Matthew's Foray into Blogging

Sunday, August 28, 2005

“Peak Oil”

In an August 21, 2005 New York Times Magazine article entitled “The Breaking Point,” Peter Maass writes about “peak oil,” the point at which maximum production of oil is reached. Matthew Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, warns of a shortage that will result in triple-digit prices per barrel of oil and worldwide depression. Sadad al-Husseini, former top executive for exploration and production of Aramco, the Saudi national oil company, is more candid than other Saudi officials. He admits that the world is heading for an oil shortage.

Messrs. Levitt and Dubner of Freakonomics: A Rogue Economist Explores the Hidden Side of Everything fame, are unconvinced that peak oil presents a crisis. As they explain on their blog, they are confident that market forces will cause innovation that will result in extracting more oil, producing more efficient vehicles, and developing alternative energy sources. Consumers will adapt, they say.

The situation will come to a head before the oil shortage is addressed. I doubt that innovation can occur at a fast enough pace to avert a depressed world economy; any depression will be protracted, I fear, because developing alternative energy sources and converting the oil-based infrastructure and economy that are in place cannot be accomplished overnight.

Get on the stick, and start innovating!

2 Comments:

  • Hi Matt. I read the blog post on the Freakonomics site. They are totally wrong here. Even if the "oil crisis" isn't as bad as we think, what is wrong with us thinking it is really bad anyway? We would need to think the sky was falling anyway before we would seek out alternative fuels.

    So it is a win-win situation for the alternative fuel movement, I think.

    By Blogger Thomas, at 10:57 PM, August 28, 2005  

  • Exactly. So many industries and sectors of the economy are dependent on oil and the oil industry, that a move away from oil cannot occur overnight without resulting in serious disruption to the world economy and our lives.

    By Blogger Matthew, at 3:32 AM, August 29, 2005  

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