More on "Prospects for Oil" from H-Energy
There's been some interesting replies to Lewis Smith's posting to H-Energy. Today's is from Kenneth Zimmerman, Senior Analyst for the Oregon Public Utility Commission:
"I've worked in the energy sector for almost 30 years, still not nearly as
long as Lewis, and I believe he has most of it right in his comments.
I would like to make a few points, however..."
* First, supply/demand economic theory is not only wrong about energy, its
massively wrong. Thus balancing supply/demand, even if it were possible,
would not help.
* For commodities such as energy the real question is which should take
precedence, the production cost and use value of these commodities or the
bid value arrived at in markets. The two are not the same and generally
no where near one another in terms of size. Plus the two serve very
different goals. This is one of many reasons energy markets don't work
and do a lot of harm to societal welfare.
* As Lewis indicates there are technological fixes for the some of the oil
issues, but most are social structure problems not amenable to technical
fixes. Over the next 3 decades, if we intend to survive with our current
standard of living or anything near it, there will have to be many changes
in how energy production, distribution, and use are organized from an
institutional perspective. This must include ending the current structure
of private corporations having a strangle hold on energy production and
distribution and removing the profit/private property motivation from
energy. It also must include international coordination and control of
energy resources and their use.
* And I ask if Lewis is correct that the industry has known about the
coming crisis for some time (I agree with Lewis on this) and did not worry
about it, WHY DIDN'T INDUSTRY WORRY? This is a clear sign that the
current energy social structure is rotten, not only ineffective and
inefficient but undemocratic.
* I want to underline and emphasize what Lewis said about water. But
water is not only the next crisis in the Middle East its also the next
crisis in the US. And it will have an intensity and level of impact never
even approached by the energy crisis.
* I too wonder what economists will tell their students next semester
about the almost inconceivable margins currently realized and likely to be
realized for some time to come on oil and other fossil energy sources. If
they're truthful, which some actually are, they'll tell their students
that the theories they've been "selling" for 50 years need to be
This is an academic's way of saying these theories don't appear to reflect
reality. The real issue here is how many countries will be bankrupted,
how many lives will be destroyed, how many dreams for the future will be
squashed before the necessary structural changes are made to fix the
problems the application of these theories has caused.