[extropy-chat] Re: peak oil debate framed from a game theory standpoint ?

[Mike Lorrey]

--- Robert Lindauer <robgobblin at aol.com> wrote:

> 
> On Sep 3, 2005, at 2:56 PM, Mike Lorrey wrote:
> 
> >
> >
> > --- Hal Finney <hal at finney.org> wrote:>
> >> As oil reaches each new price level, Peak Oilers take it as
> >> vindication and confirmation of their views.  There was a time
> when
> >> $50 oil was unimaginable. Then $60 oil was unimaginable, then $70.
> >> Today $80 or $90 oil is unimaginable. What will we be saying by
> the
> >> end of this year?
> >
> > What do they say about the fact that once you take into account
> price
> > shifts solely due to changes in the value of the dollar caused by
> > banking policy, oil prices of $56/bbl today are essentially no
> > different from $40/bbl prices two years ago. Todays spot price of
> $69
> > is equal to $49/bbl prices two years ago, when prices were $30/bbl.
> So
> > it appears that half of the present high prices vs. two years ago
> is
> > solely due to fluctuations in the dollar markets due to banking
> policy.
> > The other half can be attributed to multiple things: middle east
> > instability, the current Katrina crisis, as well as growth in
> Chinese
> > demand.
> 
> I'd say your scenario contradicts itself since you say below:
> 
> > I should also note that President Bush ordered the Reserve filled
> to
> > capacity shortly after 9/11, when oil prices shot up from the mid
> $25
> > range to the $35-38 range on the spot markets. Depending on what
> prices
> > it obtained these reserves at, the gov't could realize a
> significant
> > windfall on these sales. Assuming they sell a million a day for two
> > months, they should see profits of about $1.5 billion, which should
> > help offset some of the $10.5 billion being authorized by Congress
> for
> > the Katrina recovery efforts.
> 
> Well, how much is it?
> 
> Anyway, at two years at 5% inflation, from $49, you get $54, not $56 
> and the prices are not $56.

Inflation is not the change in the international value of the dollar.
The dollar has dropped in value by about 40% over the last two years,
compared to other currencies. That is not reflected in our CPI because
only a small percent of our overall economic activity is priced on
foreign currencies. So, no, you are the one that is wrong.

> 
> Anyway, this is mostly irrelevant since the underlying theory is 
> obvious and simple:
> 
> There are no new sources of fossil fuels.  We have already tapped the
> "easy to get to" ones (for the most part, I've heard recently that 
> Vietnam has a major reserve but I'm not aware of the reliability of
> the source...) and the easy-to-get-to portions of the easy-to-get-to
> ones.  

The Vietnamese reserve you speak of is actually a proven inorganic oil
source. The "White Tiger" field offshore was drilled by Russian teams
from Yukos after American oil companies declared the field to be
non-existent and abandoned the area. The Russians drilled 17,000 feet
deep into and through basaltic layers for each well, producing 6,000
bbl/day/well.
http://reactor-core.org/peak-oil.html
The Vietnamese resources would not exist under your malthusian paradigm
of limited resources. According to the biotic oil 'experts', oil
doesn't exist that deep, and doesn't exist under the continental
basalt. The biotic theory is that it is a sedimentary deposit of
biological material. If so, it can only exist above the continental
basaltic bedrock. Once again, it is you who are wrong.

> This leaves the harder to get to ones dwindling down to the
> impossible to get to ones and finally to the no more left scenario.

And as each is exploited, new technologies will be developed that will
be able to get at them easier and cheaper. At the same time, energy
conserving technologies will enter the market and help reduce demand
per dollar of GDP.

> 
> The alternative - that the core of the earth is filled with nothing
> but fossil fuels and we'll be able to run on unleaded gasoline for
the
> next 100 years at our current rate of consumptive growth is absurd.

On the contrary, the Athabascan oil tar sands of Alberta has enough oil
for centuries of consumption.
http://www.answers.com/main/ntquery;jsessionid=1mhi35m1go3h3?method=4&dsid=2222&dekey=Athabasca+Oil+Sands&gwp=8&curtab=2222_1&sbid=lc01a&linktext=Athabasca%20Tar%20Sands
"Although not proven, and not even considered within the oil industry,
according to the Alberta Energy and Utilities Board, the Athabasca tar
sands is the largest oil deposit in the world, with a claimed
estimation of 1.6 trillion barrels (254 km³) of oil, of which at most
315 billion barrels (50 km³) are claimed to be recoverable by the oil
companies given current technology. Syncrude
(http://www.syncrude.com/who_we_are/01_06.html), one of the oil
companies involved in mining the tar sands, states that the entire tar
sand deposit is twice the size of Lake Ontario. It is estimated the
Venezuelan Orinoco tar sands deposit is slightly larger than Athabasca
(see tar sands article). See [1]
(http://www.energybulletin.net/4385.html) for more accurate estimations
of about 174.5 billion barrels (28 km³)."

So, at current technology and global consumption rates, if all the rest
of the oil in the world ended in the near future, the Athabascan sands
could supply about ten years of total global oil consumption. With
advances in technology, the sands could potentially supply 50 years or
more of global oil needs. The Orinoco tar sands have similar capacity.
The Athabascan deposits equal 1/3 of all global reserves.

> 
> Consequently the obvious conclusion for those with half-a-brain-left
> is that it's just a matter of time - 10 years, 2 years, 50 years, 100

> years.  In any case, the US economy in particular will have to
> undergo 
> a major change in order to survive the removal of our primary energy 
> source and it's the kind of thing it's better to prepare for earlier 
> rather than later lest we find ourselves fossil fuels one day.

On the contrary, the market will signal when the need occurs. As with
articles previously cited by Hal, it is clear that the oil oligopolists
won't pass up expensive prices tomorrow for cheap prices today.
Instead, they will drive up current day prices by delaying exploitation
of unused reserves or other means of expanding production beyond
current capacity. In a market of rising demand, simply delaying
expansion of production drives up prices automatically to send the
price signals that will trigger consumer conservation. Your abject lack
of faith in the market explains a lot why you are not a libertarian.

Mike Lorrey
Vice-Chair, 2nd District, Libertarian Party of NH
Founder, Constitution Park Foundation:
http://constitutionpark.blogspot.com
Personal/political blog: http://intlib.blogspot.com

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