energiewende wrote:However remember that higher price and greater shortage are in a market economy two ways of saying the same thing, with infinite price corresponding to zero supply. So you will always be able to buy oil, eventually at some point it can simply be converted from nuclear or solar generated electricity which is effectively infinite potential supply, but you won't actually want it for all the things you once did. Cars in the US will get smaller, more household and industrial processes will be electrified, the world will continue to turn and the sky will remain in place.
Personally I agree
up to some point. The real problem is not the changing oil supply itself. Changing oil supply merely causes smooth changes in price.
The problem is: what is the impact on the economy when
the derivative of the oil price, with respect to time, becomes very large? I submit that it would be arrogant and overconfident to assume that we can continue to model this in isolation.
Isolated supply/demand models work fine for products whose availability or nonavailability has no major second-order consequences. Say, pocket calculators- if pocket calculators suddenly got fifty times more expensive overnight, we'd find a way to get by readily enough. But for something like food or water, there may be unforeseen, nonlinear and chaotic consequences of the price getting too high, which cannot be modeled by basic economic methods.
For instance, when food prices rise to the point where many people can't earn enough to eat, something's going to change. Either people start demanding more money (the economy may or may not be able to provide it), the state intervenes (medieval rulers kept granaries for just such an emergency), or something else. Sometimes the peasants riot and storm the Bastille and the whole system gets turned inside out. Because unlike abstract blips in a simulation, they're not going to die to preserve the order of things that your supply/demand model was modeling in the first place.
And this can change very suddenly- because people
must eat, they will not take a rain check on their daily food supply. It gets even worse when for whatever reason there is an actual state of famine, one where past production of food is literally
not enough to ensure present supply, and there are literally not enough calories available to keep everyone alive.
This doesn't invalidate the basic price model, but it does represent a limit on that model. By analogy, there is a simple linear model for the force exerted by a spring that has been stretched some distance x:
F = k*x
Under normal conditions engineers use this all the time. But what if your spring is a Slinky, and you try to stretch it a distance of one mile? Will the spring continue to obey F=k*x? No. Other processes kick in, the force exerted by the spring becomes NON-linear, the metal begins to permanently deform, and finally breaks... after which the spring exerts no force at all.
Rapid changes in the price of food
definitely have the potential to do things like this to an economy. Rapid increases in the price of oil might; it is not easy to say with certainty.
That is not a criticism of linear models, or Newtonian physics- it's just that reality is sometimes complex, and intelligent people make allowances for the places where their model breaks down.
Oil should and will be extracted well beyond the point that EROEI is less than 1.
Oil should not be extracted if the EROEI is less than 1
unless that oil is being used for some purpose other than "get energy out of it." This is just common sense. If I have a way to burn a one-pound note to get a five-pound note I'll do it in a heartbeat; the reverse is not true unless I'm a complete idiot.
Expending 1 MJ of coal/nuclear/whatever energy to extract oil that, when burned, yields 100 kJ of energy is that kind of disastrous idiocy. If it can ever be profitable, it's because a very fucking perverse incentive structure is in place. For example, because someone forgot to develop ammonia-burning car engines.
Singular Intellect wrote:As real as the Peak Oil (production) problem is, it no longer concerns me in the slightest. I used to think it was a doom and gloom scenario, then a scenario of very bumpy history until we transition fully to renewables. But for awhile now it seems it won't even register as a significant bump on the road of progress. Not that I'm complaining by any means.
[/quote]You also think Moore's Law or something like it applies to solar power output, as I recall.
Not that I'm even arguing about that right now; I just think a man should state his assumptions.
