Bryan Caplan  

OPEC and Global Warming

PRINT
Conceived in Tribalism... Teachers and Stardom...

True or false? "OPEC has done more to reduce global warming than all the world's environmental protection agencies put together." Discuss.


Comments and Sharing





COMMENTS (9 to date)
mgroves writes:

That's begging the question. I don't think it's been adequately proven that global warming is a man-made phenomenon.

Gabriel writes:

True, but it's "has done" not in the intentional sense, but rather "as a consequence of", which is not the same.

In similar fashion we could say that the early inventors involved in the oil industry did more harm than all oil companies combined.

Clearly, there are many other factors, other than the agencies, that influence the quantity of oil burnt. What makes the agencies "special" is that they're supposed to be the political dimension to this.

What you're saying boils down to the fact that non-political factors are still more influential that political ones.

Carl Marks writes:

Not a fair question. The EPA and others have only attempted to deal with global warming for a few (I would guess less than ten) years, while OPEC has been going at it since 1965.

A better question is who has done more in the past 10 years. I would say the French, Danish, and Icelandic governments have done more than all other groups combined since 1996. Terrorist groups would come in 2nd, especially when Nigerian rebels and American soldiers are included in the classification.

Tom Myers writes:

I don't think this can really be a true/false, but we can discuss it as a combination of probabilities and plausibilities. Back in the early 80s, as comp.sci. faculty interested in many kinds of models, I thought the net anthropogenic effect might equally well be cooling or warming; by now I'd say that anthropogenic net warming is overwhelmingly more probable, and that net warming -- anthropogenic or not -- is almost certainly a substantial problem.

And it's likely that OPEC price hikes have done more to restrain oil use than environmental activism has, so you might say my first-order weighting should be towards a "true", even though of course OPEC's primary effect is as a wealth-sink (at least, I don't see OPEC's income as having been effectively re-invested in the OPEC countries or anywhere else. Am I wrong? I'd like to know.)
However, the serious projections of global warming problems are almost all very-long-term projections; my answer to global warming is that I'm too close to singularitarianism to believe that we should worry about the problems of 2100, or even 2050. We (or our grandchildren) will be rich enough to deal with it (using the wealth created by self-reproducing factories descended from today's fablabs, 3D printers, and robotic tech generally; nano is nice, but not necessary).
Given a wealth-oriented framework for addressing the problem, I am pushed back towards saying that I think your conjecture is false: OPEC's first-order function as a wealth sink actually delays our growing ability to deal with global warming, plausibly more than price hikes delay global warming itself. So I would give the environmental groups more credit than OPEC, even though I'd give still more credit to direct investment (profit-seeking or pure research) in new technology.

Well, maybe. That thinking is dependent on the near run being basically okay, and it probably is, but we do have changes to be measured not so much in degrees as in feet of altitude or miles of latitude or weeks of growing season. As my U.Mich bioprof brother put it for the Detroit Free Press a few months back, (google cache for dead link)
"We're in immediate danger of losing deer mice and northern flying squirrels from the Lower Peninsula," he said. "But they'll probably hang on in the UP at least for a while."
The margins for marginal survivors are shifting, which is always bad and good. Still, I think the overall probable answer to your question depends on the rates at which those margins go on shifting, and that we don't know.

Brad Hutchings writes:

I'm first going to recognize the obvious "true" answer which is that by holding the price of crude high, they make cleaner alternatives less unlucrative (though perhaps not yet profitable).

But I am going to argue the "false" side. By jacking up the price of energy through collusion, they force us to spend more on energy and petrochemicals than we would in a freer marketplace. Perhaps 3x or more at current prices and extraction costs. This leaves us poorer and less able to deal with mitigation, invest more in new technologies, etc.

Take the Stern Report's basic number of 1% global GDP required to offset global warming, compare that number to the OPEC premium of $50ish/barrel right now. I bet the oil number is higher.

This might actually suggest joining the Pigou club, but with a platinum membership. If you believe that $70/barrel is a price that the demand side can tolerate long term, then slap a $30/barrel tax on oil and see who breaks first, consumers or OPEC. Or jack it up $1/month over 30 months. Just take the cartel away from them. But then, you have to believe that our government (or the UN is done on worldwide scale) is a better steward of the funds than the members of OPEC. Tough call.

Gary Rogers writes:

I vote "false" because I am not convinced that carbon dioxide and oil use is that much of a factor in global warming.

For true believers, however, the increases in oil prices from OPEC should be a blessing because the only other solution is nuclear energy and that industry has been set back 30 years by the same people who are now preaching global warming.

Trevor In Canada writes:

Once you make a few assumptions (that I may not necessarily agree with) and look at long term cause and effects you end up with a close race.

To make this comparison possible I have made the following assumptions.
1. The world is getting warmer due to anthropogenic global warming and CO2 is the primary driver of this warming.
2. The use of Fossil Fuels since industrialization has increased the amount of CO2 in the atmosphere with the greatest increases coming during the post WW2 growth period.
3. The group of global environmental protection agencies, have been working to stop global warming (I include both government and private groups in this).
4. OPEC controls oil prices through cartel pricing.

Once you make the first two assumptions, then you can look at the reality of the next two.

The environmentalist look at the world through an altruistic viewpoint and most of them genuinely want to improve the world; stop pollution, protect its environment and improve the health of people and the planet. The fringe group that shouts the loudest and protest the most, look at the world as a place which needs to be controlled and forced into the perfect image of Gaia (that has never existed). The radical environmental ideas of the past have become internalized into the vast majority of people in the developed world and have led to the improvements that we have seen in the post WW2 growth period with cleaner cities, better air quality, purer water, and more energy efficient practices employed across the economy.
On the positive side, the environmentalists have been working with government and as private individuals to save virgin old growth forests, reduce consumption, recycle materials, stop pollution, improve water supplies, use smaller vehicles, use more efficient energy sources, save wild lands and wetlands, and stop the hunting of whales.
On the negative side the environmentalists have worked to impose rules and regulations forcing recycling of non valuable resources, blocked power plant and refinery construction, made nuclear power an anathema in North America, prevented dams for power and water supply management, and spread disinformation about the science and the world (If you have ever spoken to a Greenpeace activist or attended one of their presentations, you know what I mean).
The OPEC cartel was most effective from 1973-1985 when world oil prices dropped substantially.
Of the Hydro Electric power plants that came on line during this time many were planned from much earlier and would have occurred in this time frame anyway. Nuclear Plants that were already in construction that were completed in this time frame did reduce our dependence on fossil fuels but the three mile Island disaster in 79 and Chernobyl in 86 caused the environmental movement to force restrictive legislation on the industry that slowed the development of Nuclear power with 97 planned nuclear plants being cancelled.
The Environmentalists have also put restrictions on other power generation due to NIMBY laws and restrictive regulations and permitting. This has increased the cost of electricity resulting in blackouts and brownouts.
Their focus on renewable energy with solar power and wind power the primary goals will also result in net losses.
The energy that it takes to make solar panels is almost as great as the energy that they generate in their lifespan and when you add in the energy cost of safe disposal they are currently a failure (there is still the ability to improve efficiency in these so further research is warranted).
Wind Farms are reported with the peak power that they generate and it is not steady state, in reality you only receive about 30% of the rated power output of the generators due to the wind not always blowing; additionally there is no control over when this power is generated. If wind is a small part of the grid, it can be a net gain, but if it is a large part of the grid you need to have backup power plants (usually coal fired) on standby producing CO2.
In California, the Hydro Electric dams already in place are being fought by environmentalists due to the effects that they have on fish stocks and water ways. Government entities in the US were expressly denied the right to define CO2 as pollution (this may change soon) so they have been focusing their attention on other areas of environmental concern like reducing smog which was primarily NO2, SO2 and Ozone, not CO2.
So the environmental movement has resulted in things looking prettier, cleaner and healthier for people, animals, and plants, but being more expensive and more reliant on fossil fuels than it could be

OPEC is an international organization that in the past and present works together to try and maintain a high price for it’s oil resources on the world market. During the early 70’s this was a huge force in the world with the ability to set prices high above the historical average price. The member countries also had the ability to restrict who would receive the oil that they produced causing the 1973 Oil Crisis in the United States.
This crisis quickly revealed both the dependence on international oil resources and opened up opportunities for greater efficiencies. Government regulations like CAFE and gas rationing, extended the effect of this price increase and resulted in a lower use of oil than would have been expected in this period. This also led to greater use of Coal for Power and the implementation of hydro electric generation and the planning of additional nuclear capacity.
The effects of OPEC price controls are reduced by the fact that many of the world’s oil producers are not OPEC members.
Canada, while not an OPEC member, is the number one exporter of Oil and Gas to the US. Russia is a major supplier of oil and gas to Europe, and domestic oil supplies that were not previously accessible are now routinely used – oil sands, oil shale, offshore reserves.
While oil currently trades at over $70 dollars a barrel, it is between $5 and $10 in 1977 dollars after adjusting for inflation, so the OPEC members are not the 600 pound gorilla in the room any longer. With the Current increase in price coming from world market forces and minimal cartel pricing in effect, the effects of OPEC are over and have been over for almost 20 years.
Since the 80’s when the price controls were dropped and gas line ups disappeared, the use of oil for transportation has increased massively. The crash in the price of oil in 85 as new sources of oil were brought to the market caused a surge in use as cheap fuel was a boon to many industries and individuals.
The 15 year period in which OPEC pricing, Middle East instability and recurring oil crises affected the North American economy were also somewhat mitigated by prices not increasing globally and embargos not enforced in all markets. Europe was not as affected by the embargos as North America with English and French supplies continuing almost uninterrupted. While the American economy was the largest at the time, Europe was also a large contributor to Greenhouse gases.
The increased efficiencies developed in this time frame have also allowed the cost effective implementation of fossil fuel use by many people who would not have been able to do so previously, so while everything runs on less fuel, you have many more devices running.
So OPEC’s short period of Cartel Pricing had a positive effect on greenhouse gas emissions and led to a more efficient world.

When you look at everything together you realize that while OPEC acting within market forces may have resulted in small reduction in CO2 emissions the environmentalists acting through coercion and regulation have had a negative effect over the course of their history, so OPEC is the winner of the Global Warming showdown.

shamus writes:

First determine how many angels can dance on the head of a pin. Once this known, then we may assign blame for global warming.

Ryan Fazio writes:

Trick question: global warming is not real!

Comments for this entry have been closed
Return to top