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Sunday, October 16, 2005

Wonks on The Economy and The Climate

Hale Stewart at BOPNews tries his hand at screaming at thick-headed market analysts (i.e. Larry "I just say what they tell me to say" Kudlow):
However -- for anyone that has been paying attention to the markets, Larry (don’t you always say you trust the market to do the right thing? Then why the hell aren’t you looking at any of the energy charts?) you will notice a pattern in energy prices: they are increasing really fast. Prices are in what is referred to as an uptrend. These aren’t 4-5% increases, Larry. These are really big price moves.

Now, I have an idea, Larry. Why don’t we find a substitute for oil that we can use instead – something cheaper. I’m waiting Larry. I’m still waiting Larry. Can’t find something to use instead, Larry? THAT’S BECAUSE THERE ARE NO SUBSTITUTES FOR OIL, LARRY. DUH!!!!!!! – YOU JACKASS.
His original emphasis.

Newberry also has a rather interesting yet oblique post on climate change and how policy wonks, game theorists, and other non-scientists have apparently taken the lead on predicting a future that has arrived in everyone's minds but their own. I started watching the CATO Institute's video on Global Warming: The State of the Debate, and though I didn't finish, my first impression suggests that, yes indeed, these people only approximate scientists.

Conclusion: No substitutes for oil. And no one has found a substitute for science, either.

Update: For other economic analyses, Big Gav points to Puplava's Financial Sense (synopsis: no Plan B) and Jerome provides a rather bleak roundup.


Professor Anonymous TI said...

Now the US has had its real-life "Oil ShockWave". The main lesson was that the demand reacted more than anticipated. The literal demand destruction played of course a role here. But I think it was reasonable to anticipate that this kind of temporary disruptions would not be the real problem.

Political instablility in oil producing countries, terrorism and like are secondary and temporary problems. They are easy to handle and therefore they have much attention. The real problems are geological. Much talk about political oil risks is mostly intended to mask these problems.

We should remember that we already implemented a plan B. There was much talk in the '70s that nuclear is the bridge that takes us the next 30 years to the plan C - fusion, renewables or whatever. The energy supply structure changed, the share of oil in total energy supply diminished from about a half to little over a third. Natural gas came in. A lot was done to realize the plan B.

The problem is that we should now have the plan C ready. We don't. It was not developed in those three decades. We don't even have an idea what it could be. I think the cause was not a lack of will or money. A lot work was done but the solutions were not found. There were really none in the context of continuing economic growth.

We are now in the other end of the bridge. And the situation is worse than in the begiining. The world uses more energy than ever before but there is no way to get any more in the future. There are no big unused reserves, nuclear won't help, natural gas starts depleting soon, coal is not the solution. Other sources are insignificant. The fusion is not here.

I don't even believe that resource wars are unavoidable. There may not be enough resources to wage those wars. The risk of a US-Iran war is real but it cannot help the US any more. It would only cause an oil price shock. Occupying Iraq has not helped. It only cut the Iraqi production even more.

The real plan C is adapting and using less energy. It is feasible and easy, but not nice. But if you party, be prepared for a hangover.

12:57 AM  
Professor Anonymous OHenry said...

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3:18 PM  

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