In the interest of fairness, I've decided to publish his (unedited) letter with his recommended title: "Are Economists Collectively Stupid?". Enjoy!
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It is difficult to imagine a much less well informed article.
First the argument about peak oil is not about the world running out of oil. Oil is stored in small pores in rock. Whatever the extraction process there will always be oil left behind in the rock, somewhere between 30-50%.
We can also generate new oil by growing it. The problem is that this quantity is small compared to current consumption. If we can grow oil we can not run out.
Secondly ignoring 'new' oil production, there is a finite quantity. The key to understanding the use of this is not money but the energy used to extract the oil.
At the moment we have lots of oil and gas based cheap readily available energy. This is used for fertilisers and agriculture, chemical feedstock, food processing, electricity production, manufacturing, home heating and transportation. If electricity is not nuclear, hydro, wind or geothermally generated it is thermally generated from fossil fuels. Electric cars are not a solution unless the energy is not from fossil fuels.
The key to understanding energy production is the concept of EROI, the ratio of energy out compared to the energy invested. This rario is falling fast. In 1930 is was about 100 for oil, we are nw less thn 11-18. In theory when itb reaches 1 we will spend as much energy getting oil out as we get. At this point oil may still be extracted for pharmaceuticals but it is unlikely for transport.
The simplistic we have 150 barrels and use 10 therefore have 15 years of oil ignores the current long term trend is exponential. If we carried on present growth rates our coal resrves will be gone within 100 years!
Hydrogen fuel cells are no option, unless we have solar production of hydrogen, and develop high density storage. Oil has a very high energy to volume or mass ratio. Hydrogen is like electricity, not a source of energy but a means of transmission.
Economists need to start to think about energy not money as the basis for our society.
One also needs to look at extraction technology, depletion rates of existing fields etc filds developed using the latest 'directed christmas tree ' drilling tend to deplete in double digits, and here is insufficient oil left to justify with current technologies later reworking. Wells developed using older tech depleted at about 2%, and may be reworked with christmas trees and water injction. THis makes the Saudi Ghawar field interesting. The cut of water to oil pumped out of the wells has apparently increased to over 55%. That meansfor 100 barrels of fluid pumped we get more than 55 barrels of water and less than 45 of oil. As the cut increases at some point the water pushing up the oil reaches the 'christmas tree' and production of oil drops precipitously. As well age we use more energy to extract oil.
Currently we do not have a replacement technology for oil. Whilst nanotechnology may lead to better batteries, and enzymic breakdown of lignin may produce a greater amount of fuel, when we have a replacement we will need to redesign and build our infrastructure. It takes time to impliment new tech. To give an example jet planes were invented in the thirties but became commercial in the 70's, computers were invented during the second world war but needed the transistor in the sixties to become viable for large industries in the seventies, and a consumer item in the ninties. Markets exploit existing technology and infrastructure, replacement does not just happen, the underlying research may have taken years.
There have been a number of reports on these problems, testimony in the US to the senate etc. See the Hirsch report.
Whilst we could build numerous Sasol plants to convert coal to oil, climate change imposes a further constraint.
We have a problem based on Geology, Physics and Chemistry. It is vital our economists understand this.
Suggested title, 'Are Economists Collectively Stupid'
