I haven't the time or energy to respond in detail to Jim's comments. But
there are two comments I would like to make.
Yes, overpopulation. World population has been increasing exponentially
in recent decades despite a falling birth rate in some (most?)
developed, industrialized countries. The population now stands at
around 6.4 billion and, according to UN projections, will level off but
not before it reaches 9.3 (+/-) billion, an almost 50% further
increase. Yet the scientists tell us that, without oil, there is only
enough sunlight to produce sufficient food to feed 2 to 3 billion
people. This is a scientific ratio between energy received and food
calories produced and is independent of productivity or technological
change. If all the people in the developing world were to be brought up
to the living standards of North Americans and Europeans, this would be
the same as increasing the world population to approximately 94 billion,
an obvious impossibility.
On this same point, to try to discredit Malthus' population theory on
grounds of his policy proposals is like trying to discredit Einstein's
theory of relativity because it was used to make nuclear bombs to kill
people. It is simply silly.
Secondly, yes I do accept peak oil as a fact. Increasing tertiary
recovery, improved technology and the rate of new discovery is no way
sufficient to offset the ongoing decline in output from the North Sea,
Mexico and the other mature fields. Canada's tarsand output, seen by
some as the saviour of US supply, is currently in the 1-2 million BPD
and at the peak output is hoped to reach 5 million BPD (which is itself
unrealistic given the water and gas requirements for that level of
output). US consumption alone is 20+ million BPD so the increase
possible to supply US needs in the future even in the unlikely event of
reaching this production target, would constitute at most 10 to 15% of
US demand. At the same time Canada's conventional output is falling
,virtually offsetting the increase in tarsand production. World
production levels have apparently levelled off since 2005 while
increasing amounts are being consumed in the producer countries. Yet,
despite the decrease in demand due to the high price and the recession,
the price of oil remains at around $100 pBBL with forcasts of it rising
to $130-150 per BBL during the summer driving season.
Besides, of course, this is not dependent on oil production actually
peaking. All that is required is that demand be increasing faster than
supply. Barring a world wide depression, I don't see demand dropping
below supply. Even in the event of a world wide depression, there is no
reason why the real price of oil would fall in the face of generalized
deflation.
As to the ridiculousness of prices, remember that economic rents are the
result of price, not a cause of it. The price of oil was so low in the
1980s and 90s that economic rents at the margin were negative. The usual
explanation was that the Saudis were dumping oil to satisfy the
Americans. Apparently, they are no longer willing or able to do so.
Paul Phillips
--
Paul Phillips Professor Emertus, Economics University of Manitoba Home
and Office: 3806 - 36A st., Vernon BC, Canada. ViT 6E9 tel: 1 (250)
558-0830 email: [EMAIL PROTECTED]
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