click here to return to the Calico Cat homepage

Krugman and oil

There's been a lot of talk in the blogosphere about Paul Krugman's recent column in The New York Times regarding the coming oil shortage. Here are some links: Tim Worstall, Crooked Timber, Cold Spring Shops.

Well let me add my two cents. First of all Krugman is a lousy economist, and his column in The New York Times is mostly left-wing propaganda. Indeed, in his oil column, he is too busy attacking the Bush administration to have much space left to actually write about oil. It's disgusting that The New York Times gives this guy a platform while economists more deserving are denied a voice.

Nevertheless, Krugman is correct that oil is running out. I've written about this topic before on my blog. But because people are very shortsighted, they don't see the obvious. In 1956, M. King Hubbert predicted that U.S oil production woule peak in 1970 and then begin declining. And he turned out to be right.

Applying the same analysis to other parts of the world, other geologists have predicted that world oil production will peak sometime during this decade or the next, and then begin declining.

Does this mean the end of the world? Not for people living in the United States. If the price of gasoline rose to $5/gallon, or even $10/gallon, life would go on. Big deal. People would drive more practical cars instead of monster SUVs (of which presidential candidate John Kerry owns three). Even if oil were $100/barrel, it's still the most practical form of energy for transportation.

That doesn't mean that there is nothing to worry about. Vastly higher oil prices will be a bad thing for the world. It will give even more economic power to unstable governments in the Middle East. It will hurt poor third world nations far worse than the United States. For example, think about how oil is related to agriculture. The costs of operating farm machinery, fertilizer, and transportation of food, are all impacted by higher oil prices. Where people barely can afford to buy enough food to eat, higher prices for food could mean famine.

Even Americans will feel pain. Higher prices for oil means we have to make do with less. Making do with less is painful. People whine because gas is $2/gallon. How much more loudly will they whine when it's $10/gallon? We are accustomed to each generation having more than the last. How will we pay for the social security payments of Baby Boomers if prosperity is decreasing due to declining resources?

I am pessimistic about the ability of technology to magically replace oil. First of all, we must remember that oil is predominately used in transportation. "Green" forms of energy almost always involve the creation of electricity. Windmills won't power your car. Also, think about all the plastic we use. Plastic comes from oil, and there's no good substitute for plastic.

Cars powered by alternative forms of energy are just not very practical at the moment. Some say they could be more practical in the future through technological innovation. Many liberals complain that if just the evil Republicans would allocate more money towards research, we could replace all the gasoline powered cars with ones powered by hydgrogen or electricity or kryptonite. However, this research has gone nowhere. In Europe, where gasoline is already significantly more expensive, people still use cars powered by gasoline, they are just smaller and they don't drive them as much.

Liberals should be glad that the price of oil is rising. After all, they hate it when Americans drive big SUVs (except for John Kerry who owns three). Well, high gasoline prices will encourage people to conserve, right? So liberals are happy that gasoline prices are high, right? No, instead the liberals whine and complain when gas prices are high. They blame Bush and Haliburton and evil right wing conspiracies, and bemoan how horrible it is that poor people can't afford to fill up their SUVs. Liberals are very hard to understand.

posted Sunday, May 09, 2004