Side Topic for Great Depression Thread

[revelator]

Side Topic for "Great Depression" Thread

No, the world is not slated to "run out of oil in 2050". Even if "Peak Oil" is right about hitting the peak in the next few years, commodities don't ever "run out", they just hyperbolically decrease forever. With oil, that decrease will be especially slow, because there are vast, untapped reserves that far exceed the Middle East, just waiting for oil to be valuable enough to make it worth collecting.

If you want to discuss that more, please start your own thread - I don't want to hijack waste's

The demand for oil is also on the rise though. As vast as these reserves may be, all that does is buy us a little more time to figure out alternatives/fight over it. It will still run out eventually.

 

[russ_watters]

The demand for oil is also on the rise though. As vast as these reserves may be, all that does is buy us a little more time to figure out alternatives/fight over it. It will still run out eventually.

The law of supply and demand holds that as supply decreases, prices increase exponentially, which reduces demand. As a result, the less oil we have, the less people will want, and we will *never* "run out".

Not even the peak oil man himself says that it'll "run out":

Oil will not just "run out" because all oil production follows a bell curve. This is true whether we're talking about an individual field, a country, or on the planet as a whole.

http://www.lifeaftertheoilcrash.net/

In any case, the basic problem with his theory, is that his bell curve is so far not acting much like a bell curve. His peak is looking more like a plateau because technology and economics are intervening to find more oil, make more oil available, and make more oil economically viable to recover.

edit: While I agree that we need to start putting alternatives into use immediately (nuclear power), I don't buy the doom-and-gloom scenario he paints.

 

[revelator]

What I worry is, that oil will become too scarce before alternatives are implemented too such a degree that the demand for energy is met. I don't much relish the thought of living in society where energy shortages are the norm.

 

[Anttech]

The law of supply and demand holds that as supply decreases, prices increase exponentially, which reduces demand. As a result, the less oil we have, the less people will want, and we will *never* "run out".

Is that not a theory rather than a hard set Law?

 

[russ_watters]

Is that not a theory rather than a hard set Law?

A "law" is a mathematical relationship. Calling it a law does not imply anything about how set-in-stone the underlying principles of market economics are. But if you are asking if market economic theory works (if the predictions match reality), the answer is yes.

http://en.wikipedia.org/wiki/Physical_law

Physical laws are distinguished from scientific theories by their simplicity. Scientific theories are generally more complex than laws; they have many component parts, and are more likely to be changed as the body of available experimental data and analysis develops. This is because a physical law is strictly empirical. It is a summary observation of things as they are. A theory is a model that accounts for the observation, explains it, relates it to other observations, and makes testable predictions based upon it. Simply stated, while a law notes that something happens, a theory attempts to deal with why or how it happens.

 

[Art]

Is that not a theory rather than a hard set Law?

Actually it's just plain wrong . Whether or not the price increases (or even decreases) and by how much, as supply constricts, depends on the price elasticity of the product, substitute goods etc... etc..

 

[Jonny_trigonometry]

get yourself a diesel car, convert it to run on vegetable oil, and get free vegetable oil from local restaurants, then refine it yourself in your garage and use it to power your car for 55 cents per gallon (even though the oil is free, the equipment you need for it costs a bit), and you can even power and heat your house with it. I saw it all on dirty jobs (a great tv program if I might add).

 

[Anttech]

A "law" is a mathematical relationship.

Call me old fashioned but I thought mathematical relationships were always true? For example Pi theorm... Or simple Algebra

But if you are asking if market economic theory works (if the predictions match reality), the answer is yes.

I wasnt asking that, I was wondering why you used the word "Law" And by doing so you are impling that * The law of supply and demand holds that as supply decreases, prices increase exponentially,* is true for every premises, which it isnt..

 

[russ_watters]

Call me old fashioned but I thought mathematical relationships were always true? For example Pi theorm... Or simple Algebra

Yes, they are. I guess what you are missing is the domain of applicability. A law says if this(1) is true, then this(2) must be true.

I wasnt asking that, I was wondering why you used the word "Law"

Because that's the convention. Do a google search for it and see how often it is referred to as a "law". Heck, Newton's Law of Gravity is known to be wrong, but it is still a law!

And by doing so you are impling that * The law of supply and demand holds that as supply decreases, prices increase exponentially,* is true for every premises, which it isnt.. [emphasis added]

?? You read the exact opposite of what the meaning of "law" is. Why do people always assume I'm trying to pull a fast one on them? Is it because people want me to be wrong, so they assume I didn't mean what I say so that what I meant could be wrong? I meant what I said!

A law is valid for a very limited set of premises - and this happens to be one of them for this law. I knew that when I said it and I meant it!

 

[Art]

A law is valid for a very limited set of premises - and this happens to be one of them for this law. I knew that when I said it and I meant it!

There is a relationship between supply and demand which are married to one another through a complex set of variables (a couple of which I've already mentioned) but the oft quoted rule of supply decrease = price increase is generally false in the long term. Just as in general abnormal profits are unsustainable in the long term.

In this specific case oil prices will not rise exponentially as supplies decrease because at some point they will pass a threshold where other alternatives will become economically viable. At this crossover point even if the total world oil reserves continue to fall prices will also fall to compete with the competing energy formats.

 

[Anttech]

?? You read the exact opposite of what the meaning of "law" is. Why do people always assume I'm trying to pull a fast one on them?

Did you not just state that a mathematical relationship is ALWAYS true? Did You not also stated that a Law is a mathematical relationship?

I mearly followed from what you said that "The law of supply and demand holds that as supply decreases, prices increase exponentially" is a mathematical relationship.. such that it is always true, ie if supply decreases then prices increase expontially.. which as Art has highlighted is not always true...

I guess what you are missing is the domain of applicability

Maybe, but where was it stated?

 

[The Smoking Man]

Hey since we're now discussing mathematical theory vs. law does this get split off into a new thread?

Side Topic for Side Topic for "Great Depression" Thread.

:rofl:

 

[russ_watters]

Did you not just state that a mathematical relationship is ALWAYS true? Did You not also stated that a Law is a mathematical relationship?

Always true under a specific set of circumstances. I guess my not combining those two into one sentence confused you - but they have to go together. To say something is "always true" (which I did not - you did) would be nonsensical. Ie, you can't use the law of supply and demand to explain the behavior of women. ()

Think about my Newtonian Gravity example: Newtonian gravity is known to be wrong, but is still used because it is still useful under certain, specific conditions.

which as Art has highlighted is not always true...

Again, I never said it was always true - and Art is correct. But that doesn't have anything to do with what I've posted so far. If you want to get into it, those deviations from perfect/simple market conditions are why I don't buy the "peak oil" hypothesis. Other forces will intervene to overcome simple supply and demand. The graph on the peak oil page is a smooth bell-curve, reflecting a perfect supply and demand situation. The reality will be somewhat different.

But my first post (2 posts, actually) was not about that. It was about how some people misread the "peak oil" hypothesis to imply that we will "run out" of oil. All I was pointing out was that's not what "peak oil" is about.

Maybe, but where was it[domain of applicability] stated?

It isn't stated. I guess I figured everyone would realize that it had to be there, so there was no need to state it explicitly. I'm not doing a dissertation here. Perhaps the guy who wrote the book included his calculations and assumptions in the book, if you care to read it. I don't see it as being all that important, though.

I think I'm finished with this line of argument though - it is soooooooo trivial. If you want to debate "peak oil" though, I'm all for it.

 

[Mercator]

I think I'm finished with this line of argument though - it is soooooooo trivial. If you want to debate "peak oil" though, I'm all for it.

Not too much to discuss about peak oil, except when it will happen.

 

[The Smoking Man]

Not too much to discuss about peak oil, except when it will happen.

I was hoping that You'd end up here.

Okay, Russ ... Here's the master ... An oil industry professional.

He eats, sleeps and breathes it.

 

[Mercator]

I was hoping that You'd end up here.
Okay, Russ ... Here's the master ... An oil industry professional.
He eats, sleeps and breathes it.

Naah, I just drink it sometimes

 

[The Smoking Man]

Naah, I just drink it sometimes

I think I found your problem then.

You know mineral oil is a laxative?

 

[Mercator]

I think I found your problem then.
You know mineral oil is a laxative?

Anything better than Baijiu!