The Myth of Running Out of Oil

Update: When looking back at the passage Mr. Beck calls it “an indisputable fact.” So now I do not feel so bad bashing him on this one. Consider it disputed.

Many pundits (including Glenn Beck which I bashed slightly in the past post) state that “face it, one day we are going to run out of oil.”

Wrong.

Maybe it is a semantic issue but I hear it a lot and the semantics over the words liberty, liberal, freedom, and even anarchy started off the same way.

Let me start with, we will never run out of oil.

Okay, so thanks to the modern media both conservative and liberal (uh, I mean Progressive), we have people in a frantic believe that one day the world will run out of oil.

The reason why we will never run out of oil is because there will always be at least one barrel left. Think of it in a different context. Copper.

It was once predicted that we were going to run out of Copper by the year 1993. Go down to Home Depot or Lowes and pick you out some Copper pipes for your house. Wait, that isn’t a good idea. First, it is really expensive. Second, it makes your water taste funny. But wait, it is 2009 and we still have copper.

Well when the original prediction was made, it was made with current production. That means it does not include innovation. Yes, the same innovation that brought us iPods, Computers, the Internet, Planes, and well everything. How could they forget?

Now it could be argued that we could innovate but then we would still run out. Except one thing: supply and demand.

It is time for a lesson on a commodity say diamonds (you can insert gold, copper, iron, zinc, anything that had value). Let’s say there is 1,000 diamonds in the world now. If the number doubles, what happens to the price? If you guessed goes down, you were correct. If the number goes down, what happens to the price? If you guessed goes up, you were correct.

So then what happened when the supply of oil shrinks: people innovate away from it because it becomes too expensive. Then at some point the oil will not be worth as much because it is no longer needed. How much does a gallon of whale oil for a 19th century lamp go for these days?

Oh, you do not care? Yeah, exactly. At one point, we thought we were going to run out of whales to get oil just like we think we are going to run out of reserves to pull oil out of. We innovated so that whale oil was no longer needed in such vast quantities. Now, yes I know, whales are currently being hunted today.

But let’s remember if the people at the time were right, there would be no whales to hunt today.

So it is semantics? Kind of. Is someone like Glenn Beck and I saying the same thing? Kind of. We both understand that the only way out of this problem is innovation. Is he saying we will run out so we better find something else and I am saying the price will rise so we better find someone out? Yes.

But accepting the doomsday rhetoric brought to you by the left is not the way to do it.

World, do not panic, we will innovate.

~PCCapitalist

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Published in: on September 9, 2009 at 11:26 pm  Comments (2)  
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2 CommentsLeave a comment

  1. […] few parts of Mr. Beck book has caused me to write two separate posts on tipping and on running out of oil. I will not dwell on these subjects but I urge you to read them if you think that this review fall […]

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