Casaubon's Book

I would like to create more oil. Specifically, I’d like to create it up on my field – a gusher of light, sweet crude would be just the thing to fund my farming habit, plus provide some neat little tax benefits. Rural upstate New York has a sad lack of oil fields, and given its recession-prone economy, I think it would be just the place for some oil.

Fortunately, all I have to do, according to Forbes Magazine, is help along the development of new technologies that will extract all the oil that I’d like upstate New York to have. Because, of course as any dimwit knows, we don’t consume resources, we create them.

Please note that I’m not trying to state, as no economist is, that we do not live on a finite Earth. That there isn’t some limit to the number of copper atoms available to us, or that oil or natural gas are out there in truly unlimited quantities.

The argument is, rather, that while there are indeed such hard limits to availability they are so far away from our current situation that they’re irrelevant (for example, the hard limit for tellurium is 120 million tonnes and we use 125 tonnes a year). Thus an entirely different dynamic comes into play, one in which we humans create resources by developing the technologies that make them available to us.

Note that although Tim Worstall mentions peak oil, the resource he actually uses as an example is Tellurium, which, in fact, we aren’t depleting very fast because we don’t use much of it. Just like oil, right?

Worstall conveniently leaves off the numbers of expected production in the Deadwood field in the New York Times article by Cornucopian cheerleader Clifford Krauss he cites, which notes that Deadwood is producing an amazing 9,000 barrels a day – practically a miracle. Indeed the Times in its opening paragraphs continues supporting the myth that new technologies mean energy independence is right around the corner when it says,

...oil production is increasing rapidly in the United States even as gasoline consumption is falling.

High oil prices have indeed made it viable to extract a slightly larger trickle from old oil fields in the Permian Basin and elsewhere. But as anyone with even minimal scientific or mathematical literacy can see, in no way is this a “Turnaround in US Oil Production.” 9000 barrels a day is a bigger trickle – the US uses close to 20 MILLION barrels of oil a day.

Let’s scrap the misleading language of “creating more resources.” When was the last time you made a fish or some oil? Instead, let’s try and get a real sense of what high oil prices are driving us to do – digging around in our couch cushions for loose change.

Let’s say that I have some resources available to me in the form of money. For a long while, I have a good job and my life isn’t very expensive and there’s more than enough cash to go around without worrying about it. Then things change. My benefits cost more, prices go up, raises go down, I have a couple of children and my wife loses her job – all of a sudden, the money supply is awfully tight.

I also suddenly have a compelling reason to extract more monetary resources – and I do. I use technology (internet auctions) to sell off some of my Grandma’s dishes and my collection of Star Wars figurines. I cut my expenses back to the bone. I borrow from my sister-in-law. And when things get really tight, and I’m having trouble paying the bills, I think “Wait a minute, in all those years when I was flush, I never looked in the couch cushions – I bet tons of cash fell out of my pockets and I never even noticed.”

I lift one cushion, and lo and behold, there is $11.58 in loose change back there! And wow, there are three more cushions I’ve never even lifted up – hey, in the language of unproven reserves, I could have 70 or 80 bucks under each one! Wow, what a windfall!

Now is there anyone here that thinks that resorting to the couch change to pay your bills is really good sign for our hero? Or that the couch will yield infinitely ever-greater quantities of money? That our hero’s estimate of the riches of his couch is probably right? That getting a bit more money out of your couch means he’s rich?

Even the New York Times has to admit that those areas of Deadwood *could* have been drilled previously – they are just doing it faster now, and high oil prices make it economically viable. What they don’t do is put more oil in the ground – they don’t make resources, they simply make it worth our effort to do things in desperation we never would have bothered with before.

Our hero’s money woes don’t make him richer – what they do is force him to race around extracting every last bit of money he can from anything he didn’t have to care about when there was plenty. And in the end, the couch can only yield so much – when the last coins have been scraped out, the last salable things listed on Craigslist or Ebay, it is all over – now the inadequate salary is all that’s left. The crash is harder because there’s nothing left to draw on.

The desire to believe that oil is infinite (or nigh-infinite, a la the Tick’s nigh-invulnerability) is so great that it can lead to a great deal of bizarre silliness, including interpreting bad signs as good ones. Drill, baby, drill is proof of something – not America’s infinite resources, but America’s desperation.

Sharon

Comments

  1. #1 Robyn M.
    March 27, 2012

    You’ve been hitting on some truly great metaphors lately–the laundry one, then the couch-cushion one. They’re gold.

    I am gratified to see the (utterly sane) comments on the original article, too. At least, the ones posted so far. My favorite: “Thank you for finally disproving the second law of thermodynamics!”

  2. #2 Damien
    March 27, 2012

    Genuine question, and there may be no good answer, but what should we do then?

    Is there anything, even in combination, that you think could replace oil at least a little bit?

  3. #3 nayrb
    March 27, 2012

    the resource he actually uses as an example is Tellurium, which, in fact, we aren’t depleting very fast

    Now don’t cherry pick statistics like oil. I can think of many examples: there must be millions of copies of Tolstoy’s War & Peace & at current rates of consumption they will last thousands of years. This probably holds true with National Geographic magazine also. QED.

    Bryan

  4. #4 crosstif
    March 27, 2012

    Wow ! Two great posts in a row ! Sharon’s back.
    Thanks from a faithful french reader.

  5. #5 John D. Wheeler
    March 28, 2012

    Damien, there is a vast array of stuff that can replace oil, a little bit. What does not exist is anything that can replace vast quantities of cheap oil, at least anytime in the next few decades.

    What we should do is reduce our needs. If the oil supply drops by 20% but we voluntarily reduce our demand by 30%, it will seem like a glut.

  6. #6 Wendy
    March 28, 2012

    I love the analogy – because I know exactly how it feels to be looking under every possible surface for the loose change to buy milk or diapers, or *fill in the blank need*.

    We have options – none of which include continuing to consume … and hoping to find that hidden stash up in the attic that will buy away all of our troubles.

  7. #7 Eden Balfour
    March 28, 2012

    My husband uses a similar metaphor of selling off stuff in your basement. Our province’s boom is based on oil, gas, and potash. Apparently, growth means selling the stuff in your basement *faster*.

  8. #8 TTT
    March 30, 2012

    This reminds me of Bjorn Lomborg’s “argument” that since all of our more aggressive and technology-driven fishing fleets are catching more fish than in the past, the ocean must be producing more.

    Which makes sense, since both Worstall and Lomborg are just smudgy xeroxes of cornucopian kook and absolute scientific illiterate Julian Simon.

  9. #9 Neil Craig
    March 31, 2012

    Is there anybody with more respect for science or futhrt from illiteracy or indeed lore od a record for getting it right than Julian Simon? If so who exactly. Not thieving liars like Ehrlich. Not mountebamks like Hansen. Nor pork barrelers like Gore. Nor fraudsters like Mann.

    And that being the case are there any circumstances under which somebody like TTT, who makes no attempt whatsoever to discuss facts and relies on ad homs against people infinitely superior to him can ever form part of a movement (ie ecofascism) to which any decent human being coyuld wish to belong?

    Or perhaps TTT might care to (A) apologise and (B) try sticking to facts like a human being would?

  10. #10 NJ
    March 31, 2012

    Is it ever possible for NC to comment on SB without using his neologism “ecofascist”? I ask merely for information…