Friday, August 15, 2008

More Peak Oil

Even as oil prices plummet, I have ramped up my buy-in to the peak-oil theory and the consequences. Based solely on the price of oil decreasing lately, maybe I should be skeptical, but, sadly, I think the decrease in prices is temporary.

The term peak-oil is debatable and can either be what is meant as half the oil extracted from the earth or that the ability to produce more is peaked. I believe in the latter and the latter also includes that crazy theory of Abiogenic oil. Abiogenic, if exists, doesn't mean there are no worries. The theory seems refuted by most geologists but if say it does exist, it's so slow that effectively oil production will still peak.

The problem with peak oil production is a simple economics problem. You reach the limit to where you can produce it. If the demand increases, then the price will rise due to the limited supply. Fine, that is basic economics. But the problem is that oil has been taken for granted and very necessary in modern society. It is expected that oil be cheap to live the lifestyle that people have lived for the past 50 years. If people have to spend more of their income to get to work and get food, and then food prices rise due to the same effect, the economy has to necessarily shrink due to money reallocation to fuels and inflation factors.

Money allocation is what determines prosperity. When you have lots to spend on fun, you are prosperous. When it's spent just to survive (and you have to work more to get it), you are not so prosperous. Peak oil seems to very well define prosperity in some sense unless alternatives are found that are just as cheap. The question is whether that is possible and whether if it can be done in time before some huge economic crisis occurs.

I have to recommend a great lecture by David Goodstein, vice provost at Caltech University. He is a terrific lecturer, who did a great series of basic physics called the 'Mechanical Universe.' The lecture is definitely directed toward a person with college science background but still can be understood for the most part by most people.

It's based on his book, 'Out of Gas.' I have learned a lot of physics from Dr Goodstein that helps my career, but I feel it's one of the most important lectures I have seen in my lifetime.

Watch it here in Cable or dsl , Modem, Broadband Requires RealPlayer

I have watched 'A Crude Awakening,' 'The End of Suburbia, 'Escape from Suburbia' and 'End of Oil,' They are all excellent documentaries, But unlike them, this lecture doesn't have the dramatic music and editing they do. It's a straight lecture by a scientist like you would see at a science conference.