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

[Samantha Atkins]

On Sep 3, 2005, at 4:32 PM, Hal Finney wrote:

> Here are a few more thoughts about Peak Oil.
>
> For those who have not run into it, although there are many variants,
> the most virally virulent version of Peak Oil says that we are within
> two or three years of the fall of Western civilization.  This may seem
> absurd on its face but I will lay out the argument briefly.
>
> It is suggested that we are reaching a peak in oil production such  
> that
> no reasonable amount of money, or perhaps no amount of money  
> whatsoever,
> can increase production levels.  While the world's oil wells still  
> have
> lots of oil, it is becoming harder and harder to extract.  Existing
> technologies to increase the rate of extraction work for a few years
> but then the fields "die" and the rate of production begins to fall
> by 10 to 20 percent per year, and no known technology can change that.
> There is nothing, in this view, that can increase the rate of  
> production
> of oil to overcome the declines that are appearing in more and more
> countries around the world.  Only Saudi Arabia claims to have the  
> ability
> to increase production, but Peak Oilers generally believe that Saudi
> Arabia is lying.  Oil analyst Matt Simmons published a book this year,
> Twilight in the Desert, analyzing Saudi oil fields in detail and  
> arguing
> that they are near their own peak.

As I used to work in (or at least on the outskirts of) the industry I  
can attest that this is more or less correct.  There are no known  
technologies that can significantly increase the productivity of a  
field without shortening its productive lifetime or prevent its  
eventual decline in production.   Some of this is simple common  
sense.  It is not a "view".  What is a view is the notions portrayed  
of what the consequences of world wide oil demand outstripping supply  
will likely be.   But that demand will outstrip supply is incontestable.

>
> This supposedly inexorable decline in oil production levels runs  
> head-on
> into rapidly growing world demand for oil.  China in particular, but
> also other countries like India, are expanding their oil  
> consumption at
> a rapid rate.  And of course Western countries, especially the U.S.,
> are also continuing to use more and more oil every year.  Although the
> West has improved its oil efficiency in many ways, the current  
> economy is
> fundamentally dependent on oil for growth, and in the present  
> situation,
> economic growth will be impossible without increasing the supply of  
> oil.
>
> The collision of these two trends will, it is claimed, produce
> catastrophe.  Oil prices will skyrocket to unheard-of levels,  
> hundreds of
> dollars per barrel.  Most people will simply be unable to afford  
> gasoline
> or heating oil.  Airlines and other forms of transport will go  
> bankrupt
> and business failures will be widespread.  The economy will enter a
> permanent state of decline that will make the Great Depression look  
> mild.

I don't know about hundreds of dollars per barrel but as it stands we  
are certainly headed for a very real energy crisis.  There are many  
factors that lead me to belief that we are also in for an exceedingly  
dangerous and painful economic crisis other than peak oil.

>
> Worse, even essentials like food and pharmaceuticals are highly  
> dependent
> on oil, and with the explosion in the price of this crucial commodity,
> the world will see a rapid spread of famine and disease.  This  
> produces
> what Peak Oilers call the "great die-off" and many of them expect it
> within a few years.

You are talking about one particular fringe group of people who  
believe peak oil is real.  Implying that all people who  believe Peak  
Oil is real have the same beliefs is dishonest.  Let us see and  
address the real problem instead of disowning it.

>
> This may seem like an astonishingly implausible scenario, but it is  
> widely
> believed among the Peak Oil community.

Not really.

>
> Of course, not everyone concerned with Peak Oil buys into this whole
> picture.  There are a range of beliefs.  Some see this scenario  
> playing
> out, but not for a decade or more.  Others think that the impact  
> will be
> limited to a permanent state of economic depression, and don't  
> accept the
> great die-off.

Others including myself  believe that new technolgies will take up  
the slack.  Unfortunately the deniers of the problem and the real  
inertia of how long it takes to bring alternatives fully online means  
there will be some harsh consequences before the problem is  
sufficiently addressed.

>   People also disagree about just when the peak will occur.
> Some see it as 10 to 15 years off, others out 5 years or 2 years, and
> yet others think it's already happened and we are beginning to feel  
> the
> first effects.

It is difficult to say without much more impartial and complete data  
on the state of existing fields.  But my guess would be no more than  
5 years.  My suspicion is that it has already begun among those in  
power who see it coming.

>
> Needless to say, this is not a very Extropian image of the future!

Being Extropian does not include living in denial of real problems!   
Extropianism is not simply wearing high tech rose-colored glasses.

> And if you look closely you can see some inconsistencies and flaws in
> the assumptions that this scenario is based on.  Nevertheless the Peak
> Oil community devotes enormous efforts to analyzing every scrap of  
> news
> about oil supply and demand levels all over the world, and in fact  
> their
> predictions do hold up pretty well against recent trends.

Yes.

> 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.

Non-fringe major financial sources have talked about spikes to $100  
per barrel.  When that happens will you believe the problem is real?   
What would constitute enough evidence to convince you that we face a  
very real problem?

- samantha
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