the visible hand

it is the theory which decides what can be observed – einstein

Economist’s View: Oil

Posted by ecoshift on September 27, 2008

Economist’s View: Oil

Jeff Sachs says “current energy crisis will most likely worsen before it gets better”:

Why the Oil Crisis Will Persist, by Jeffrey D. Sachs, SciAm:

…[F]undamental factors of supply and demand in the world economy will keep oil costly for years to come.
… Drilling in protected areas would provide little relief, and at horrendous environmental risks. Only a concerted move to new transport and energy technologies will relieve the pressures.

The greatest irony about the Bush Administration is that it correctly focused on energy needs at the start of its first term, but then got everything wrong in the strategy. Viewing the world through the eyes of Texas oilmen, it focused on gaining concessions to Iraqi oil fields and opening U.S. protected areas to drilling, while scorning fuel economy standards, renewable energy sources, and climate change mitigation. But the simple arithmetic of oil and carbon was always against the strategy.

World demand for conventional oil is outstripping world supply. … There are few prospects for mega-discoveries that could keep up with fast-growing world demand. …

The boom in global driving is likely to be relentless. … If China attains just half of the U.S. per capita ownership of passenger vehicles, it would have … roughly twice as many as the U.S. And that prospect is not a silly scenario. Vehicle production in China has already tripled… With … massive house building on the spreading periphery of city centers, China seems intent on reproducing America’s metropolitan sprawl and commuter-based society. A similar, though still less dramatic trend, is getting underway in India. …

Conventional oil has little prospect of keeping up with this soaring demand.

What then will give? Of course a grave economic crisis—war, global depression, economic collapse of one or more major economies—would cut oil demand the hard way. There are two much better alternatives. The first is a redesigned, far more energy-efficient automobile that uses … electricity or hydrogen. Several variants of plug-in-hybrid and all-battery cars have been promised by major auto producers as early as 2010…

Many unresolved problems of cost, performance and infrastructure face these technologies, of course. Public funding for technological research, development and demonstration, and for supporting infrastructure, should certainly be deployed… Any electric or hydrogen option will require large-scale deployment of new low-emission electricity generation, such as solar, wind, nuclear, and coal plants that capture and sequester carbon dioxide.

The second alternative, equally important, is a gradual reconfiguration of city life, to reduce our dependence on automobiles… We’ve learned that sprawl is not good for energy dependence, air quality, biodiversity, human health or quality of life, including commuting time. …

The current energy crisis will most likely worsen before it gets better. … Yet it could also be the critical spur to action, prompting vital changes in technologies and lifestyles. It’s not too late to take the more productive path, but time is running out.

Posted by Mark Thoma on Saturday, September 27, 2008 at 02:16 AM

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