Peak Oil Fears

Back in 2006 EWEB invited author Richard Heinberg to Eugene, to give a talk about Peak Oil. Heinberg had just published a scary book about this, claiming :

The world is about to run out of cheap oil and change dramatically. Within the next few years, global production will peak. Thereafter, even if industrial societies begin to switch to alternative energy sources, they will have less net energy each year to do all the work essential to the survival of complex societies.

This got an enthusiastic response in Eugene. Since I’d spent some time in the oil fields doing seismic exploration, and had been hired by UO in part on the basis of my claim to be an environmental economist, I thought I should respond. So I wrote this Op-Ed for the RG, which they published in Feb 2006. It’s no longer on their website, so here’s the version I submitted:

Peak Oil and Other Fears

I’ve been following the reports about the enthusiastic reception that Professor Heinberg’s talk about peak oil and industrial collapse have received in Eugene. Here’s a related problem that I give in class: World oil reserves are 600 billion barrels, and we are using it at 20 billion barrels per year. How long until we run out? Please write down your answer before you read any more of this op-ed.

My students do the math and they tell me 30 years – maybe just 20, if we add growth in consumption and population. Good try, I tell them, but these numbers are from 1950. Hmm.

The idea of economic collapse from resource exhaustion used to be mainstream economics – a long time ago. In 1798, Thomas Malthus argued that population would soon outstrip food production, and that mass starvation would result. During the potato famine, English politicians used his economics as an excuse not to waste money on relief for the starving Irish. Stanley Jevons, in 1865, argued that England’s industrial revolution would soon come to a halt because the country was using up its supply of coal.  Actually, England still has plenty of coal, though not much use for it. As for the starving Irish, well, today 57% of them are now officially “overweight or obese.” Whoops.

While this embarrassing failure to explain reality sent economists back to the drawing board, apparently it has left the peak oil cult untroubled – their forecasts of doom and gloom are just a recycled version of Malthus’s logic, which treats humans as if we are mindless sheep, and which shows no understanding of markets or incentives.

The new model that economists came up with starts from sensible assumptions – business people aren’t idiots, they want to make money, and consumers don’t like to waste money. As more people use up an exhaustible resource like oil, the owners see the scarcity coming and they start demanding higher prices. This gives consumers an incentive to conserve, and oil companies incentives to find more oil. Companies that don’t own oil start to develop alternative energy sources. Combine these effects, and scarcity tends to go away. Add in a little technical progress and prices will fall, not rise. Sure enough, measured by how many hours we have to work to pay for a barrel, the long trend of oil prices has been downward, except for a few short spikes during wars.

The list of alternatives to oil is very long. On the production side, there’s solar energy, wind energy, nuclear/hydrogen energy, coal, tar sands, or just plain drilling more oil wells. On the consumption side, there’s insulating your house, buying a small car, or riding your bike. (If you haven’t ridden it since the last oil crisis, lube the brake cables first. I learned that one the hard way.) We don’t use these substitutes much, yet, because they are still a bit more expensive or inconvenient than oil is. But they are still out there, waiting for us.

Here’s some evidence of how painless the transition to these alternatives will be. Since it peaked around 1970, US energy use per dollar of economic output has been falling steadily. It is now half what it was. You are probably surprised to hear this – unless you are in a business that uses a lot of energy. If you are, you’ve worked like a dog to make this happen, and you’ve increased your profits along the way. But for the average person, all this has been done without much trouble or even notice by you. This is why we call the market “the invisible hand.”

I don’t understand why people continue to give predictions of resource exhaustion and economic collapse so much attention. The prior history of these predictions is simple – they have always been wrong. The theory they are built on is also simple – and also obviously wrong. But then I don’t understand why people like reading Stephen King either. Is it possible that a nice simple story about imaginary scary things is just a fun distraction for the evening?

What scares me is that with all the attention they are devoting to oil scarcity and the coming collapse of civilization, Eugene and its politicians are getting distracted from working on the many things that markets don’t reliably deliver – like health care access, affordable housing, transportation, good paying jobs, and education – and which we rely on good government to help provide.

Bill Harbaugh, Associate Professor of Economics, University of Oregon

I soon started getting angry emails about my claims, including one from a Portland businessman who accepted my offer to bet that the price of oil wouldn’t go above $200 in real terms within the next 10 years. He backed out when he realized I was prepared to put $10K on it.

So what’s happened? I haven’t been keeping an eye on global production, but today the Dept of Energy’s weekly report is out, and US oil production has now hit 11M barrels a day, up from 5M in 2006:

The price of sweet West Texas Intermediate, which was $78 at the time, briefly got up to $161 in 2008, but it’s currently about $70. (All in 2018 dollars). So what are the predictions for future oil output and prices? If you’re still asking that question, you didn’t understand my op-ed.

EWEB Board votes against Tin-Hativists, for lower bills

When I moved to Eugene in 1995 I was surprised at the size of my first EWEB bill. Perhaps I was unduly influenced by the songs of Woody Guthrie, but I assumed that with lots of hydro and rain, electricity and water wouldn’t eat into my mortgage payments much.

Woody steered me wrong. EWEB was a classic government protected monopoly gone bad, and the bills were steep. I had an $863 mortgage on an 1100 sq ft house with oil heat, and EWEB was charging another $120 for water and lights. I couldn’t make it work without my parent’s help – and I knew lots of people didn’t have that kind of help.

Things have now changed. A few years ago the EWEB board hired a new manager, who has cut costs and your EWEB bill. Now he wants to increase the use of “smart meters” which use cell-phone technology to record electricity use and calculate bills, freeing up meter readers for more productive work, cutting your bill even more.

And yesterday the EWEB board voted in favor of this, despite the testimony of a small group of tin-hatters who thought the radio waves would harm their already iffy brain functionality. The RG has the story:

In celebration, a reader sent me this fabulous video, showing how to put those redundant old electricity meters to a higher valued use. Woody Guthrie would be proud:

“I’m calling from Google to tell you that your computer has been hacked”

We’ve been getting a lot of these call this week. Usually I just hang up, but this time I thought I’d see if I could get them to stop calling:

Me: “You’re calling from Google?”

Him: “Yes. Our logs show that your computer has been hacked from a foreign country.”

Me: “That sounds very serious.”

Him: “Indeed. I will walk you through the steps to download a program that will secure it.”

Me: “OK, but first, can you tell me what IP address my computer is using?”

Him: Click. Tial tone.

No calls since. So if these scammers are hassling you too, try asking the same question. You don’t need to know what your IP address is, or even what an IP address is – they’ll move on to easier prey.

Let us now praise famous men turned women

From the Washington Post:

Virginia’s most socially conservative state lawmaker was ousted from office Tuesday by Danica Roem, a Democrat who will be one of the nation’s first openly transgender elected officials and who embodies much of what Del. Robert G. Marshall fought against in Richmond.

The race focused on traffic and other local issues in suburban Prince William County but also exposed the nation’s fault lines over gender identity. It pitted a 33-year-old former journalist who began her physical gender transition four years ago against a 13-term incumbent who called himself Virginia’s “chief homophobe” and earlier this year introduced a “bathroom bill” that died in committee.

“Discrimination is a disqualifier,” a jubilant Roem said Tuesday night as her margin of victory became clear. “This is about the people of the 13th District disregarding fear tactics, disregarding phobias . . . where we celebrate you because of who you are, not despite it.”

Sorry for getting off topic, but having grown up in Virginia with a trans best friend as my rock-climbing buddy, I wanted to celebrate too. Sic semper tyrannus, Cathy.

How to help Puerto Ricans get water and electricity

I’m no former marine electrician, but it’s harder than you’d think. I asked a union friend and he sent me some links. The first one had a default of $9.99 a month and no way to change it. I’m guessing it’s a bit hard for them to update their website without electricity.

This one worked: In case your Spanish is as bad as mine, HAZ TU DONATIVO means exactly what you think it does. Paypal or credit card. If anyone has a better suggestion, please post it.

President Schill reiterates UO commitment to our DACA/Dreamer students

9/4/2017: The full text of President Schill’s message here includes links to UO resources and the UO Dreamers website, here.

Members of the University of Oregon community,

President Trump this week is expected to make changes to the Deferred Action for Childhood Arrivals immigration policy, also known as DACA. I join hundreds of university leaders as well as local, state, federal, and business leaders in strongly urging President Trump to continue this program. I also write to let our students know that we support them, and to provide information about where our students and their families can go for assistance, should the need arise.

In a world full of ambiguities, there is no ambiguity for me about the importance of continuing DACA. My view of morality dictates that young people, many of whom were brought here as infants or toddlers, must be allowed to remain in the United States to learn, work, and make a life for themselves. The United States is their home. To uproot them would be wrong. Period.

But the argument for DACA doesn’t just rest on principles of morality; it is also good for our country. One of the reasons the United States became the greatest nation in the world is because it was founded, built, and shaped by immigrants. Millions and millions of people, including all of my grandparents, risked everything to come to the United States to escape religious, ethnic, and political oppression or to seek out a better life for their children. The very act of coming here showed grit and determination, the willingness to assume risk, and courage—just the skills necessary to build our nation. …

The UO Senate resolution from last November, written by Prof. Lynn Stephens and other members of the DACA and Undocumented Students Working Group, with cooperation from the UO administration, is here. The video of the Senate meeting is here. Minutes:

4.4 Vote: US16/17-09: Declaring UO a Sanctuary Campus; Lynn Stephen (Anthropology) et al. Lynn Stephen read the motion. She thanked President Schill and Provost Coltrane for their statement on immigration earlier in the day and for working together with the Senate. She noted that over 200 local jurisdictions throughout the United States, though not Lane County, have expressed their unwillingness to help ICE enforce immigration laws.

Motion to adopt. Presented by: _______________. Second: ________________.

Craig Parsons expressed his concern about the Senate addressing issues like this one, which asks the UO to take a position on how it will deal with federal agencies. The previous resolution focused on the university’s own values, but this one requires a political stance from senators who were not elected based on their political beliefs. Jane Cramer said this resolution will make many students she knows feel safer. Chris Chavez said it is important for the university to speak up at critical moments like this.

Vote to adopt. No – 2. Yes – all other votes. Moved/Seconded/Carried.

9/4/2017: Miserable old man finds brief joy in punishing innocent children

Politico has the news on Donald Trump’s decision to repeal the Obama directive that gave temporary residency and a path to citizenship for the children of undocumented immigrants, here. Congress will have 6 months to decide to reinstate it, or not.

Sept 5 downtown Eugene rally against DACA/Dreamer repeal:

By some of the same people who organized the excellent Eugene Anti-Hate march. On Facebook here.

8/14/2017 update: Peaceful Eugene Anti-Hate march from EMU to downtown

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