Wednesday, May 14, 2008

Peak Oil - Liberals vs. "Conservatives"

In a column yesterday, Paul Krugman discusses the widely held theory that the recent spike in oil prices is the newest financial "bubble." He entertains various possibilities and concludes that financial speculation is not the most fundamental basis of the rise in oil prices.

"The only way speculation can have a persistent effect on oil prices, then, is if it leads to physical hoarding — an increase in private inventories of black gunk. This actually happened in the late 1970s, when the effects of disrupted Iranian supply were amplified by widespread panic stockpiling.

"But it hasn’t happened this time: all through the period of the alleged bubble, inventories have remained at more or less normal levels. This tells us that the rise in oil prices isn’t the result of runaway speculation; it’s the result of fundamental factors, mainly the growing difficulty of finding oil and the rapid growth of emerging economies like China. The rise in oil prices these past few years had to happen to keep demand growth from exceeding supply growth."

In short, the rising cost of oil is due to rising demand and constant, even declining, supply.

What's most interesting about Krugman's column is his observation of the political reaction to the growing evidence of constrained oil supplies. He writes, "Traditionally, denunciations of speculators come from the left of the political spectrum. In the case of oil prices, however, the most vociferous proponents of the view that it’s all the speculators’ fault have been conservatives — people whom you wouldn’t normally expect to see warning about the nefarious activities of investment banks and hedge funds. The explanation of this seeming paradox is that wishful thinking has trumped pro-market ideology. After all, a realistic view of what’s happened over the past few years suggests that we’re heading into an era of increasingly scarce, costly oil."

The denial of the growing evidence of - yes - "peak oil" by commentators on the Right resembles their vociferous denial of global warming (more sophisticated responses now reveal that, all along, it wasn't the reality of global warming that bothered them; it was the implications. And they are daunting).

The same is true of the reaction on the Right about Peak Oil (in fairness, there's a good deal of techno-optimism on the Left as well; while the Right thinks there's plenty of oil - enough in ANWR to run our civilization for another century, it is implied - the Left thinks we're going to replace oil with algae and fairy dust.)

Krugman's column prompted Andrew Leonard over at (their in-house Peak Oil man - h/t Joe Knippenberg) to post a smart column about "the peak oil culture wars," observing what should be obvious at this point - the debate isn't about the facts, it's about the implications. And, people on the Right - "fighting like caged rats" - don't want to entertain the possibility that all those "dirty Gaia-worshipping hippies might be right" - and worse still, we might have to change our behavior.

Writes Leonard:

"Partisan conservatives pooh-pooh peak oil (and human-caused climate change) because they think that to concede that these challenges are real and must be confronted is to acknowledge that greed is not always good, and that free market capitalism must be restrained, or at least tinkered with substantially. Peak oil and climate change are fronts in the culture wars, and to some conservatives, watching the price of oil rise as the Arctic ice melts, it might feel like being in Germany at the close of World War II, with the Russians advancing on one front while U.S.-led forces come from the other. The propositions that cheap oil is running out and the world is getting hotter -- as a result of our own activities -- threaten a whole way of life. The very idea that dirty Gaia-worshipping hippies might be right is absolute anathema.

"Given that many on the left also see peak oil and climate change as cultural battlefields, as weapons with which to assault enemies whose values they politically and aesthetically oppose (see James Kunstler), it's no wonder that some conservatives are fighting back like caged rats, or that they want to blame speculators for oil prices, or biased scientists for climate change."

My own view is that this debate is going to collapse as more people realize that our high oil prices are NOT the consequence of financiers or the evil oil companies stoking profits (all along, their production of oil is declining), but the cold hard facts of reality. The tired Left-Right consensus - one essentially designed to obscure that there is no real disagreement about whether a growth economy premised on an itinerant and rootless workforce is desirable - is going to collapse and something else will take its place. The great fear is that a new consensus will form that someone is to blame, and we have plenty of weapons to get what we want, or at least to distract us from our penury. The great possibility is that we will realize that a future of less driving, stable neighborhoods, greater localism, the reinvigoration of diverse local cultures isn't as bad as our kneejerk panic about impending change would lead us to believe. Surely this is something a "conservative" would not object to?

What may be most productive in coming years is to stop calling this cadre of economic libertarians - what we now call "the Right" or even conservatism - conservatives. There is nothing they want to conserve - nothing in the natural or moral ecology. They are rapacious exploiters who want to use every last natural and cultural reservoir for their own immediate profit - even at the price of leaving nothing for their children. Recall, it was Dick Cheney who said "Conservation may be a sign of personal virtue, but it is not a sufficient basis all by itself for a sound, comprehensive energy policy." Probably true, but it's a damned good place to start, and we fool ourselves if we think we are not going to need substantial reservoirs of personal and political virtue in coming years.

Soon, if not soon enough, I predict, there will be a party of conservatives and a party of "live now'ers." Live now'ers have original sin on their side, and are likely to win a lot of votes until it's clear that the grasshopper was wrong and the ant was right. Then they will tell us it's time to get the guns. Are you sure that's the side you want to be on?


Stuart Buck said...

It seems odd that Leonard (along with many other people) is worried both about peak oil and about global warming, without noticing that those two threats aren't likely to happen at the same time. If we run out of oil, then at least we can't keep burning oil and heating the planet. More scientifically, here's the chair of engineering at CalTech pointing out that the IPCC's dire predictions of global warming are based on the assumption that over the next 100 years, we're going to burn several times more oil and coal than actually exists.

Patrick Deneen said...

Stuart -
I agree, though a number of analysts suggest that it won't take the burning of fossil fuels to increase temperatures - that we may have reached a tipping point at which warming soil and oceans will release large quantities of sequestered carbon and methane. I don't know about all that - seems just as plausible as the opposite - and if so, there's really nothing we can do. But we can try to exercise self-governance, which may ultimately help us if global warming is even partially true.

Anonymous said...

"The denial of the growing evidence of - yes - "peak oil" by commentators on the Right resembles their vociferous denial of global warming"

Perhaps, but that is only because those of us who consider ourselves "economic libertarians" believe the facts are on our side. In other words, we think you are wrong that there is "growing evidence" of global warming and/or believe that attempts to do anything about this warming will be more harmful than the warming itself (see e.g. Jim Manzi on this subject).

I for one hope that the Anglo-American conservative tradition of a strong preference and vigorous defense of free markets (based on a 200+ year track record of success) continues well into the future. It is folks like you who claim to represent some sort of truer "conservative" vision who want the U.S. to radically change, which doesn't seem very conservative to this observer.

I like your low-tech ideas on how to fix education -- you paleo types still know a thing or two about culture. I just wish you'd brush up on your economics!

Anonymous said...

While I can't claim to speak for conservatives, I am a conservative who doesn't worry that much about either global warming or peak oil. I'm sure both predictions are at least partially correct, but I very much doubt that either will cause as great of a problem as you predict. Basically, when people try to sell me on the idea of peak oil (or global warming or whatever) and I tend to kick-in the same skepticism that I would when confronted with any other salesman.

I realize that, for example, Kunstler, views himself as more of a prophet than a salesman, but reading him gives me new insight into why they threw Jeremiah down the well. I'm not yet 40 and I've had my fill of earnest people trying to convince me of one disaster after another. Killer bees, Ronald Reagan with nukes, AIDS, stock market crash, housing crash, bird flu, swine flu, etc. Lots of crises have been predicted, some correctly. But, none has been the disaster that the perennially worried predicted, at least not if you try to follow a few of the old rules. And, most of the people pushing these crises seem to push the sorts of solutions that would send my taxes through the roof. On the off chance that Western civilization doesn't end, I've got a college fund to fill and a 401k to stock-up.

You can call my attitude techno-optimism, denial, pigheadedness or whatever you want, but it isn't like I've gone out of my way to develop a whole world view about peak oil or global warming. I have my standard heuristics that I use when somebody wants to scare me into something, whether it is buying more life insurance or supporting a political platform that would upset everything in my life. I do pay attention to the world and we've made some changes based on the assumption that resources are going to get tighter (i.e. living in a smaller house in the city). But, those cuts are things which save us money that we get to keep. Before I even look at doing anything more, I'm going to need to see some more evidence. Extra-ordinary claims require extra-ordinary proof.

Patrick Deneen said...

Very reasonably and well put. You are right that we should be cautious about chicken littles running around telling us the sky is falling. But, let's not forget that Jeremiah was actually right - we should not reject all prophets because what they say is uncomfortable or inconvenient.

You are above all correct that it would be unconservative to fundamentally alter our civilization. The broader point that should be mentioned, though, is that our civilization is fundamentally unconservative, so a conservative is in a real bind: to argue Burkean prudence is to empower a way of life that does not conserve. That's why such critiques can sound radical, and it's necessary to recall the context. A true prudence is called for, one that moves us away from our current way without radical disruption. A way of moving in that direction is to call to mind worse or worst case scenarios - to shake complacency. In the face of what could be profound societal disruption, a gas tax doesn't look all that bad. Frankly, a good gas tax (use the proceeds to build up public transportation, in the way that we now use it to subsidize automobiles) wouldn't be the worst thing if it further encouraged our efforts to move beyond oil (buying a smaller house is a good move); I'd rather pay the taxes now than the price of the invasion later on.

I would also say that you should be at least circumspect about that college fund and 401K plan, and think about trying to keep your children closer to home (rather than sending them out into an educational system whose only major - in the words of Wes Jackson - is upward mobility) in the event that your investments don't pan out. Hope for the best, plan for the less than best. And I think there's evidence - maybe not enough for you, but considerable evidence - that past performace (even over the past 200 years, pace jeffrey) is no guarantee of future performance. But, time will tell - it always does.

Anonymous said...

Never forget -- Burke was a Whig! Here is another delightful short post on the problems with the IPCC's "predictions":

I too live in a smaller house in the City (I even drive a Prius!) and I too believe a Pigovian tax on gasoline makes sense (it is actually good free market economics, at least according to Greg Mankiw:, Bush's former Council of Economic Advisor's Chairperson. We should make sure that consumers pay the true cost of their purchases -- factoring in negative externalities as much as possible.

Anonymous said...

When you say "In the face of what could be profound societal disruption, a gas tax doesn't look all that bad," you are absolutely correct but you can justify almost anything by that standard. Not only do I doubt the chance of profound societal disruption in the near term, but I am very much predisposed to discount any argument where "societal disruption" as a contrast. When it comes to which prophets of doom to pay attention to, I think about base rates, past records, and the likely interests of the potential prophet. For example, I pay no attention to the mutterings of our local politicians when they talk about building-up mass transit because they have been hugely wrong in the past and have a profound desire for public works spending. Yes, I would like a better local mass transit system for both policy and personal reasons (I ride the bus). However, I know I'm not getting it as new money has not been spent wisely.

Nothing like living in a union-dominated city to turn you against taxes and big government. I'm for increased gas taxes, ONLY IF we cut another tax by a roughly equivalent amount. I'm much more afraid run-away government expansion than I am of run-away warming. I've seen the former close-up and it is not pretty. At the local level, at least the state can step in to stop it.

Also, what is wrong with upward mobility? I not only want that for my son, but I still haven't given up on it for myself. I am well aware that some day civilization as we know it will end. But, the end of a civilization is something with a very low incidence. Basically, if I worried about problems at that level of probability, I'd be unable to justify getting out of bed in the morning.

Patrick Deneen said...

OK, maybe I'll frame it in different terms that may create "overlapping consensus" - we should seek to wean ourselves from our petro-addiction on the grounds of national security. Woolsey, Matthew Simmons and Bacevich (all conservatives of a sort) all agree on this point. So long as a national transfer of wealth continues from the U.S. to the Middle East which then ends up financing Islamic radicals, we're not doing ourselves any favors.

One thing I think IS and will continue to happen is that many one-time Reagan sympathizers (mostly what we call Reagan Democrats) are getting over their kneejerk abhorrence of "guvment." Look at the recent special congressional elections in Illinois, Louisiana and Mississippi. Government doesn't do certain things well, but in many other instances it's the only agent that can accomplish something with an aim to securing public weal. Public transportation happens to be one of those things. It would be far better if we could get beyond seeing the government as something "out there," a foreign entity that is separate and even, for some, malevolent. In a democracy, we are the government, or properly ought to be; holding a view of the government as a hostile foreign agent only strengthens the hand of large-scale private entities who decidedly do not have the public weal in view. Now, of course, in an extended republic such as the Framers built, the government is indeed distant and vast, a huge machine that seems impervious to our particular circumstance. This is among the reasons I insist that democracy and self-governance are rightly pursued in every possible instance at the local level. To put it in Catholic terms, the principle of subsidiarity should govern. You and I could certainly agree that we would like to see less "consolidation" (to use the term of critique by the Antifederalists) and centralization; perhaps we could agree that government ought properly to serve the public weal and that it can at times do this; I'm not sure if we could agree, but I would urge us to consider various ways that we can strengthen local communities and thereby strengthen our own sense that government is us - that we are most likely to experience ourselves as citizens when we can directly experience ruling and being ruled in turn and perceive the practical effects of our contribution.

Anonymous said...

Oil is the most efficient means of obtaining energy to to work, when environmental concerns have regulated nuclear power into utter unavailability. (Where efficiency is measured in economic terms; i.e., ratio of energy output to the cost of producing it.)

The business -- or country -- which utilizes the most efficient means to reach its goals will gain an edge over those which use less efficient means; in the long term this can differentiate between economic dominance and prosperity, and decline to irrelevance and powerlessness.

In the years preceding an economic crisis, two things are vital: (1.) that one's country has wealth to fall back on, and (2.) that it has the flexibility to adapt its economy as rapidly as possible. Item 1 requires that the country maximize its wealth going in by maximizing its efficiency relative to strategic and economic competitors, and Item 2 requires that it be a market-driven, not a command-and-control, economy.

The majority of countries in the world simply do not have the traditions of respect for human rights -- as we understand them -- that exist in the Anglosphere. Put differently: Given the choice between living in a Chinese dictatorship, a Russian dictatorship, an Arab dictatorship, or a British dictatorship, give me the Brits, any day!

The same goes for world leadership. Anyone who thinks the world would be better off with the U.S. being as powerless as Britain, and China or Russia in the dominant economic (and therefore cultural) role, is either a lover of war and repression, or self-deceiving.

Let us say that we are on the verge of a crisis of Peak Oil, Global Warming, or both.

Given the choice between a world in which the Anglosphere, especially the U.S., impoverishes itself through unilateral and hopelessly ineffective heroic efforts to delay climate change by a few years, and a world in which the Anglosphere, especially the U.S., remains immune to such suicidal tendencies and enters the crisis with (a.) the most wealth and (b.) the most adaptability...give me the latter!

For with respect to Peak Oil: Those who adopt alternatives sooner are merely using more expensive, less efficient, sources of fuel *sooner* than their competitors. Is that wise? To cede all the least-expensive energy to China until it runs out (thereby delaying that day, but only for China's benefit)?

And with respect to Climate Change: The indicators are that, sans killing much of the world's population through induced poverty, there is no action to be taken -- none -- that will delay it by more than a few years.

So, if it's going to really be devastating, one is better facing the devastation in a wealthy society than a poor. And if it's not going to be that bad, then it certainly isn't worth voluntary economic suicide to delay it.

In short: By letting the economy do more or less exactly as it wants, the safest results are obtained.

The only alternative is to willfully engage in symbolic acts of self-immolation in hopes of inspiring others to do likewise. (And, trust me: China, Russia, and India are far too practical: They ain't playin' the role of dutiful lemmings.) The passion of the political left to do exactly that is the reason why the political right and center suspect them of religious, rather than practical and self-preserving, motives.

For who else, other than a fanatic, wants to kill themselves to no useful purpose?

Anonymous said...

If this is the day of peak oil and we're using it as fast as we're pumping it doesn't it stand to reason that we're also at peak carbon emissions? Therefore, shouldn't all the consequences of burning fossil fuels steadily lessen?

Patrick Deneen said...

Maybe. I don't know. But, I'm pretty sure we'll burn everything there is, so we'll find out. It may not matter if we're past a "tipping point." Thank God my kids will have to deal with it, not me. I'm just busy spending their inheritance... (whatever the bumper sticker said).

With the linking of this posting by Jonah Goldberg at NRO's "The Corner," the response here by my "conservative" guests is pretty indicative of what Krugman, Leonard and I were talking about.

Anonymous said...

The climate "scientists" have been exposed for their failure to meet a basic level of scientific competence in recording the temperature (see e.g. the efforts of Anthony Watts). They've been exposed several times for their misapplication of statistical modeling techniques (see McIntyre et al). They've been exposed for fudging the temperature records of the past in order to "establish" a warming trend.

When an astrophysicist demonstrated that climate models contain an assumption that violates well-accepted laws of science, he was stonewalled in order to protect billions in research funding.

James Hansen, Algore's biggest cheerleader, has received over a million dollars from people like George Soros to push the AGW scare. Algore has already made himself wealthy.

Wake up and smell the fraud.

Patrick Deneen said...

Yes, I'm well aware that there's lots of debate, and I don't have a strong view on global warming. I DO think it is a good conservative - or better still, Christian - approach to these questions to scrutinize our motives for the positions we hold. It so happens that the most vociferous deniers happen to be those who want to continue a way of life of consumption, exploitation of the earth and neglect of future generations. That should at least give us pause amid our scientific certainty that we can do no wrong.

As Joseph Pearce, the Catholic author, writes in his book "Small is Still Beautiful," "Although many have sought to dispute the gravity of the situation or the extent to which it is caused by man-made factors, it is surely truly _conservative_ to err on the side of caution in _conserving_ the environment, and reckless in the extreme to throw caution to the wind."

Anonymous said...

Needlessly consigning billions of the world's poor to lives of disease and misery because of coercive government policies based on fantasy and conjecture isn't "conservative" and isn't moral.

Patrick Deneen said...

I don't think that using and consuming less, creating less waste by conserving, repairing and self-denial, farming more sustainably, living closer and being better stewards of the world will do that. Doesn't seem to follow to me. I'm not suggesting we cease all economic activity - as you seem to be suggesting. That's silly. But we can do better, much better.

Unknown said...

"Thank God my kids will have to deal with it, not me."

Patrick, do your really mean that and all it implies?

Patrick Deneen said...

David -
No - I was being a bit snarky. But, I did intend for its implications to be obvious.

Anonymous said...

R.C. -- Excellent! Concise, true, and entertaining.

Patrick, how is using the cheapest and best form of energy available "neglect of future generations"? I want my children to have the best food, education, and living environment possible. Notice that there is a strong and explanatory correlation between use of energy and these positive factors for raising children.

Given that this is obvious to everyone who doesn't espouse peak oil and global warming theories, why should I conclude you are anything other than one of the flag waving hippies, albeit with a college education?

Patrick Deneen said...

Steve -
Read some other posts and let me know. I doubt many hippies would find me very congenial - I'm kind of a "downer," and not a big proponent of "free love," and I think they'd have a big problem with all the positive things I say about tradition and authority. Besides, my hair is short and I'm over 30.

Lest you forget, the hippies hung out in college during Vietnam, so most of them are college educated and many now teach in our universities.

To your bigger point, I think it's absurd that a society that has little practical work or activities for children, that feeds them a steady diet of chemicals and petroleum, that puts them on buses and sends them away for most of the day for a little bit of learning and a lot of tax-funded babysitting (along with healthy doses of indoctrination), that teaches them that consumption is the way to happiness - and I could go on - is a "positive" way to raise children. You and other visitors from NRO seem to assume that I am suggesting that we ought to live in abject poverty and allow our children to starve. Surely these are not the choices, though I know we live in an age of simplistic dichotomies (e.g., hippie vs. someone who loves children).