[p2p-research] no oil crisis?

Paul D. Fernhout pdfernhout at kurtz-fernhout.com
Thu Aug 6 16:56:01 CEST 2009

Michel Bauwens wrote:
> Hi Paul,
> is chapter 11 is anything to go by ... Julian Simon's book must be total
> crap  ...
> http://www.juliansimon.com/writings/Ultimate_Resource/

OK, so where do you disagree with, say, this:
    You may wonder whether "non-renewable" energy resources such as oil, 
coal, and natural  gas differ from the recyclable minerals in such a fashion 
that the non-finite arguments  in earlier chapters do not apply.  Eventually 
we'll burn all the coal and oil that powered these impressive advances, you 
may be thinking.  But our energy supply also is  non-finite, including oil 
as an important example. That was not a misprint. In chapter 3  I showed 
that it is necessary to say how one would count the amount of a resource if 
one  is to meaningfully say that the resource is finite.  Therefore, let's 
consider the  following sequence of difficulties with respect to counting 
the amount of oil.  As with  other resources, careful thinking leads to the 
conclusion that the potential amount of oil - and even more, the amount of 
the services that we now get from oil - is not finite.
    (1) The oil potential of a particular well may be measured, and hence it 
is limited  (though it is interesting and relevant that as we develop new 
ways of extracting hard-to-get oil, the economic capacity of a well 
increases). But the number of wells that will  eventually produce oil, and 
in what quantities, is not known or measurable at present and probably never 
will be, and hence is not meaningfully finite.
    (2) Even if we unrealistically assume that the number of potential wells 
in the earth might be surveyed completely and that we could arrive at a 
reasonable estimate of the oil that might be obtained with present 
technology (or even with technology that will be  developed in the next 100 
years), we still would have to reckon the future possibilities  of shale oil 
and tar sands - a difficult task.
    (3) But let us assume that we could reckon the oil potential of shale 
and tar sands. We would then have to reckon the conversion of coal to oil. 
That, too, might be done, but the measurement is becoming increasingly 
loose, and hence less "finite" and "limited."
    (4) Then there is the oil that we might produce, not from fossils, but 
from new crops - palm oil, soybean oil, and so on. Clearly, there is no 
meaningful limit to this source  except the sun's energy (land and water are 
not limits - see chapters 6 and 10).  The  notion of finiteness is making 
ever less sense as we proceed.
    (5) If we allow for the substitution of nuclear and solar power for oil 
- and this  makes sense because what we really want are the services of oil 
and not oil itself - the notion of a limit is even less meaningful.
    (6) Of course the sun may eventually run down. But even if our sun were 
not as vast as it is, there may well be other suns elsewhere.
    The joke at the head of chapter 3 makes the point that whether there is 
an "ultimate" end to all this - that is, whether the energy supply really is 
"finite" after the sun and  all the other planets have been exhausted - is a 
question so hypothetical that it should be compared with other metaphysical 
entertainments such as calculating the number of angels that can dance on 
the head of a pin. As long as we continue to draw energy from the sun, any 
conclusion about whether energy is "ultimately finite" or not has no bearing 
upon present policy decisions.

I think Julian Simon's philosophy goes wrong in issues like natural 
biodiversity (until we gene-engineer new animals), social equity (until we 
have a basic income), and the systemic risk of global war (an external cost 
of war being profitable, which it is hard to eliminate until we move beyond 
the market entirely to local production and a peer-based gift economy). But 
the core idea of the market *eventually* adjusting to scarcity by changing 
pricing structure and investing in alternatives seems sound, absent special 
interests or government backed monopolies. From Brittle Power:
"Brittle Power: Energy Strategy for National Security is a 1982 book by 
Amory B. Lovins and L. Hunter Lovins, prepared originally as a Pentagon 
study, and re-released in 2001 following the September 11 attacks. The book 
argues that domestic energy infrastructure is very vulnerable to disruption, 
by accident or malice, often even more so than imported oil. According to 
the authors, a resilient energy system is feasible, costs less, works 
better, is favoured in the market, but is rejected by U.S. policy. In the 
preface to the 2001 edition, Lovins explains that these themes are still 
very current."

So, the production of better solar panels and wind power and alternatives is 
just proof of Julian Simon's point. The market is planning for and adjusting 
to an increasing physical scarcity of oil, which will ultimately make fossil 
oil fairly very cheap (but no one will want it, because it will be dirty, 
unhealthy, unaesthetic, immoral, etc. same as lighting homes with whale oil 
lamps instead of electric light bulbs these days). Granted, the market has 
to have a credible alternative to switch to, but solar and wind and other 
things are very credible at this point, so the switch will happen and is 

Now, often the government supports the centralized technology for political 
reasons (like special interests):
"In 1860, the government determined which technology was best. The oil 
industry was the favorite, and in effect, it was born with the competition 
swept neatly away and the silver spoon of subsidy (or tax advantage) lodged 
firmly in its teeth."

It has been hard for renewables to fight against all the government 
subsidies to the fossil fuel and nuclear interests. But they seem finally to 
be winning in the market, despite a playing field heavily tilted to fossil 
fuels and nuclear energy.

By the way, some people think much oil comes from cosmic processes, not 
dinosaurs. Hydrocarbons are common in other parts of the solar system. So, 
there are both lots of them around (though hard to get at, and pointless to 
bring back to Earth, although using them in place may be a good idea). But, 
like the stone age did not end because we ran out of stones, we now have the 
solar electric option, like from Nanosolar, which will soon (two decades?) 
mean fossil oil is no longer used much, same as whale oil is no longer used 
much, and wood heat is no longer used much for industrial processes (some 
heat homes with wood still, of course).

Anyway, I'd appreciate it if you could be specific about what you object to 
either above or in that chapter.

--Paul Fernhout

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