Cap and Trade and the Illusion of the New Green Economy
Dr. Roy Spencer, from his blog at www.drroyspencer.com
July 1st, 2009
I don’t think Al Gore in his wildest dreams could have imagined how successful the “climate crisis” movement would become. It is probably safe to assume that this success is not so much the result of Gore’s charisma as it is humanity’s spiritual need to be involved in something transcendent – like saving the Earth.
After all, who wouldn’t want to Save the Earth? I certainly would. If I really believed that manmade global warming was a serious threat to life on Earth, I would be actively campaigning to ‘fix’ the problem.
But there are two practical problems with the theory of anthropogenic global warming: (1) global warming is (or at least was) likely to be a mostly natural process; and (2) even if global warming is manmade, it will be immensely difficult to avoid further warming without new energy technologies that do not currently exist.
On the first point, since the scientific evidence against global warming being anthropogenic is what most of the rest of this website is about, I won’t repeat it here. But on the second point…what if the alarmists are correct? What if humanity’s burning of fossil fuels really is causing global warming? What is the best path to follow to fix the problem?
Cap-and-Trade
The most popular solution today is carbon cap-and-trade legislation. The European Union has hands-on experience with cap-and-trade over the last couple of years, and it isn’t pretty. Over there it is called their Emissions Trading Scheme (ETS). Here in the U.S., the House of Representatives last Friday narrowly passed the Waxman-Markey bill. The Senate plans on taking up the bill as early as the fall of 2009.
Under cap-and-trade, the government institutes “caps” on how much carbon dioxide can be emitted, and then allows companies to “trade” carbon credits so that the market rewards those companies that find ways to produce less CO2. If a company ends up having more credits than they need, they can then sell those credits to other companies.
While it’s advertised as a “market-based” approach to pollution reduction, it really isn’t since the market did not freely choose cap-and-trade…it was imposed upon the market by the government. The ‘free market’ aspect of it just helps to reduce the economic damage done as a result of the government regulations.
The Free Market Makes Waxman-Markey Unnecessary
There are several serious problems with cap-and-trade. In the big picture, as Europe has found out, it will damage the economy. This is simply because there are as yet no large-scale, practical, and cost-competitive replacements for fossil fuels. As a result, if you punish fossil fuel use with either taxes or by capping how much energy is allowed to be used, you punish the economy.
Now, if you are under the illusion that cap-and-trade will result in the development of high-tech replacements for fossil fuels, you do not understand basic economics. No matter how badly you might want it, you can not legislate a time-travel machine into existence. Space-based solar power might sound really cool, but the cost of it would be astronomical (no pun intended), and it could only provide the tiniest fraction of our energy needs. Wind power goes away when the wind stops, and is only practical in windy parts of the country. Land-based solar power goes away when the sun sets, and is only practical in the sunny Southwest U.S. While I personally favor nuclear power, it takes forever to license and build a nuclear power plant, and it would take 1,000 1-gigawatt nuclear power plants to meet electricity demand in the United States.
And no one wants any of these facilities near where they live.
Fortunately, cap-and-trade legislation is not necessary anyway because incentives already exist – right now — for anyone to come up with alternative technologies for energy generation and energy efficiency. Taxpayers and consumers already pay for billions of dollars in both government research (through taxes) and private research (through the cost of goods and services) to develop new energy technologies.
Whoever succeeds in these efforts stands to make a lot of money simply because everything we do requires energy. And I do mean everything…even sitting there and thinking. Using your brain requires energy, which requires food, which requires fossil fuels to grow, distribute, refrigerate and cook that food.
Economic Competitiveness in the Global Marketplace
Secondly, when instituted unilaterally by a country, cap-and-trade legislation makes that country less competitive in the global economy. Imports and trade deficits increase as prices at home rise, while companies or whole industries close and move abroad to countries where they can be more competitive.
The Obama administration and congress are trying to minimize this problem by imposing tariffs on imports, but this then hurts everyone in all of the countries involved. Remember, two countries only willingly engage in trade with each other because it economically benefits both countries by reducing costs, thus raising the standard of living in those countries.
The Green Mafia
Third, cap-and-trade is a system that is just begging for cheating, bribing, and cooking the books. How will a company’s (or a farm’s) greenhouse gas emissions be gauged, and then monitored over time? A massive new bureaucracy will be required, with a litany of rules and procedures which have limited basis in science and previous experience.
And who will decide how many credits will initially be given by the government to each company/farm/industry? Does anyone expect that these decisions will be impartial, without political favoritism shown toward one company over another, or one industry over another? This is one reason why some high-profile corporations are now on the global warming bandwagon. They (or at least a few of their executives) are trying to position themselves more favorably in what they see to be an inevitable energy-rationed economic system.
Big Oil and Big Coal Will Not Pay for Cap-and-Trade
Fourth, it is the consumer – the citizen – who will pay for all of this, either in the form of higher prices, or reduced availability, or reduced economic growth. Companies have no choice but to pass increased costs on to consumers, and decreased profits to investors. You might think that “Big Business” will finally be paying their “fair share”, but Big Business is what provides jobs. No Big Business, no jobs.
The Green Jobs Illusion
Fifth, the allure of “green jobs” might be strong, but the economic benefit of those jobs is an illusion. The claim that many thousands of new green jobs will be created under such a system is probably true. But achieving low unemployment through government mandates does not create wealth – it destroys wealth.
Let me illustrate. We could have full employment with green jobs today if we wanted to. We could pay each other to dig holes in the ground and then fill the holes up again, day after day, month after month. (Of course, we’ll use shovels rather than backhoes to reduce fossil fuel use.) How’s that for a green jobs program?
My point is that it matters a LOT what kinds of jobs are created. Let’s say that today 1,000 jobs are required to create 1 gigawatt of coal-fired electricity. Now, suppose we require that electricity to come from a renewable source instead. If 5,000 jobs are needed to create the same amount of electricity with windmills that 1,000 jobs created with coal, then efficiency and wealth generation will be destroyed.
Sure, you can create as many green jobs as you want, but the comparative productivity of those jobs is what really matters. In the end, when the government manipulates the economy in such a fashion, the economy suffers.
And even if a market for green equipment (solar panels, windmills, etc.) does develop, there is little doubt that countries like China will be able to manufacture that equipment at lower cost than the United States. Especially considering all of our laws, regulations, limits, and restrictions.
So, What’s the Alternative?
If anthropogenic global warming does end up being a serious problem, then what can be done to move away from fossil fuels? I would say: Encourage economic growth, and burn fossil fuels like there is no tomorrow! Increased demand will lead to higher prices, and as long as the free market is allowed to work, new energy technologies will be developed.
As long a demand exists for energy (and it always will), there will be people who find ways to meet that demand. There is no need for silly awards for best inventions, etc., because the market value of those inventions will far exceed the value of any gimmicky, government-sponsored competitions.
Why are Politicians so Enamored by Cap-and-Trade?
Given the pain (and public backlash) the EU has experienced from two years’ experience with its Emissions Trading Scheme, why would our politicians ignore that foreign experience, as well as popular sentiment against cap-and-trade here at home, and run full-steam with eyes closed into this regulatory quagmire?
The only answer I can come up with is: more money and more power for government. As a former government employee, I am familiar with the mindset. While the goal of a private sector job is to create wealth, the government employee’s main job is to spend as much of that wealth as possible. A government agency’s foremost goal is self preservation, which means perpetuating a public need for the agency. The idea that our government exists to help enable a better life for its citizens might have been true 100 years ago, but today it is hopelessly naïve.
All Pain, No Gain
And finally, let’s remember what the whole purpose of carbon cap-and-trade is: to reduce future warming of the climate system. Even some prominent environmentalists are against Waxman-Markey because they do not believe it will substantially reduce carbon dioxide emissions here at home. To the extent that provisions are added to the bill to make it more palatable to politicians from agricultural states or industrial states, it then accomplishes even less of what it is intended to accomplish: reductions in carbon dioxide emissions.
And even if cap-and-trade does what is intended, the reduction in CO2 emissions as a fraction of global CO2 emissions will moderate future warming by, at most, around one tenth of a degree C by late in this century. That is probably not even measurable.
Of course, this whole discussion assumes that the climate system is very sensitive to our carbon dioxide emissions. But if the research we are doing is correct, then manmade global warming is being overestimated by about a factor of 5, and it is the climate system itself that causes climate change…not humans.
If that is the case, then nothing humanity does is going to substantially affect climate one way or the other. Indeed, given the fact that life on Earth depends upon the tiny amount of CO2 in the atmosphere, I continue to predict that more atmospheric CO2 will, in the end, be a good thing for life on Earth.
Yet, many politicians are so blinded by the additional political power and tax revenue that will come from a cap-and-trade system that they do not want to hear any good news from the science. For instance, in my most recent congressional testimony, the good news I presented was met with an ad hominem insult from Senator Barbara Boxer.
I can only conclude that some politicians actually want global warming to be a serious threat to humanity. I wonder why?
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Phil. (11:56:12) : Your point? No more of this innuendo please.
I’m not understanding here… what you say seems to contradict this:
http://www.esrl.noaa.gov/gmd/ccgg/trends/
Flanagan
Ron and Pierre: 2009 is a very special year because of the crisis, and the US is doing even worse than EU. Unemployment in the US is now higher than in Europe – you known the crumbling continent with horribly reduced incomes.
according to Eurostat the Eu’s unemployment rate in may was 9.5 percent that is the same as the U.S. not lower. Second countries like Spain that are fully on cap and trade unlike other E.U. countries unemployment is 18.7 percent as of May. Spain is the poster child for cap and trade and you can see what is happening there, just wait till it happens in your home country then we will see what a supporter of cap and trade you are OK?
If… The Lights Go Out
http://news.bbc.co.uk/1/hi/programmes/if/3487048.stm
I’ve read that in the next 10 years the majority of the UKs Nuclear and coal fired powered electricity generating stations will come to an end. There is talk about replacing them but nothing seems definite. Protests and court action could delay the building of these generating stations for years.
“IF” those who predict another little ice age prove to be correct, added to cap and trade the UK will suffer.
Neville, above, has pretty much nailed it. Waxman-Malarkey will not reduce CO2 on the global level. Worse, it will increase it (not that I care if it does).
In an example of the Law of Unintended Consequences, Cap and Trade will cause US and EU production to “move offshore” where the same production will be performed in nations which are much less efficient at burning fossil fuels than we and the Euros. Assuming the amount of net energy to perform a particular manufacturing task is the same everywhere, the net effect is more CO2. And unfortunately that assumption is also wrong- the third world is much less efficient than we in energy use as well as production. QED.
Cap and trade? Carbon taxes? Monitoring of business and individuals? “Waxman-Malarkey” bill requesting major renovation of our homes? Bah humbug. Nothing compared to when the British parliament passed this ridiculous law to impose a stealth tax upon citizens
http://en.wikipedia.org/wiki/Window_tax
“the tax was unpopular, because it was seen by some as a tax on “light and air”.”
See the contemporary section too, cough
There is NO EVIDENCE!
Jul 03, 2009
There is No Evidence
By Dr. David Evans
Let’s break down the case for human-caused global warming logically:
1) There is plenty of evidence that global warming has been occurring recently.
2) There is ample evidence that carbon emissions causes warming and that the level of atmospheric carbon dioxide is increasing.
3) But there is no evidence that carbon dioxide emissions are the main cause of the recent global warming.
The alarmists focus you entirely on the first two points, to distract you from the third. The public is increasingly aware of this misdirection. Yes, every emitted molecule of carbon dioxide (CO2) causes some warming – but the crucial question is how much warming do the CO2 emissions cause? If atmospheric CO2 levels doubled, would temperatures rise by 0.1, 1.0, or by 10.0C?
We go through the usual “evidence” offered by alarmists, and show that in each case either it:
� Is not evidence about what causes global warming. Proof that global warming occurred is not proof that CO2 was mainly responsible.
� Is not empirical evidence; that is, it is not independent of theory. In particular models are theory, not evidence.
� Says nothing about how much the temperature would rise for a given rise in CO2 levels.
Despite spending $50bn over the last 20 years looking for evidence of point (3) above, the alarmists have found none. In two instances they expected to find it, but in both cases they found only evidence of the opposite – and they have kept awfully quiet about those cases. If they just had some evidence of (3) they could just tell us what it was and end the debate.
We note that there used to be some supporting evidence, but better data later reversed that evidence. Instead there are now at least three independent pieces of evidence that the temperature rises predicted by the IPCC due to carbon dioxide emissions are exaggerated by a factor of between 2 and 10, primarily due to the assumption of overly positive water vapor feedback in the climate models. Finally, we discuss some examples of what would constitute evidence. The evidence must of course be empirical, meaning that it is independent of theory.
Typical Evidence
Typical Alarmist Offerings of “Evidence”: Polar Bears, Glaciers, Arctic Melt, Antarctic Ice Shelves, Storms, Droughts, Fires, Malaria, Snow Melt on Mt Kilimanjaro, Rising Sea Levels, Ocean Warming, Urban Heat Island Effect. Although each of these issues may say something about whether or not global warming is or was occurring, none of them say anything about the causes of global warming. It would make no difference to these issues if the recent global warming was caused by CO2 or by aliens heating the planet with ray guns.
The IPCC Said So
So what is their evidence? Chapter 9 of their latest Assessment Report 4 (2007), “Understanding and Attributing Climate Change”, contains no evidence. That CO2 is the main cause of the recent global warming is an assumption in much of what they say, and they find many ingenious ways of saying it and implying it using complex language. But repetition is not proof, and nowhere do they present any actual evidence. If you doubt me, read it yourself then say what the evidence is in your own words.
Often the assumption takes the form that nearly all the temperature rises since the start of industrialization are due to CO2 rises, or that there are no other possible significant causes of global warming.
Computer Models are Evidence
Computer models consist solely of a large number of calculations that, individually, you could do on a hand-held calculator. So models are theoretical, and cannot form part of any evidence.
Computer Models Incorporate a Lot of Sound Empirical Science
Yes they do. The climate models contain some well-established science that has been verified by empirical observations. But they also contain a myriad of:
– implicit and explicit assumptions
– omissions
– guesses
– gross approximations.
A single mistake in any one of these can invalidate the climate models. Typical engineering models that mimic reality closely contain no untested assumptions, material omissions, guesses, or gross approximations. They are the result of mature understanding of the reality being modelled, and have been tested ad nauseum in a wide range of circumstances. On the other hand, climate science is in its infancy, individual models routinely fail most tests, the climate models are riddled with untested assumptions and guesses, they approximate the atmosphere with cells a hundred kilometres square and hundreds of meters high, and they do not even attempt to model individual cloud formations or any feature smaller than the cell size. Don’t let the word “model” fool you into thinking climate models are better than they are.
Read much more here.
http://www.icecap.us
50 reasons to stop the Climate Bill:
http://article.nationalreview.com/?q=YTc1MmVhMGYxY2UzNzAwMTJlODBjZjg2NDJjNmM2MWE=&w=MA==
timetochooseagain (12:08:43) :
Phil. (11:56:12) : Your point? No more of this innuendo please.
What innuendo? The monthly UAH has a minimum at May/June so low values are to be expected.
The cartoon opening this article brought another cartoon to mind:
http://4.bp.blogspot.com/_kMs_q1g_CmQ/SkxDQ16CuzI/AAAAAAAAEVU/Wt8xzvkf5SA/s1600-h/Cap+%26+Tax
Enjoy!
Open letter to Congressman Dave Reichert
Are you aware that glaciers are growing in Washington State?
__________________
3 Jul 09
Dear Congressman Reichert,
As a resident of Washington State, I feel betrayed by your vote for the Control-and-Tax bill, a bill purportedly designed to fight “global warming.”
What global warming?
Dave, are you aware that glaciers are growing in your own state?
Yes, glaciers are growing in Washington State.
The Nisqually Glacier on Mt. Rainier is growing. The Emmons Glacier on Mt. Rainier is growing. Crater Glacier on Mount St. Helens is growing. (Crater Glacier is now larger than it was before the 1980 eruption.) Glaciers on Mt. Shuksan in northern Washington are growing. Glaciers on Glacier Peak in northern Washington are growing.
Congressman Reichert, I wish you would ask the US Forest Service for a list of glaciers in Washington State, and ask them to tell you – honestly – which ones are growing. I have a feeling that there are more growing glaciers that any of us have been told.
My fear is that that there is a giant cover up going on, especially given the fact that glaciers are also growing on California’s Mt. Shasta, and that glaciers are growing in Alaska for the first time in 250 years. In May, Alaska’s Hubbard Glacier was advancing at the rate of seven feet per day.
Every time I read about another growing glacier, I’m told that it’s “the only glacier in the world that is bucking the global warming trend.”
But that’s not true.
Perito Moreno Glacier, the largest glacier in Argentina, is growing. Pio XI Glacier, the largest glacier in Chile, is growing. Glaciers are growing on Mt. Logan, the tallest mountain in Canada. Glaciers are growing on Mt. Blanc, the tallest mountain in France.
Glaciers (230 of them) are growing in the Western Himalayas. Glaciers are growing in Norway. Recently, all 50 glaciers in New Zealand were growing. And contrary to what we’ve being told, the Antarctic Ice Sheet is growing, not shrinking.
More than 90 percent of the world’s glaciers are growing, but all that we hear about are the ones that are shrinking.
As author of the book Not by Fire but by Ice, and publisher of http://www.iceagenow.com, I can verify the facts that I am presenting to you today.
Respectfully,
Robert W. Felix
P.S. Here are links to verify some of what I’m saying.
http://www.iceagenow.com/Nisqually_Glacier_Growing.htm
http://www.iceagenow.com/Mount_St_Helens.htm
http://www.iceagenow.com/Glaciers_growing_on_Glacier_Peak_WA.htm
http://www.iceagenow.com/California_Glaciers_Growing.htm
http://iceagenow.com/Alaskas_Hubbard_Glacier_advancing_7_feet_per_day.htm
http://www.iceagenow.com/Largest_glacier_in_Argentina_advancing.htm
http://www.iceagenow.com/Glaciers_growing_on_Canada_tallest_mountain.htm
http://www.iceagenow.com/Glaciers_in_Norway_Growing_Again.htm
http://www.iceagenow.com/New_Zealand_Glaciers_Growing.htm
http://www.iceagenow.com/Mont_Blanc_glacier_almost_doubles_in_size.htm
http://iceagenow.com/Glaciers_Growing_in_Western_Himalayas.htm
http://www.iceagenow.com/Antarctic_ice_growing_not_shrinking.htm
Politicians tell us CO2 Cap and trade will lead the U.S. to energy independence. What they fail to mention it will make us dependent on foreign carbon credits.
Welfare for dictators
Phil. (14:36:55) : There is a subtle suggestion here, which originated with Tamino I believe, then went to Atmoz, and finally found it’s way over to “Deep Climate” that there must be something still “wrong” with the UAH data because of this “annual cycle” whining. Well, if such a thing is there, evidently it’s really not a problem. Research has shown UAH to be superior:
http://www.agu.org/pubs/crossref/2008/2007JD008864.shtml
Gee, but you know?
.
I must ask just one really, REALLY relevant question: IF CO2 is such a contributor to so-called ‘global warming,’ why aren’t we cooking with it to save energy?
.
Yes, I know, that’s simplistic, but if CO2 is ~really~ the contributor to AGW as it is supposed to be, then WHY NOT use it to cook with?
.
Why not inject it into a covered pot with simmering whatever?
.
If that doesn’t work out, then I propose to say that the whole matter has been so overblown as to be nought but an Artificial Global Wax job. If you know what I mean …
Highlander (18:37:08) : Uh, because it isn’t flammable, duh?
O.T. Reminder:
This weekend is the first annual Watts Up With That Barbeque (for those that recall the suggestion made back in April in the comments on the post “Weather is Not Climate,” by Steven Goddard, for an annual WUWT BBQ with attendant temperature data collection).
All those participating are encouraged to record the temperature on their grill and report the temperature with as much or as little accuracy as they feel is necessary. The data will be collected and appropriately adjusted for UHI (Unbelievably Hungover Individual) effects. Any temperature data missing from unreported cookouts will be infilled with RegM.
The results will be made available to the MSM so they can report unprecedented barbeque temperatures and duly alarm the general population.
N.B. If cap n’ tax passes in the Senate, this may well be the first and LAST annual WUWT Barbeque.
Everyone enjoy!
timetochooseagain (18:17:04) :
Phil. (14:36:55) : There is a subtle suggestion here, which originated with Tamino I believe, then went to Atmoz, and finally found it’s way over to “Deep Climate” that there must be something still “wrong” with the UAH data because of this “annual cycle” whining.
Which is all irrelevant to the point which I made that a low anomaly is to be expected in May & June because that is the way that UAH is set up.
REPLY: Yet all of the above think GISS is just dandy. Sure, lets beat up on UAH and ignore the elephant in the room problem wise. Phil. as usual you fail to impress.- Anthony
Bill Junga (10:13:47) :
This country has to get going again. To do that will need cheap, reliable abundant energy. This cap and trade, carbon tax,etc will not allow this.
Funny as a student of economic history mistakes of the Thirties appear as if they are being repeated.
Hopefully, this massive government intrusion will be stopped so we won’t get GREAT DEPRESSION II.
Bill, have a read here:
http://heliogenic.blogspot.com/2009/07/government-killing-jobs-with-taxes-and.html
Friday, July 03, 2009
Breaking: Another moonwalker is a climate realist
Buzz Aldrin [the second person to walk on the moon] calls for manned flight to Mars to overcome global problems – Telegraph
But while trying to spread the word about the possibilities of space, Dr Aldrin said he was sceptical of climate change theories.
“I think the climate has been changing for billions of years,” he said.
“If it’s warming now, it may cool off later. I’m not in favour of just taking short-term isolated situations and depleting our resources to keep our climate just the way it is today.
“I’m not necessarily of the school that we are causing it all, I think the world is causing it.”
Feb ’09: Former astronaut speaks out on global warming – BostonHerald.com
SANTA FE, N.M. – Former astronaut Harrison Schmitt, who walked on the moon and once served New Mexico in the U.S. Senate, doesn’t believe that humans are causing global warming.
“I don’t think the human effect is significant compared to the natural effect,” said Schmitt, who is among 70 skeptics scheduled to speak next month at the International Conference on Climate Change in New York.
Inconvenient quotes by Al Gore
Former Vice President Gore has claimed that scientists skeptical of climate change are akin to “flat Earth society members” and similar in number to those who “believe the moon landing was actually staged in a movie lot in Arizona.” (LINK) & (LINK)
http://tomnelson.blogspot.com/2009/07/breaking-another-moonwalker-is-climate.html
Never wrong, but never fully right, right, Phil.? What an advocate, but the power of the advocacy diminishes the science. The satellites are telling a more accurate and reproducible story than the surface based thermometers.
==================================
I’m awaiting microwave or other sensors that can actually measure the UHI of a city. Why wouldn’t IR do it?
==========================================
Phil. (19:32:28) :
timetochooseagain (18:17:04) :
Phil. (14:36:55) : There is a subtle suggestion here, which originated with Tamino I believe, then went to Atmoz, and finally found it’s way over to “Deep Climate” that there must be something still “wrong” with the UAH data because of this “annual cycle” whining.
Which is all irrelevant to the point which I made that a low anomaly is to be expected in May & June because that is the way that UAH is set up.
REPLY: Yet all of the above think GISS is just dandy. Sure, lets beat up on UAH and ignore the elephant in the room problem wise. Phil. as usual you fail to impress.- Anthony
And you miss the point Anthony, it has nothing to do with GISS or beating up on UAH. Over recent years UAH shows a minimum in the anomaly at this time of year, for whatever reason, therefore as recognition of that pattern a low anomaly is expected. Whether the current anomaly is ‘low’ or ‘high’ should be judged against that standard. Since 2003 the average May value has been 0.09 and June 0.10 so the current values are slightly low (as they have been all year but not as low as last year, the first half of which was very different from the other years in the series).
REPLY: And you miss the point also. Spencer has explained it to me personally He explained the deviation that occurs between UAH and RSS. Judging them low or high has nothing to do with it. You are the one always raising the cherry picking issue, so we have 5 years where May/June are a bit lower in the measurement. Are you ready to call a trend on 5 years and rule out any natural variation? – Anthony
@Benjamin (10:46:24) :
“Roger Sowell (08:18:33) : “…” (on the importance of crude)
Thanks Roger. I’ll put those links on my to-read list (and I’ll read them, too!)
But I have got to know… what did you think about the gold comparison? Do you think, or does anyone in the field that you know think that exploration/exploitation costs are distorted by the erratic moves of the currencies, such that it renders the peak oil prophecy self-fulfilling?”
The price of gold is interesting, but not the end-all for analysis. Gold prices tend to not only reflect general inflation over long periods, but also perceived instability or panic (or the lack thereof) in the world.
As the graphs in the following link show, the real price of gasoline (U.S., regular) has steadily declined since 1919. This is deadly data to the peak-oil believers. All during this period (1919 to now) peak-oil believers have sounded their alarms. Peak oil never happened, and never will. Oil price increases are due to temporary market distortions, and nothing more. Technology for finding oil improves much faster than oil consumption, thus driving the price down in real terms. Technology is improving faster and faster, with better computers, more sophisticated techniques, economy of scale in transportation (ships, pipelines), refineries, and vehicles that achieve higher miles per gallon. All these drive the cost of gasoline down.
As ExxonMobil’s executives state frequently, what is keeping the price of oil up is restricted access to known oil deposits around the world. The Saudis and others in OPEC knew what they were doing when they nationalized their oil assets, kicked out foreigners, and restricted the production of oil so as to increase the price and thus their revenues. Smart guys, have to admire them for that.
Peak oil is a myth, just as unicorns are mythical.
http://www.eia.doe.gov/emeu/steo/pub/fsheets/real_prices.html
As an economics student (I believe you mentioned you are?), it would be well to learn what the profs teach regarding gold. But it would also be well to identify a few common commodities (gallon of gasoline, loaf of ordinary bread, gallon of milk, dozen eggs, etc) and follow their long-term price trends. Find a few commodities that are produced and consumed world-wide by nearly all consumers, and follow them. These commodities are not like gold in that they have little to zero price influence by hoarding, inflation-hedging, or panic.
At one time, we also followed the price of electric power as cents per kwh. But that market got distorted when nuclear power plants became operational due to their exorbitant costs, then that is softened by government subsidies. Now that government-subsidized renewable energy is entering the power mix, those prices will be even less reliable.
Taxman-Malarkey
Max (22:55:18) :
Taxman-Malarkey
Bloody marvellous!!!