Archive for October 13th, 2009|Daily archive page

On the Predictability of Peak Oil

I just finished reading Peak Everything by Richard Heinberg, which I found to be notably uneven. Some chapters were succinct and compelling, while others were sprawling and unconvincing.

Throughout the varied chapters you get a sense of the dramatic importance and certainty he places on peak oil theory. Broadly speaking I agree with Heinberg’s concerns about resource depletion, but his certainly about the process, timing, and consequences of peak oil really shows the insular nature of online communities and political subcultures. The ‘depletionists’ are far from the worst offenders, but it’s clear that Heinberg has mistaken the thousands online interactions and in person conversations for broad public awareness of peak oil.

This results in Heinberg conflating three related, but not equally valid premises:

  • People in today’s society consume energy resources at an unsustainable rate. This is a very strong position. Barring unforeseen and unlikely technological breakthroughs we’ll need to dramatically reconfigure our economy to use less resources during the coming century
  • The rate of energy consumption is immediately and dramatically unsustainable. The exact timing and severity of resource depletion is much more debatable then the overall nature of the problem. Legitimate predictions about resource depletion are all over the map, as are the assessments of the potential of unconventional fossil fuels, nuclear power, and energy efficiency to ‘save us‘. All of those issues have been extensively discussed and debated by Carrots and Sticks as well as many others, but it’s important to remember these are empirically unanswerable questions. You could run off a list of times were energy optimists made bad predictions, but you could do the same with energy pessimists. Indeed, I’m unaware of anyone in any field that has displayed a consistent ability to predict future events in even general terms. If I had to bet I’d bet with the pessimists and say peak oil is around the corner, but we shouldn’t forget the uncertainty present in all our decisions.
  • The rate of energy consumption is unsustainable and people know it and ignore it.
    There is precious little evidence that natural resource depletion is a main stream issue. While climate change, renewable energy legislation, and dependency of foreign oil are hot issues in Congress, there no real reflection of peak oil theory or any real sense that conservation will soon be a necessity. Outside of a few websites you don’t read much about peak oil.
  • -Chris

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    CBO Apparently an Equal Opportunity Buzzkill

    If you’ve been following the health care debate and any other congressional debate involving money this year, you’ll notice the Congressional Budget Office has been playing a very important role, grabbing an unusual amount of headlines for such an apolitical and wonky office. For a policy idea to be considered “viable”, it has to get a good score from the CBO.

    Now what exactly does that mean? In general, a good score is one that has the greatest positive (or least negative) effect on the budget over a 10-year window. This is crucial, since the House has instilled rules under the Democratic majority that mandate all policy initiatives to be at least budget neutral. PAYGO, as it’s generally called, is a pain in the ass, but also a good idea since the Republican style of credit card spending isn’t particularly viable in the long term. But that doesn’t mean it’s not a huge pain in the ass in the short term (for more on PAYGO, see CBPP’s useful primer).

    So this is where the CBO gains its power. And get used to it, as long as the agents of fiscal responsibility (Dems) are in control anyway. What makes the whole dynamic so interesting is that the CBO seems to be quite capable of acting neutrally regardless of political pressure. Since they tend to take a very cautious approach to revenue estimates, you see a wide swath of policies on both sides be strewn into the political dumpster for failing to meet their strict criteria.

    One such policy is the tax on oil speculation, proposed by Rep. DeFazio, that we’ve been advocating. DeFazio requested the CBO to score it along with another proposal to tax oil itself by the barrel. Although they have not yet released the official report, word is that CBO simply claimed too many variables were at play with the speculator tax (volume of trading, small transaction amounts, avoidance) and returned a combined score that only included the barrel tax. Now there may be a wide range of possibilities for the amount of revenue this measure will bring in, and nobody has any particular idea , but is it fair to effectually mark the speculator tax as zero? Wouldn’t it be more honest to estimate somewhere between zero and a bajillion dollars? But either way, it’s now difficult to imagine proponents of the plan will have the political fortitude to withstand both the Big Oil and Wall Street lobbies to push a tax that doesn’t officially raise any revenue. Oh well.

    On the other hand, CBO did also throw some cold water on Kent Conrad’s insidious co-op plan. So I guess it ain’t all bad. Such is life – nonpartisan budget analysts are omnipresent in the era of PAYGO.

    -Jeremy

    Somewhat Irrelevant Disclosure: I personally know a number of former senior-level CBO officials, including my graduate school advisor at George Washington University, and they are all very well-intentioned budget/tax wonks.