The Intellectual Bankruptcy of the Peak Oil Movement

Ever since the publication of We Will Never Run Out of Oil I've been receiving a steady stream of e-mails which disagree (usually vehemently) with the premise of the article. I understand that; the article is on a controversial topic and the title chosen was intentionally provocative.

But I notice most of the letters I get do not actually address the argument. Rather they accuse me of working for an oil company (I don't), or being a toady for the Bush administration (I'm not a Republican) or being in favour of the destruction of the planet (which is ironic, as I've stated on here many times that I'm involved with the environmental movement). The peak oil movement appears to have no arguments beyond "if you don't agree with us, you're either corrupt, evil, or stupid".

Here is one of the nicer letters I've received from a peak oil supporter, which demonstrates what I mean. It comes from a woman who describes herself as an "Environmental Professor".

This article's optimistic title based on Economics 101 is too simple and begs for a much more complex, nuanced, insightful, detailed, scholarly look at what will happen as the world's cheap oil reserves run out.

My own view is that it is important to sound the siren and announce "Peak Oil" and that if we stay the course, we will run out of oil as we know it. Today's capitalist system is based on short term returns and therefore it requires a lot of siren sounding to educate people about the inevitability of what will happen... unless we do something about it. Most CEOs will do something about it only when it makes economic sense. Will it be too late then? Will sounding the siren help move government towards seting goals that the private industry then needs to fulfill?

This article is terribly simplistic and I find this young man ostensibly in his 30's to have hubris in asserting any sort of long-term historical insight. Perhaps there is a connection between his inflated sense of history and his sense of how easily things will change in a short amount of time.

There are two basic arguments here:

1.: Corporations only care about the short term, so government needs to step in.

This view seems to imply that CEOs have a much shorter time horizon than politicians do. That seems like a remarkable claim, given the fact that politicians need to be re-elected every 2-6 years, depending on the jurisdiction. Is there any evidence, whatsoever, that politicians look toward the longer term more than CEOs do?

Even if politicians do look more toward the longer term (which I doubt), are they in more of a position to make unpopular decisions, given the fact they need to get re-elected. I'm reminded of Al Gore's comment's on the Stern Report:

To its enormous credit the Review supports very strongly the politically-unpalatable idea, which no politician anywhere wants to hear, that the world needs desperately to start confronting the reality that burning carbon is expensive because it has a significant externality cost that must be taken into account.

So why should we expect politicians to cause short-term pains for long-term gains, even if we think they're looking toward the longer term?

2.: You're young and therefore ignorant of history.

The "Environmental Professor" is right in that I am in my early 30's. I don't see what this has to do with anything, though. I might be young, but I'm old enough to remember the following:

• The Canadian Government issuing propoganda comics to school children telling them that the oil supply would run out by the mid 1980's.
  
  
• The Club of Rome stating the oil supply would run out entirely in 20-31 years. They issued that statement in the 1970s. (source).
  
  
• The world's oil production would peak in 2000. (source).
  
  
• There's been all kinds of scaremongering on issues other than the oil supply running out. How about: "The Y2K problem is the electronic equivalent of the El Niño and there will be nasty surprises around the globe." – John Hamre, Deputy Secretary of Defense (source).

While I might be young, I'm old enough to realize that some people just need to believe the end of the world is coming and it takes them very little evidence to set them off.

Three Questions for Peak Oil Fans

I have three simple questions for peak oil supporters - I have yet to find anyone who can answer all three:

1. If the peak is just around the corner and exceedingly high prices ($200 dollars a barrel? $300? $400?) are coming our way, then why are the prices for oil futures and oil call options so low?
   
   
2. Are you buying oil futures or oil call options? If not, why not?
   
   
3. Why did peak oil supporters in the 1970s tell us that the oil supply would run out in the 1980s and 1990s? Why were they wrong then? Why are you right now? What's changed?

I would dearly love to hear from a peak oil fan who could answer those three questions - you can contact me by using the feedback form.