I’m an optimist on the personal level. I’m a bit of a pessimist in regard to the next decade or so – I think we’ll come out of it alright (that optimistic bit again) but I think it’s going to be a rough ride in the meantime. One of the places of this difficulty is in regard to oil.
Now, I’ve posted before about Peak Oil. And there’ve been a few readers who wanted to think I was one of the “OMG WE’RE GOING TO RUN OUT” people instead of reading what I was writing. So let’s kill that up front. We’re not going to “run out” — not swiftly. What’s going to happen is that for one of several reasons we’re going to see the demand for oil exceed the ability to produce – gradually but consistently. Before, I’ve said that on a theoretical basis – my argument being “in the near future”. Now, I’ve got a date. By the end of 2008, and possibly as early as now, demand will exceed production. Why do I say this? Because the EIA says OPEC needs to increase production by about 2% or it’ll happen by the end of 2007, and because the IAE says they need to increase by about 3% or it’ll happen by the end of 2007, and OPEC says that while the demand will exist they don’t need to increase yet as the overstocked inventories are plenty for 2007 (and fail to mention the need to increase to cope with 2008). In other words, the demand is there, and production isn’t there, and the naysayer says we can manage on inventory for a while.
Now, the next rebuttal I got historically was “If the prices go up, you’ll see alternatives – currently marginal fields will become profitable and so they’ll be pumped, and shale, and wind and solar and…” Know what? They’re right in the long run. But before the long run is tomorrow, and if you’re not ready for it you won’t reach the long run. It’s the sarcasm (that’s missed by so many) from John Maynard Keynes’s statement that “in the long run we’ll all be dead”. Before I’m dead I’ll live, and I’d rather live in peace and prosperity than disruption and poverty. So telling me things will be great eventually isn’t rebutting the issue. It’s ignoring it and hoping it’ll go away.
As an apparent digression, I’d like to point out another reality. A friend of mine posted on his blog that capitalism – actually, market forces – gets things moving. He attributes the resistance to change to people ASSUMING things will remain as they always were. I disagree. Instead, the resistance is because people PREFER the status quo even when it’s uncomfortable. They change because the discomfort of change is less than the discomfort of not changing. There are a lot of things out there that’ll do us all better, both individually and as groups of various sizes, but doing them would be a change from how things are now.
And now we merge the lines of thought.
Starting this year things start getting uncomfortable. The price of oil will start to climb. The price of things that use oil will climb in response. People will drive less, and will do other things to reduce their bills. As the price goes up a bit more they’ll start pursuing alternatives – but they’ll still be kicking more money into the gasoline pot. This increase in price will eventually – six months, a year, maybe two – drive businesses to re-open currently closed fields. That will take a few months more, but it’ll happen. And, eventually, either gas prices will come down due to demand and supply getting into synch, or we’ll have alternatives.
I don’t think we’re going to face an economic “bang” – though there are a lot of pressures, there are a lot more working to keep that small. I do think, however, that there will be a lot of whimpering. And while the whimpering goes on, I think the potential for a bang is a lot higher.
I’ll revisit this – it’s sparking a lot of thought in my mind – but thought I’d get it out for memory sake.