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Tuesday, August 23, 2005

Peak oil, or maybe not.

A few of the few readers of this blog have chastised me for posting too many comments on other peoples' blogs when I should be posting here (or at least provide pointers to those comments). OK, point taken, and I am grateful to those who are kind enough to care.

I'll confess now to spending my spare time last Friday over at Prof. Hamilton's very excellent Econbrowser, in a discussion with some Peak Oilers about the impending end of civilization as we know it by energy starvation.

They confirmed for me something I always suspected...
"Well, my impression is that with oil use per $ of GDP down 50% since the first oil shocks, the effect of a shock on GDP would be proportionately less today..."

Logically, the situation is worse now than before: a smaller reduction of the oil (ie. in barrells) will cause a larger change in the GDP!
... yup, conservation is bad.

Meanwhile, the NY Times employs Peter Maass to cover the same ground in the Sunday Times Magazine and provide us with such insights as ...
Few people imagined a time when supply would dry up because of demand alone.
But now we know -- supply dries up because of demand alone!

For such new, creative analysis of the economics of oil one really can't do better than the Times' strategy of giving the cover story to a name writer noted for many things other than knowing anything at all about either economics or the oil industry.

Update: Steven "Freakonomics" Levitt's opinion of the Maass piece seems rather less charitable than mine.

Update: The Times' John Tierney pulls a Julian Simon and bets $5,000 of real money against $200 oil in 2010. (Then lays off $2,500 of the bet on Simon's widow.) The money goes in escrow, winner take all on January 1, 2011. Finally, the Times has an op-ed writer who's interesting. Words are cheap, Paul, Bob, Mo -- let's see some more action.