[FoRK] WSJ on Peak Oil (via jrobb)

Russell Turpin deafbox at hotmail.com
Tue Sep 21 11:12:24 PDT 2004

What a lot of people miss is the fact that the Hubert
curve is essentially an *economic* extraction model
for a finite resource, whose underlying assumptions
are that demand increases, that extraction technology
improves, and that suppliers go after the cheaper
sources first. To some extent, the model arguably
includes factors such as increased demand from China
and India, and even increased cost of extracting
oil from areas with corrupt governments.

Like all simple models, it has a somewhat messy
connection to reality. Hubert nailed the US48 peak
twenty years before it happened. That justifiably
is held up as a great success for his work. On the
other hand, the steep downside his curve predicts
hasn't quite matched the slower real decline.
Hubert's model is pretty simple, and doesn't take
into account a wide variety of things, such as
political upheavals (as opposed to mere corruption),
technical discontinuities, substitution effects, etc.

Betting on the future is always a gamble. ;-)

My own bet is that oil prices will be firm for the
next few years, and likely more, but that a variety
of alternative sources and enforced demand
reduction will prevent the Olduvia gorge scenario
of which the neo-luddites are so fond. In short,
I continue to invest in energy, with cautious
optimism, but I don't stockpile survival rations in
my basement.

Keep in mind the usual caveat about my dusty
and poorly functioning crystal ball. There are
far worse investment strategies than watching
what I do, and doing the opposite.

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