    IMO, what Hubbert missed is just how critical oil is, just how desparate people would become to keep the flow rates up. This is why world peak is not following a bell curve. A stubbornly high price per barrel is a measure of that desparation and is driving “innovation” and expensive techniques in increasingly exotic locations. Most of these innovations are actually old and only now cost-justified. Look forward to coal liquefaction – it’s coming.

    The “human ingenuity” argument has some small truth to it. Nickel can sometimes replace platinum as a catalyst, etc. But generally these ideas are incremental and come with a price (aluminum is as good a conductor as copper). There is no replacement for the irreplaceable. And oil is, or comes very close, to being such a substance.

    The Anasazi innovated no replacement for water. The Easter Islanders invented no substitute for timber. They were not dumb and we are not as smart as we think.

  9. Mike in Calif. on Tue, 26th Feb 2013 6:16 am 

    “It ignores the role economics plays in shaping supply and demand…”

    This is indeed Hubbert’s greatest mistake, but not for the reasons the author thinks. Hubbert’s predictions were generally accurate for region, state and country. The wells didn’t “dry up” (exactly). Instead, there were other regions or countries where the ‘cheap and easy’ could still be had. There was no business incentive to use more expensive methods for smaller results in failing areas.

    IMO, what Hubbert missed is just how critical oil is, just how desparate people would become to keep the flow rates up. This is why world peak is not following a bell curve. A stubbornly high price per barrel is a measure of that desparation and is driving “innovation” and expensive techniques in increasingly exotic locations. Most of these innovations are actually old and only now cost-justified. Look forward to coal liquefaction – it’s coming.

    The “human ingenuity” argument has some small truth to it. Nickel can sometimes replace platinum as a catalyst, etc. But generally these ideas are incremental and come with a price (aluminum is not as good a conductor as copper). There is no replacement for the irreplaceable. And oil is, or comes very close, to being such a substance.

    The Anasazi innovated no replacement for water. The Easter Islanders invented no substitute for timber. They were not dumb and we are not as smart as we think.

  10. Mike in Calif. on Tue, 26th Feb 2013 6:17 am 

    Crap. Double post, one correction. Sorry. Thought I stopped it in time.

  11. Ken300 on Tue, 26th Feb 2013 6:38 am 

    Fossil fuels are giving us Climate Change.

    Nuclear energy is too dangerous and too costly.

    It is time to transition to safe, clean alternative energy sources.

    See what the disaster at Chernobyl looks like today over 25 years after the disaster.

    http://www.youtube.com/watch?v=YfulqRdDbsg

  12. GregT on Tue, 26th Feb 2013 7:15 am 

    Ken300,

    The population explosion was not caused by poor family planning, it was caused by an excess of energy. Advocating alternate energy, makes you a huge part of the problem, not part of the solution.

  13. BillT on Tue, 26th Feb 2013 9:41 am 

    Oops! GregT, you just broadsided the ‘family planning’ guru! ^_^ The problems of today are all from having an excess of energy that we were not intelligent enough to appreciate and use wisely. Now Mother Nature is preparing to wipe us off the slate and start another ecology without homo spiens.

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