Oil Worries

A fairly recent interest of mine is in energy issues, particularly the issue of oil. I went through a brief period of obsession about the notion of "Peak Oil" a few weeks ago (see below if you're not familiar with that term). Eventually I calmed down and decided that while things were going to be bad, it would merely (merely!) Second Great Depression bad and not End of Civilization As We Know It bad.

Now, I am not at all sure that I am not thinking this simply due to confirmation bias -- I have a very strong confirmation bias in favor of the idea that things will be okay (as many of us do), and in particular that Civilization Will Endure. So I may well be misreading the evidence. But while I do find the arguments that we will soon hit a peak in world oil production convincing, and the arguments that this will cause severe oil shocks (like 1979 without the quick alleviation) leading to a global depression convincing too, I don't find the arguments that we won't be able (eventually) to pull out of it using alternative fuels (rather then spiraling down out of industrial civilization altogether) convincing. Perhaps in a later post I'll go into the details about why so you can judge for yourselves whether or not I am judging the evidence well (at least within the limits of your own confirmation biases, if any).

But I do worry about Depressions. And this issue is not only tied to Peak Oil; regular old politics, war, terrorism, economics and suchlike can cause it too. And, I fear, probably will soon. There was a war game held in D.C. yesterday in which the players tried to imagine what the U.S. would do in response to a disruption in the oil supply -- a scenario which one of the players described as "absolutely not alarmist [but] realistic". You can read more about the war game in this Washington Post write-up of it, and in this blog post about it. (Update: another news account here.) Scary stuff.

Nor are these the only scenarios out there. Juan Cole suggested just the other day (follow-ups here and here) that withdrawing from Iraq would lead to an oil shock which would in turn lead directly to a Second Great Depression. How this fits in with Peak Oil, and the possibility (probability?) of future oil shocks for other reasons, I don't really know; nor have I yet quite figured out if this changes my mind on my current position on Iraq (withdrawal as soon as is possible; I may lay out my reasoning in a future post). But it's a point of view worth taking into account.

Finally, in the current issue of The Atlantic, James Fallows -- who has written some excellent articles in The Atlantic recently, including quite prescient stuff on Iraq which should give, in my view, his most recent article the benefit of the doubt -- spells out a scenario for a future U.S. economic meltdown in which an oil shock plays a key role (although it's only one factor among many in Fallows's scenario.) Fallows article, alas, is not online; but if you are a print subscriber to The Atlantic you can read it here (the rest of you can read the opening paragraph -- not its best section, however).

Even without Peak Oil, oil shocks are coming soon. If only we had a government that might do something productive to prepare.

(PS: If you're new to the notion of Peak Oil -- e.g. don't have the slightest idea what I mean by that phrase -- there are a number of primers around on the web. A calm, sober, non-hysterical version is spelled out by Kevin Drum here; that's probably the best place to start. Another good primer is here; a particularly brief primer is here; and the more End-of-the-World-as-we-Know-It viewpoint can be found here.)