MikeT wrote:Richard Heinberg's book (amongst others) paints a pretty gloomy picture of the consequences. I have no reason to doubt this overall assessment.
However I would appreciate some guidance on whether there are any other analyses or models on the economic impact of oil peak - and the characteristics of businesses and country economies that would make them more or less susceptible to these changes.
P'=k(D-S) => P=k*int( t[0]->t , D-S) + C
That's ridiculous. Prices are a result of completely subjective valuations on the part of consumers. It's impossible to determine how people will value any resource in the future. Maybe in the future everything is made of synthetic diamond and diamond has become worthless, regardless of the level of depletion of diamond deposits.EnergySpin wrote:I think that Hotteling (the same guy who invented the T-square test for multivariate Student T data) worked out the economics of depletion of a finite resource in the 30s. If my memory is playing games with me he said that the price should go up by the same percentage as the rate of depletion (expressed at the same unit of time).
You can say all of these things but the fact remains that you are only engaging in speculation. Your predictions are not grounded in any science. An statistical measure of change in prices is only speculation, and so is a differential equation. They are not economic science. All economic science can say is that value is subjective, and tastes and preferences change. It's possible, although improbable, that a new energy source will be discovered and the value of oil will vanish entirely as an economic good, making Hubbert's depletion model irrelevant. The subjective valuations made by consumers will price oil at 0. You can't predict future valuations like you can predict the movement of a physical body subject to a force. To make a prediction would require knowledge of the preferences of every consumer now and into the future, something they probably don't even know about themselves. You would need to be omniscient.ElijahJones wrote:However I have to tell you that I know the price of oil tomorrow will not be under $30 per barrel and not over $100. Now if you ask me how much I will bet on that that is the measure of my certainty. Yes, as we move forward in time the typical person is willing to bet less and less on a prediction about the price of oil. And yet since the resource is depleting and there is a current built in demand we feel good about saying that prices will continue to rise as long as these factors persist. You see people are both free and not free, this is true economically, sociologically and psychologically. EnergySpins idea of a stochastic dynamical system is right on the money.
jaws wrote:That's ridiculous. Prices are a result of completely subjective valuations on the part of consumers. It's impossible to determine how people will value any resource in the future. Maybe in the future everything is made of synthetic diamond and diamond has become worthless, regardless of the level of depletion of diamond deposits.EnergySpin wrote:I think that Hotteling (the same guy who invented the T-square test for multivariate Student T data) worked out the economics of depletion of a finite resource in the 30s. If my memory is playing games with me he said that the price should go up by the same percentage as the rate of depletion (expressed at the same unit of time).
jaws wrote:You can say all of these things but the fact remains that you are only engaging in speculation. Your predictions are not grounded in any science. An statistical measure of change in prices is only speculation, and so is a differential equation. They are not economic science. All economic science can say is that value is subjective, and tastes and preferences change. It's possible, although improbable, that a new energy source will be discovered and the value of oil will vanish entirely as an economic good, making Hubbert's depletion model irrelevant. The subjective valuations made by consumers will price oil at 0. You can't predict future valuations like you can predict the movement of a physical body subject to a force. To make a prediction would require knowledge of the preferences of every consumer now and into the future, something they probably don't even know about themselves. You would need to be omniscient.ElijahJones wrote:However I have to tell you that I know the price of oil tomorrow will not be under $30 per barrel and not over $100. Now if you ask me how much I will bet on that that is the measure of my certainty. Yes, as we move forward in time the typical person is willing to bet less and less on a prediction about the price of oil. And yet since the resource is depleting and there is a current built in demand we feel good about saying that prices will continue to rise as long as these factors persist. You see people are both free and not free, this is true economically, sociologically and psychologically. EnergySpins idea of a stochastic dynamical system is right on the money.
Economics is not math-phobic, it's just that math is not useful to the field other than to construct illustrations of phenomenons discovered through the logical method. You can't say that psychology or philosophy is math-phobic.
ElijahJones wrote:Honestly, I really don't like your attitude, whatever your personal beliefs are and I think that to keep this thread from flamesville I will just ignore you until you start making some sense. Do you have a degree in something? Maybe we should comfort one another with an exposition of formal logic. Did your econ 101 class teach you axiomatics or prepositional calculus or how about graph theory? Do any of these have things to teach us about economic systems?
Peak Oil is a serious issue that is likely to cost the lives of millions of people and I am not interested in entertaining children or bullshit! So please, if you cannot respond here with logical argument kindly start your own thread. And do not flame the participants or I will report you to the moderators.
No, the valuations cannot be codified because they are unknown until individuals act on them. That creates a historical fact, an exchange of such goods took place for such goods on such date between two such people. This is why econometrics is useless. Aggregating historical facts and running mathematical analysis on them yields no valuable insight. Garbage in, garbage out as they say. What do you think would be the point of doing an econometric analysis of major battles fought in Western Europe?EnergySpin wrote:But jaws ... most of the recent Nobel prizes in Economics have been given for mathematical breakthroughs (Black Scholes formula for example is an SDE solution). And the logical method as you call it was the foundation of Jaynes approach to Bayesian probabilistc reasoning. The subjective valuations as you call them can be codified in utility functions (zero-one if you are a Bayesian) and then examine expectations combining both uncertain events and personal utilities (de Finneti's approach).
My physicist detector lights up whenever one thinks the methods of physics are appropriate for every field. What good are hypothesis and experiments to geology and meteorology? They have no laboratory to test. They are studying an immensely complex system in motion. All of their insights are based on observations and predictions. Economics is the same kind of field, except for two important differences. First, there is no constant metric in economics, therefore "measures of prices" are useless. The value of both money and goods is fluctuating. And the indexes constructed to adjust money to "real values" also fluctuate. Constructing a CPI based on eggs and a suit and a Ford Model T stops being useful when people's tastes naturally change and they buy different things. Since you have nothing constant to measure against, taking measures is not scientific, no matter how much you want it to be. By using prices as measures, you are making the same mistakes you accuse those quack doctors of making before using your methods.As I said in my first post, my BS detector starts ringing when (Economists) or other scientiest CANNOT or WILL NOT use quantitatve reasoning. That puts them at the same level of credibility as astrologists, tarrot card readers, alchemists and other nutcases.
In my field (i'm a physician) the mathematical/statistical approach is the standard way of formulating hypotheses and testing research questions. It is only when medicine accepted this "statistical" and "scientific" method that we were able to do awat with quackeries. Hearing that mathematics are not applicable to economics reminds me of the objections that supporters of medicinal leaches and blood letting used to discredit Louis studies against those methods in the early 19th century.
EnergySpin wrote: But jaws ... most of the recent Nobel prizes in Economics have been given for mathematical breakthroughs (Black Scholes formula for example is an SDE solution).
EJ wrote:Efficiency by definition is "achieveing a goal as cheaply as possible" (Colander, G4) There is no reason to suppose that perfect efficiency is even possible or that the model makes this assumption. I agree the actual working models will be difference equations but ODE's are the continuous analogs of difference equations, I am making no logical err by starting here.
Yes we have to get an estimate of D[0] and S[0], since we are interested in the long term behavior of the systems and most trajectories will be captured by the trend we can feel ok with being off by possibly as much as 15%. This is a calibration issue separate from the notion of process realism.
How small do you think is to samll to account for with mathematics? This point does not make sense nero. I can keep a math model that tracks to 30 digits of precision in both Mathematica and Maple certainly that is good enough to stay wihtin a percentage error of any real trend. Unless of course the trend we are looking at is chaos.
I think your conclusion is totally invalid the study of far from equlibbrium systems is gainaing ground in mathematical ecology as we speak. You've done nothing to show that the model is invalid. The argument you are using is often called "The Strawman Fallacy." It means you constructed an argument different than my position without really understanding my position. Then you defeated your own imagined foe and declared victory. You'll have to do better than that my friend. Try this link for starters http://www.datanation.com/fallacies/ . He does a pretty good job with it. Of course any good math program is going to teach formal logic and set theory (which is the foundation of everything logical).
EJ wrote:The equation P'=k(D-S) lacks many real world properties but as a starting point is has the following. Price goes up when D-S>0 and it goes down when D-S<0. Howmuch price changes under these conditions has to do with elasticity so k is not really constant, but that would be the next step in building the model. No k does not have to go to infinity for D-S to be zero. In the real world D-S=0 is the equilibrium the market is seeking but never finds.
I think you said that part of the reason it never finds the equilibrium is because it is actually discrete and not continuous.
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