From: Charlie Stross (charlie@antipope.org)
Date: Fri Apr 14 2000 - 05:51:23 MDT
On Thu, Apr 13, 2000 at 12:56:41PM -0400, Michael S. Lorrey wrote:
>
> And you are saying that more taxes and government controls are a good thing?
Under some circumstances, yes.
Clue: I am _not_ a libertarian; I'm a liberal, in the classical sense
of being a member of the Liberal Party of the United Kingdom (not to be
confused with those running-dog revisionist-socialist Liberal Democrats).
I'm on your side on the civil liberties issues, but I don't believe in
simplistic economic nostrums and uncontrolled free-market economics as
the final solution to all our woes.
> > If you remove OPEC, bad things happen:
> >
> > Firstly, the price of oil crashes. Each oil producer in the middle east will
> > start pumping like crazy in an attempt to maximize revenue, because everyone
> > will be trying to undercut their neighbour and when you cut your prices you
> > have to make it up on volume.
>
> Outstanding. This is NOT a bad thing. This is a very good thing.
In dealing with a finite resource?
You gotta be joking.
> There won't be a shortage, this is bull. The market will finally meet the demand
> at a market determined price, not a producer determined price. If the british
> oil unions go out of work, well, I won't cry for them.
There ain't no such animals; just high-tech companies that specialise in
extracting oil from under half a mile of frigid and turbulent ocean.
> > Basically, prices will yo-yo violently. The whole process will be aggravated
> > by the diminishing reserves -- wildly fluctuating prices will discourage
> > oil companies from exploring for new fields, too.
>
> Fine. We already have plenty of fields as it is, most of which are not being
> explored only because of governments setting these areas aside in order to
> maintain an artificially high oil price.
Check out last year's Scientific American run -- there was a rather
worrying feature in it (by some geologists specialising in petrochemical
prospecting) who pointed out that the official figures for known reserves
have been gerrymandered by governments (yeah, OPEC members) for political
reasons relating to their OPEC-assigned extraction quotas. Basically,
they moved a lot of stuff that was officially off the books onto the
books in the last decade, in order to justify increasing their output
at a time of diminishing prices. The actual undetected but retrievable
reserves are believed to be pretty small -- nobody is too interested
in oil fields where the energy cost to extract a barrel exceeds the
product. By their estimate, we pass the 50% exploitation level some
time between 2005 and 2010, and from there on out oil prices _will_
climb as the accessible reserves are worked out and the only new fields
coming on-stream are highly inconvenient (e.g. the Atlantic fields).
Encouraging people to think that oil is cheap and will remain so in
perpetuity is a Bad Thing(TM) in terms of long term collective self-
interest; we need to be able to migrate from an oil-burning civilization
to something more efficient and sustainable, and cheap oil encourages us
to stay fat and lazy and not bother doing things like developing
nuclear or renewable energy sources. By the time the oil price begins
climbing steeply because the oil is running low, there may not be
enough money around to begin such a large-scale conversion without
widespread economic dislocation.
I _hope_ I'm wrong about this, but I really don't want to see unhampered
deflationary price wars in the oil industry end up forcing us back into
the nineteenth century by the mid-twenty-first.
-- Charlie
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