Are We Running Out of Oil? Or Gaining More? Or both?

Following up on my argument against Malthus and the Limits to Growth a piece from Newsweek on the state of oil. Read here.

The author has a vested interest; he is an energy business. Nevertheless I still think it is a very important voice in the debate.

Long but key quote:

Now doomsday forecasts are back, predicting the end of oil in this decade or the next. The verdict of the new catastrophists may appear more convincing because they use statistical and probability models that appear to penetrate the mysteries of our planet's subsoil. In fact, they do no such thing. In sum, what little is known about the world's underground resources justifies a positive view of the future.

Historically, high oil prices have always led to booming investment and a slowdown in consumption, and this is exactly what we are seeing today. Investors are pouring hundreds of billions of dollars into energy, from conventional oil to unconventional oil (tar sands, shale oil) to all its alternatives, from natural gas to biofuels and liquefied coal. In other words, high prices are not necessarily bad news for the global economy, because they are boosting innovation and efficiency while encouraging conservation. In industrial nations, estimates of growth in demand for oil are falling for 2006 and could come in flat, as even American drivers turn their backs on gas-guzzling vehicles.

Still, no one can be sure how long this era will last. Given our fundamental ignorance of what lies below, the best bet is that the oil market will remain cyclical, characterized by boom-and-bust periods, for decades. We are in a period of high prices similar to the '70s, yet there are critical differences. Today more than 90 percent of oil reserves are under the control of producing countries, many embracing a policy of resource nationalism. Aimed at sustaining prices, this nationalist tendency could choke off new development. It could also raise the already growing tension we see between producing and consuming nations, pitting the West against Russia, the United States against Venezuela and so on. Put simply, the oil problem is not beneath the surface but above it.

Yet the perception that we are running out of oil retains such a deep hold on the popular psyche, it's worth correcting. The reason we have seen so many bad guesstimates is that even the most advanced technology can't tell us how much crude the Earth holds. No method has been devised to search for new reserves with precision, or even to gauge the true size of known reservoirs. While the mainstream view is that oil resources are finite, no one knows just how finite they are.

There are other voices involved. For an opposing view see here. Just look up peak-oil for a number of well argued (though possibly flawed) pieces on the subject. But I take with a major skeptical mind predictions of the end of oil given the history: repeated cycles of bad predictions.

Moreover, the predictions have usually been wrong because they do not take account that during periods of high price (due to high demand and low supply, even if artificially low as per OPEC), investment brings better technologies which then finds new wells, extracts better from the ones already known, etc. I imagine the truth will lie somewhere in between the rosy and gloom-doom projections of these opposing viewpoints.

Also environmental. Is simply getting more oil and burning it good for the earth? Don't think so, but I do think the only way is forward. I'm for personal choice of de-consumption and also open to taxation on consumption as long as it balanced (and actually drawn down) by an equal if not greater reduction of earnings/savings/investment taxation.

I'm also hugely in favor of tax-breaks revoked for oil companies and given instead to renewable starts and investment. On a huge scale. I'd much rather focus on developing alternative sources than simply trying to limit current consumption patterns (green) thereby slowing down economic growth (orange)--see the economies of Europe for example.

Part of the argument against a Malthus, I believe, has to do with Eros in the universe. Not a mainstream argument I know. In terms of a projection of future evolution based on past evidence--not some metaphysical belief--the human race is headed towards a hydrogen economy.

Human technology has been on a trend towards de-carbonization and inc'd hydrogenization for a long time.

From www.Sustainabilitynow.com

Wood has 10 atoms carbons for 1 atom of hydrogen. Coal, 1~2 Carbon for 1 hydrogenOil, 1 carbon for 2 hydrogenNatural Gas, 1 carbon for 4 hydrogen.

Eventually the trendline suggests a pure hydrogen economy.

Now I'm not saying it is all going to be sweetness and light in the meantime. I'm very concerned (but not anxious) about possible negative outcomes, particularly for the poor of the Earth in tropical zones, due to carbon emissions, ecological/climate change, etc.

In the long term I agree that the trendline (which is different than predictions of how much oil is in the ground--there Crichton's arguments about the impossibility of precise prediction hold), that is the evolutionary trajectory, point towards a Singularity or Singularity-like event in the technological sphere.

Given that I hold to a quadratic-holarchic view the Singularity event represents a moment of choice whose effects could be very profound, both positively and/or negatively. In other words the biggest issue for the planet, I believe, continues to be the stuck nature of interior development (individual and collective) with increasing speed of the evolution of the exterior technological-economic spheres.

The diffusion of nuclear weapons is the most dangerous evil faced currently on the planet. But by the time of the Singularity (mid-century) nuclear bombs will not nearly be the most dangerous thing on the planet. That is a sobering thought. More deadly will be biological, nanotechnological, or perhaps rogue robotic technologies.

At that point we will be long past I imagine arguments about oil.