Sadly, doomsdayers and their nonsense continues, and they never seem to have to pay for their demonstrable falsehoods. I mean, for God’s sake, econometrician Ravi Batra wrote a bestselling book in the late 80s called The Great Depression of 1990. He still has a job. It was a “slam dunk” as they say in the CIA.
We were told about Malthusian disasters and running out of oil in the 1970s by the Club of Rome. We’re still here, getting fatter, dumber, and happier by the day. No one’s starving to death, at least not in any country where the political leadership is not starving them on purpose.
The following piece by Canuck economist Mike Moffatt explains what should be obvious to educated people:
WE WILL NEVER RUN OUT OF OIL
At least not in a physical sense. There will still be oil in the ground 10 years from now, and 50 years from now and 500 years from now. This will hold true no matter if you take a pessimistic or optimistic view about the amount of oil still available to be extracted. Let’s suppose that the supply really is quite limited. What will happen as the supply starts to diminish? First we would expect to see some wells run dry and either be replaced with new wells that have higher associated costs or not be replaced at all. Either of these would cause the price at the pump to rise. When the price of gasoline rises, people naturally buy less of it; the amount of this reduction being determined by the amount of the price increase and the consumer’s elasticity of demand for gasoline. This does not necessarily mean that people will drive less (though it is likely), it may mean that consumers trade in their SUVs for smaller cars, hybrid vehicles, or cars that run on alternative fuels. Each consumer will react to the price change differently, so we would expect to see everything from more people bicycling to work to used car lots full of Lincoln Navigators.
If we go back to Economics 101, this effect is clearly visible. The continual reduction of the supply of oil is represented by a series of small shifts of the supply curve to the left and an associated move along the demand curve. Since gasoline is a normal good, Economics 101 tells us that we will have a series of price increases and a series of reductions in the total amount of gasoline consumed. Eventually the price will reach a point where gasoline will become a niche good purchased by very few consumers, while other consumers will have found alternatives to gas. When this happens there will still be plenty of oil in the ground, but consumers will have found alternatives that make more economic sense to them, so there will be little, if any, demand for gasoline.
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But just because there are economic alternatives doesn’t mean that the population’s welfare has remained the same, let alone improved. Of course, for those who can still afford petrol to drive may find their utility has increased, as there will be less road congestion.
True. But it will likely get better, at least for people in advanced economies. And there’s always tradeoffs driven by scarcity. For example, has the utility of NY gotten higher as real estate has risen several hundred percent in thirty years? Things need to be allocated and prices do that.
The idea that we’ll consume at the same rate until one day there’s none left, is ridiculous. If this “peak” is coming, then there’s lots of good reasons to horde oil now, but people who have a lot to win and lose in this matter don’t seem to be setting up the “if you build it they will come” petroleum tank farm anywhere that I can see, even though there are modest reserves for short term ebbs and flows of demand.
There is a school of thought that holds that oil is not a byproduct of organic processes but rather a product of chemical reactions deep in the earth (the abiogenic hypothesis). If so, we may indeed literally never run out of oil!