Bryan Caplan  

Hydrocarbon Pessimism: Get Your Story Straight

Polygamy Meets Economy... Climate Betting...

A sharp post by David Friedman:

One argument is that we are running out of hydrocarbons and should therefore reduce our use of hydrocarbons, reduce energy consumption and switch to alternative energy sources. The other argument is that we are, by burning hydrocarbons, increasing the amount of CO2 in the air and warming the planet, and we should therefore reduce our use of hydrocarbons, reduce energy consumption, and switch to alternative energy sources.

[I]f Rutledge is right, the two sets of calculations are inconsistent with each other. Nobody who believes one ought to believe the other.

Question for hydrocarbon pessimists: Which of these two stories do you think is right?

Discuss amongst yourselves, we're listening. Anyone got a fancy way to reconcile the stories?

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COMMENTS (20 to date)
ed writes:

Friedman doesn't seem to distinguish between "hydrocarbons" and "petroleum." Nobody denies that we have lots and lots of coal.

Furthermore, we are using up the easy-to-access oil, so the oil we have increasingly takes more energy for extraction and/or processing, further increasing carbon-per-barrel.

So I don't see the contradiction.

dearieme writes:

You don't expect internal consistency from a religion, do you?

mk writes:

I think ed's comment about coal removes the appearance of contradiction.

TGGP writes:

Global warming is right, peak oil is wrong.

Karl Smith writes:

I don't see any deep inconsistency here. First, as pointed out the majority of our hydrocarbons are not oil. I don't see anyone pushing a peak coal theory.

Secondly the concern over peak oil is about potential price shock not that we will actually run out. As most of the peak oil people suggest, we will never run out of oil because when we get to the point that it takes more than a barrel of oil to recover a barrel of oil we will simply leave the rest in the ground.

Now, I find peak oil hard to buy completely for different reasons but it is easy to imagine the following logic:

America is addicted to cheap oil. This has two problems

1) The oil is only nominally cheap. It comes with price at the price of global climate change which will actually cost the world a butt-load.

2) The oil will not even be nominally cheap for long. Eventually, we will have to pay out of the nose for oil.

Therefore, it is in our interest to reduce our reliance on oil. Said another way we should become more elastic in our consumption of oil for energy. Otherwise, we will be in a situation where we are paying a lot for a commodity which is destroying the planet.

Paul Carbone writes:

Minor terminology nitpick, as coal is not in fact a hydrocarbon. Natural Gas(methane) and petroleum are hydrocarbons, and all of the above are fossil fuels.

Running out of petroleum would matter, as it's non-trivially expensive to convert carbon (coal) into crude oil, and ultimately gasoline.

Karl Smith writes:


Thanks for the clarification. Apparently, (from 5 min. research) there is relatively little hydrogen in coal. Burning coal is essentially the transformation of Carbon and Oxygen into CO2 without the production of much water.

lll1 writes:

I really don't see the contradiction. We can't be running out of cheap oil and warming the planet at the same time?

Also, the "environmentalism is a religion" comment is unnecessarily smug. This sort of ad hominem attack is counterproductive.

Arnold Kling writes:

If you follow the links in Bryan's post, you will see that coal is *included* in Rutledge's argument about running out of hydrocarbons. The guy who is making the argument is *not* just talking about oil. He very explicitly includes coal as well. And yes, he *is* pushing a "peak coal" theory.

Now, you can disagree with Rutledge if you like. But making snarky comments that betray an ignorance about what he is saying is not very persuasive.

Matt writes:

They are both right, Brian, if you thought things through.

The amount of fossil cardon stored is at most the maximum carbon that can sustain life in the biosphere, because it came from the biosphere some 150 million years ago.

So, the idea that we both use it up and reach the limit of free supportable carbon, both makes sense and is probably scientific fact.

We all seem to forget that we all evolved with the biosphere, the two go together, so it is no suprise that the amount of carbon available at any given period is the optimum amount, evolution works that way.

Jim T writes:

Overall there is enough conjecture on both sides that the correctness of Rutledge that there will be fewer hydrocarbons to burn shouldn't slow the Global Warming crowd unless he also indicates a path back to the CO2 levels of 1900 (or whatever levels are needed to restore our preferred temperature (whatever THAT is))

The concept of Peak Oil (crude oil) production is not the same as "we are about to run out".

The date or time-span of peaking will be best noted after we have passed it. There are easily a dozen factors affecting production. This makes accurate prediction very difficult. Examples:
1. we are currently seeing much higher Market Pricing
2. Carbon Taxes may appear
3. Environmental or Global Warming discussions may inspire conservation.
4. Technology of usage. Example: New types of lighting such as CFL or LED can drastically reduce (75%) demand for electricity (yes - I know - oil and natural gas produce very small percent of our electricity...)
5. Power Politics - Russia has passed Saudi Arabia as the leading supplier of petroleum. Putin in Russia and Chavez in Venezuela are nationalizing their oil industries and being quite "assertive" on the world stage.
6. Refining is an issue too. The Saudis have more "high sulfur" oil than there is refinery capacity to process it.
7. Extraction methods and poor field management mean a significant portion of oil in some fields may stay in the ground forever or come out very slowly. Perhaps waiting for a new technology or time.
8. Like making ethanol from corn in the USA some oil extraction will need a huge input of energy to become usable. e.g. oil sands and shales.
9. As OPEC used to do, a cartel may try to hold supplies back from the market to drive up costs.

10. As far as the huge need of the USA for imported oil we have some special extra problems.
a. Exporting countries in decline may reduce exports before internal consumption. A country that exports 10% and then experiences a 10% decline may stop exporting all together. Examples: The UK and Norway have peaked and are in decline. A fairly steep decline at the moment. At some point this means these 2 sources may use all they produce internally and thus give nothing into the world trade pool.
b. Indonesia is different. I think they are still growing as a producer but they have become a net importer of petroleum and related products due to high growth of internal consumption. (Note: Thay have subsidized gasoline prices!)

On the Global Warming front:
1. I believe the notion of some sort of warming over the last 100 years
2. I believe the notion of increased levels of CO2.
3. I doubt whether we fully understand causes or consequences.
4. IF CO2 is the major and Key cause I see no plan at all that will solve the problem by reducing the CO2 just a few half-made ideas for reducing the growth rate.

Karl Smith writes:

If you follow the links in Bryan's post, you will see that coal is *included* in Rutledge's argument about running out of hydrocarbons. The guy who is making the argument is *not* just talking about oil. He very explicitly includes coal as well. And yes, he *is* pushing a "peak coal" theory.

You are right. I based my comments on Friedman's explanation without checking the link.

8 writes:

Peak oil/coal ends global warming. If nuclear and other forms of electrical power are favored, global warming will also cause a reduction in the demand for oil and gas used in home heating.

mk writes:

Good point, AK, I missed the original post by Rutledge.

I still have not fully read it, but here are some thoughts that may be relevant:

1) Certainly, a model should make good predictions. If a global emissions model does not account for our knowledge of fossil fuel depletion rates, then it should be revised to do so.

2) Anyone who believes in both "problems" is indeed obligated to have a single, non-contradictory view of the future.

3) Neither "peak coal" nor "global warming" refers to a single, certain future scenario. Both theories can only give us a range (probability distribution) of predictions.

4) Thus, it is not irrational to worry about both problems even if only one could logically happen.

5) Both doomsday scenarios would involve massive externalities. Even if we are not sure if a crisis will actually happen, it is a "probabilistic" externality today (i.e., a risk), which is still an externality. So it still makes sense to tax behavior that increases the risk.

6) Suppose "peak coal" is correct except that it will take 100 more years than we thought to encounter supply shocks. Put this way, we can easily encounter both crises (warming first and then supply shocks).

David Friedman writes:

"You are right. I based my comments on Friedman's explanation without checking the link."

My explanation specified "hydrocarbons." Coal is a hydrocarbon. I referred to "the estimation approach" used for the peak oil calculations, not to the peak oil figures themselves.

Karl Smith writes:

My explanation specified "hydrocarbons." Coal is a hydrocarbon. I referred to "the estimation approach" used for the peak oil calculations, not to the peak oil figures themselves

Didn't mean that as a critique of what you had written but as a confession of lack of due diligence on my part.

mk writes:

OK, having read the Rutledge post, I still stand by what I said. I'm sort of repeating myself, but I haven't heard a strong counterargument, so I think the points stand.

1) People are obligated to provide a non-self-contradictory vision of the future. I will concede, it seems likely some people are in fact not doing this.

2) It is not irrational to worry about two different things even if they could not both happen. Consider that we look both ways before crossing the street even though due to lanes of traffic, the events "hit by car from left" and "hit by car from right" are very strongly anticorrelated.

3) Peak coal and global warming could both happen. Suppose there is 100 years more coal left than we thought. Then we get both problems. Peak coal-ers are surely not constrained to agreeing with Rutledge's calculations.

Manjira Dasgupta writes:

I think the excerpt takes up a number of related issues although the connections could have been made clearer. (Sorry I haven't yet checked the other comments here).

First, the question of hydrocarbon use, which involves two separate issues: a) The issue of non-renewability (i.e., sustainability of resource use pattern), and b) Environmental impact of such usage. “Switching” is expected to address both of these.

The second question is that of reducing total energy use altogether, and the excerpt is not very clear on that aspect. Switching the energy mix in favor of alternatives, and reducing total resource usage volume altogether, are quite different issues.
Deciding factors such as a) cost and associated supply factors, and b) growing energy demand etc. are outside the focus of the (brief) excerpt quoted

Green man writes:

James Hansen has been making a similar argument for a while now (, basically, someone is going to use up all the conventional oil and gas there is anyway, so don't worry about it, it doesn't cause too much global warming anyway. Worry instead about coal and unconventional oil (eg tar sands, oil shale). His argument makes a decent amount of sense. Congress of course, is going down a different path, ignoring coal, but pursuing ways to cut oil use.

Patri Friedman writes:

Someone on my blog pointed out a reconciliation.

We have much less than 100 years of oil, and much more than 100 years of coal. So a model which predicts we are still using oil in 100 years is *underestimating* greenhouse gases (the opposite of what David's poster claimed), because what will actually happen is substituting coal for oil, and coal releases more CO2 per BTU.

So running out of oil actually makes things worse, because we have a dirtier substitute.

Now if the IPCC report is overestimating the total amount of hydrocarbons, counting oil, coal, natural gas, and whatever else we may burn (methane in methane hydrates for example), then the criticism still applies. But over a 100 year timespan, it's the "we're running out of fossil fuels" folk who are wrong.

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