[extropy-chat] Debate on Peak Oil

Hal Finney hal at finney.org
Tue May 3 18:51:02 UTC 2005

Mike Lorrey forwards:
> http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20050426/OPINION01/504260377/1035/OPINION
> Deloss: Arctic drilling would yield big benefits, low costs
> April 26, 2005 
> ...
> 4. Given the above-described rising economic benefits, falling
> environmental costs, and successful congressional precedent, a vote to
> drill in ANWR has always been a question of when, not whether. When oil
> prices fluctuated at $25 to $30, ANWR oil production was a questionable
> venture. But China and India have traded their economically depressing
> socialism for the benefits of capitalism. As their economies grow
> rapidly, their rising oil consumption is pushing the world price of oil
> to $50 many years ahead of expectations. ANWR oil drilling is barely
> economic at $30, attractive at $40, and irresistible at $50.

I don't know much about the pros and cons of this drilling project,
but the bottom line seems to be that if oil prices stay high or go
even higher, the political pressure to allow development of ANWR will
be insurmountable.  And presumably we will also see increased desire
to develop other fossil fuel resources.  Once people feel the pain of
seemingly permanent rises in fuel prices, concern over the environment
is likely to become a secondary factor.

I live in Santa Barbara, which is an oil producing region.  We have
a number of offshore oil wells which are visible from our coastline.
And of course, this is also the site of the famous 1969 oil spill that
my father was involved in, as I wrote earlier.  There is strong local
opposition to further oil development.

There are also active proposals to install liquified natural gas (LNG)
reception terminals offshore in the local area.  The gas would be
offloaded from ships and then piped ashore.  The problem is that this
is said to have a high risk of dangerous accidents or even terrorism.
I remember reading an article years ago depicting a hypothetical LNG
accident, with a burning wavefront as the supercold vaporized gas mixed
with air, spreading and extending for miles inland, setting everything
in its path aflame.  I don't know how realistic that is but it was
pretty horrific.

The economic problem is one of externalities.  Developing oil resources
benefits the oil companies directly and everyone indirectly.  But we
in the local area pay costs which are not compensated, in the risk of
further environmental damage or even catastrophic destruction.  So it
ends up being a battle of local vs national governments.

The current energy bill is supposed to give the president more authority
to override local opposition in oil development and LNG sites.  I imagine
that this will be an increasing trend if oil prices go on the way they
have been.


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