Comment by Lagged2Death | Hacker News Reader

Comment by Lagged2Death | Hacker News Reader

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I think one issue is the length of the bets. Ten years is a very long time for a human bet, but it's not very long in terms of history, in terms of heavy industrial technology, or in terms of Hubbert's ideas about resource peaks.

It was obvious that oil was a finite resource from the start, but it took the better part of 100 years of exploitation for US oil production to peak. Five or ten years doesn't seem long enough to reliably spot a trend on that scale.

I'm surprised Simmons expected such high prices. As the shock in 2008 illustrated, above a certain price, oil users cut back as much as they can, which lowers the price again. A sustained price of 200 2005-era dollars per barrel is a really high; that price would surely kill a lot of demand, which would probably prevent it from being sustained. Eventually, we may see $200/bbl, but it will probably be quite a while.

I know hindsight is 20/20, but still, I would have thought a better bet would be something about the average price of oil over (say) a five year period always being higher than the average price over the previous five year period. Then again, maybe Tierney wouldn't have taken that bet.

The effect of increased prices is twofold - the obvious decrease in consumption (and thus demand, exerting a downward pressure on price) and also an increase in the incentive to innovate - to find alternatives, and to make better use of the valuable resource.

The "cornucopian" belief is that the effect of innovation is greater than the effect of finite resources.

That is, because we innovate, real prices decrease (with prices best measured in amount of human labor to obtain a benefit). Sometimes the price of a specific commodity increases (e.g., hours of labor to receive one liter of oil), but the cost of the benefit decreases (e.g., hours of labor to travel 100 miles).

I'd be very interested to see counterexamples, where the human cost of a benefit increases.

kb

It sounds to me like this Cornucopian belief is just the same 'let the market handle it' position with better branding.

So the counter-argument also remains the same: 'the market' moves in fits and starts, and there is very real and severe socio-economic cost to disruptions between the start of price shocks and the emergence of alternatives.

It's not unlike advocating a central bank to (theoretically) smooth out natural business cycles, not because the market would implode without it, but because you believe you can fill in a bit of the extreme troughs at the cost of taking a commensurate amount off the extreme peaks.

> The "cornucopian" belief is that the effect of innovation is greater than the effect of finite resources.

This doesn't really make sense, of course. A finite resource remains finite whatever we do. Evidently, as said some Saudi oil minister, "Stone Age didn't end by lack of stones"n however we face now a very different situation : the end of cheap petrol is near, but we still have no better or even just roughly equivalent alternative.

As some remarked, until now we always went from one main energy source to a better one (animal and human power to coal, coal to oil). We have no better energy source in view.

Sure, we could be optimistic, or pessimistic, however we know for sure that humans already met decadency by environmental destruction and resource exhaustion several times, therefore I don't think that we should just sweep it away with a "Malthus was wrong!".

That's just not true. If you're in the USA, today, you can walk down to a Nissan dealer and order a Leaf : a highway capable (relatively, for new tech) affordable family car which runs on electricity. Electricity is a far superior power source than oil, given it can be generated in a variety of ways. And the technology is here, today, available. The technology to generate and distribute electricity is here, today, available.

The reason we're not all in electric cars is a combination of inertia and newness of the tech. But if the oil price doubled in the next 12 months, the Leaf assembly plant would be running at full capacity. But I disagree strongly that there is no alternative to oil.

Malthus was wrong and will continually be proved so. You can blindly just accept human ingenuity will drive things forward as long as people are allowed to keep the bulk of the reward for their efforts. It might be a leap of faith, but it's a better one to take than living with a doom and gloom mentality.

> Malthus was wrong and will continually be proved so.

Malthus was wrong at some points in history, and right at others. The Sumerians, the Pascuans, probably the Mayans and some others proved Malthus right several times.

> You can blindly just accept human ingenuity will drive things forward as long as people are allowed to keep the bulk of the reward for their efforts.

No, this is so fantastically wrong that I don't know where to start. This is so utter bullshit I'd want to cry.

Human ingenuity can't replace resources. We've been awash with resources for a few decades, but that doesn't mean that times of scarcity won't possibly happen again.

> It might be a leap of faith, but it's a better one to take than living with a doom and gloom mentality.

No, I'd rather live with the truth, how uncomfortable it is. Blind faith is a terrible poison to the mind. As said George Bernard Shaw :

The fact that a believer is happier than a sceptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.

What kind of confusion of ideas lead you to the statement that electricity is a "power source"?

except.. you can't just go buy one, yet. And then you can't just drive away on the highway, right away. You will have to buy the $2500 240volt charging station, and have it installed. And the oil burned in a gas car is replaced with coal burned to generate electricity in your electric car. Essentially you have converted your car to run on coal for a majority of Americans whose electricity is generated by coal. Plus you will have to pay the gas tax somehow, although I'm sure the law hasn't caught up to that one yet -- but they will; my guess is, legally speaking, you may only drive "off road" until they figure this out. You might need to upgrade your house wiring as well. But +1 for your enthusiasm.

That bet would be a flip of the coin unless you specified how much higher.

Another thing about such bets is that they are yes or no.

One plausible argument I've heard with oil is that it's a fixed resource but rather there's a "resource pyramid" of oil-types varying by availability and difficulty of extraction.

http://www.theoildrum.com/node/6544

Sure, there's a nearly infinite amount of deep-water methane hydrate but exploiting is both next-to-impossible and would be environmentally devastating to attempt. Deep water oil and tar-sands are between this and conventional terrestrial light oil.

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