Tuesday, March 27, 2007

It's running out (2)

Lately I've been following The Oil Drum more closely. As mentioned before, it's a website on peak-oil and energy, featuring geologists, petroleum industry veterans, and techno-geeks. As you can guess there is a very boy-ish atmosphere on the discussion forum, and lots of doomsday-talk. But also lots of people who know what they're talking about. There have been some very interesting posts there in the last month.

If you have any technical sense, if you are not put off by charts, I strongly suggest looking at the site, especially the posts on the situation in Saudi Arabia, the last one is here. Other recommended links are this blog and this research.

It looks like there is strong evidence to suggest oil production will peak in the next decade, if it did not peak already. As supply will fail to meet growing demand, an enrgy crisis will follow. Oil prices will rise cosiderably; by how much exactly is anyone's guess. The worrying thing is that this could happen within a couple of years.

I am not worried about the immediate question of supply. Despite my sensationalist headline, oil is not running out, it is just getting much more expensive. We can cut our consumption by half quite easily, without losing(?) much of our lifestyle. I am worried about the psychological impact. Petroleum is a finite resource: this will come to most people as a shock.

Our economy requires some basic underlying factors. Cheap energy is one of them, but another is trust. We trust the digits on our bank account. We trust the funny paper notes in our wallet, and the plastic card with its 'expiry date'. This is how we live. A sudden shock may do much to harm this trust. This is how stock markets fall, banks go bankrupt, and currencies plummet. True, capitalism is a very adaptable system. It can accomodate crises up to a certain point, and even use them to grow more. But beyond a certain point, even the supplest treas break.

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