I’ve seen several articles debating when oil production will peak. For those of you who have missed them, oil prices rise due to scarcity (real or not) or increased production costs, and the latter become important sometime around when oil production peaks. Also, the time for us to go through the second half of the world’s oil will be considerably less than the history of oil use to date, and our transportation infrastructure in particular is heavily oil-based.
Among climate change scientists, there seems to be less worry about running out of oil, and considerably more worry about its use. Recent readings have given me some understanding.
David Greene, et al, from (pdf file) Running Out of and into Oil: Analyzing Global Oil Depletion and Transition Through 2050
“It is possible that the world could go partway down the path of developing unconventional oil resources and later reverse direction. But such a strategy would strand huge investments in the more capital-intensive production and refining of unconventional oil. If the transition to unconventional oil is gradual, there might be time to introduce low-carbon alternatives and a reversal might not be too costly. But if the transition to unconventional oil is sudden and massive, the world’s economies might quickly become locked into a high carbon future. Avoiding or even slowing the transition to unconventional fossil resources might improve the world’s chances of successfully dealing with global climate change.”
The unconventional oil sources referred to are coal to liquids (synfuel), for example, or natural gas to liquids (isn’t all natural gas needed for electricity and heating?) Both increase carbon emissions, in part because of the energy needed to convert them to liquid. Both are expensive because they require so much energy for the process.
Oil prices will rise if we hit a peak, but Europeans and others are already living with much higher gasoline prices.
Detour: A vote on the Arctic National Wildlife Refuge is expected soon. My understanding is that oil companies are not particularly interested in drilling there without some kind of guarantee (a large guarantee, but will that dissuade Congress?), as there is relatively little oil, and it’s relatively far from where it would be used. I’m not sure why anyone would vote for opening up the site to oil drilling, both for practical reasons and because it’s nice to imagine those few places in the world not crowded by us. What I hear is, “got you, you crummy environmentalists”, but perhaps our legislators have other reasons, poorly articulated to date. Certainly these reasons have little to do with oil security, even for the rare person who also votes to increase car mileage standards. That said, the overwhelming concern to the caribou is not the drilling, but the use of oil. Climate change alters the environment at high altitudes faster, and refuge status will not protect ANWR.
Return: From my reading, it is apparent that the rest of the world, as non-OPEC is generally referred to, is running out of oil much faster than is OPEC. Fareed Zakaria in The Future of Freedom: Illiberal Democracy at Home and Abroad points out that governments that finance themselves without taxes are not as accountable to citizens. Hence there is worldwide discomfort at financing these governments. But the discomfort is not great enough here in the United States to taxing oil in order to encourage us to change our behavior.
We would be much better off raising taxes on oil use today. Even a moderate tax, perhaps as little as $1/gallon, will begin to shift behavior, to help stretch out our current oil supply and allow the transitions away from fossil fuels, so that we don’t finance OPEC governments so heavily.
Oh, I’ve heard many, particularly poor people, say, but we can’t afford it. Perhaps more earned income credit, or some other mechanism, could help the poor in this transition, and let people choose whether to spend the extra money on a car or the bus. It isn’t right to ignore those who will be hurt in a transition. But we are wrong if we do not transition. Some talk about making the carbon tax revenue neutral, an idea I was more sympathetic to until the Bush deficits, and back when I thought roads and bridges are paid for by the current gasoline tax rather than out of general revenue.
We could do more regional planning of mass transit systems. We could use some of the gasoline tax to pay for the roads and mass transit that makes our roads less crowded. We could teach bicycling as a PE option, as those who learn to bicycle and signal correctly are less dangerous to themselves and others and are more likely to continue bicycling as adults. This would leave more oil for those of you who can’t or don’t want to bicycle. There’s lots we can do.
The cost of our transportation continues to increase. The obvious increases in price are accompanied by the continued power of corrupt governments, the costs to agriculture and water supplies and human settlements and peace from climate change. Let’s add some of these costs, or the desire to avoid these costs, to the price of gasoline. The costs will be paid, either as lower costs consciously assumed today or higher costs imposed tomorrow.