More bucks to the barrel

There's still a debate on how much of the current oil price is a speculative bubble and how much of it is real, but increasingly I think it looks real – reflecting the growing demand for oil and its limited (and highly politicized) supply.

We know from the 1970s what a rapid rise in the oil price does for oil-dependent countries. People use oil, and oil-based energy sources, more sparingly. And more efficiently: US energy intensity (the energy used per unit of GDP created) has been cut by over 40% in the last thirty years. America is getting more bucks to the barrel. Cars are smaller, lighter and more fuel-efficient. Our domestic boilers use less oil. Factories are built to capture and re-use spent heat. And we insulate our homes more effectively.

I've a feeling that the oil price creeping up to $135 and beyond will do more to reduce carbon emissions than any number of platitudes and plans from Kyoto. That's all mostly rhetoric, and few of the world's politicians are actually living up to their rhetorical commitments. A rising oil price, by contrast, affects us all, and prompts us to change the way we use energy. But that's the market, isn't it?

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written by Arthur, June 07, 2008

Correct.

Don't Blame the Market
written by Aeon McNulty, June 08, 2008

"But that's the market isn't it?"

No. It isn't. Well over two-thirds of the world's oil production is nationalised. And the remainder is heavily taxed, regulated and restricted.

I agree that the rising price of oil isn't a speculative bubble (I am frankly dubious about the very idea of so-called bubbles when they come up in these contexts). Yes, it will go higher. But there is no real shortage of oil; there's plenty of it down there (enough to last us hundreds of years). The problem is the artificial constriction of the market engendered by capricious and malevolent government action.

Moreover I don't feel you should be cheering the rising price of energy in the hope it will make us more efficient. That's like welcoming rationing in the hope we'll eat healthier meals. The fact is that the rising cost is already curtailing innovation in most industries due to inevitably decreasing investment. There might be more money available for "green" technology but there's less everywhere else as companies feel the pinch.

High energy costs ultimately hurt everyone, but it hits the poor hardest. The results are already being felt. Children in developing (for "developing" read "Socialist") countries are beginning to starve as the cost of living rises inexorably.

Expect to see the body count increase while our "carbon footprint" is reduced.

Written by Dr Eamonn Butler
Saturday, 07 June 2008
There's still a debate on how much of the current oil price is a speculative bubble and how much of it is real, but increasingly I think it looks real – reflecting the growing demand for oil and its limited (and highly politicized) supply. We know from the 1970s what a rapid rise in the oil price does for oil-dependent countries. People use oil, and oil-based energy sources, more sparingly. And more efficiently: US energy intensity (the energy used per unit of GDP created) has been cut by over 40% in the last thirty years. America is getting more bucks to the barrel. Cars are smaller, lighter and more fuel-efficient. Our domestic boilers use less oil. Factories are built to capture and re-use spent heat. And we insulate our homes more effectively. I've a feeling that the oil price creeping up to $135 and beyond will do more to reduce carbon emissions than any number of platitudes and plans from Kyoto. That's all mostly rhetoric, and few of the world's politicians are actually living up to their rhetorical commitments. A rising oil price, by contrast, affects us all, and prompts us to change the way we use energy. But that's the market, isn't it? Bookmark Comments (2) Subscribe to this comment's feed ... written by Arthur, June 07, 2008 Correct. Don't Blame the Market written by Aeon McNulty, June 08, 2008 "But that's the market isn't it?" No. It isn't. Well over two-thirds of the world's oil production is nationalised. And the remainder is heavily taxed, regulated and restricted. I agree that the rising price of oil isn't a speculative bubble (I am frankly dubious about the very idea of so-called bubbles when they come up in these contexts). Yes, it will go higher. But there is no real shortage of oil; there's plenty of it down there (enough to last us hundreds of years). The problem is the artificial constriction of the market engendered by capricious and malevolent government action. Moreover I don't feel you should be cheering the rising price of energy in the hope it will make us more efficient. That's like welcoming rationing in the hope we'll eat healthier meals. The fact is that the rising cost is already curtailing innovation in most industries due to inevitably decreasing investment. There might be more money available for "green" technology but there's less everywhere else as companies feel the pinch. High energy costs ultimately hurt everyone, but it hits the poor hardest. The results are already being felt. Children in developing (for "developing" read "Socialist") countries are beginning to starve as the cost of living rises inexorably. Expect to see the body count increase while our "carbon footprint" is reduced. Write comment This content has been locked. You can no longer post any comment. Powered by Azrul's Jom Comment for Joomla!