esotericvoyage.com

Scarcity leads to higher prices.  That’s why there is profit in creating an illusion that the world is short of oil.  We do need to pursue alternative energy sources but we shouldn’t worry about oil shortages.

From the NY Times Op Ed, http://www.nytimes.com/2009/08/25/opinion/25lynch.html

But those are just the latest arguments — for the most part the peak-oil crowd rests its case on three major claims: that the world is discovering only one barrel for every three or four produced; that political instability in oil-producing countries puts us at an unprecedented risk of having the spigots turned off; and that we have already used half of the two trillion barrels of oil that the earth contained.

Let’s take the rate-of-discovery argument first: it is a statement that reflects ignorance of industry terminology. When a new field is found, it is given a size estimate that indicates how much is thought to be recoverable at that point in time. But as years pass, the estimate is almost always revised upward, either because more pockets of oil are found in the field or because new technology makes it possible to extract oil that was previously unreachable. Yet because petroleum geologists don’t report that additional recoverable oil as “newly discovered,” the peak oil advocates tend to ignore it. In truth, the combination of new discoveries and revisions to size estimates of older fields has been keeping pace with production for many years.

…

The latest acorn in the discovery debate is a recent increase in the overall estimated rate at which production is declining in large oil fields. This is assumed to be the result of the “superstraw” technologies that have become dominant over the past decade, which can drain fields faster than ever. True, because quicker extraction causes the fluid pressure in the field to drop rapidly, the wells become less and less productive over time. But this declining return on individual wells doesn’t necessarily mean that whole fields are being cleaned out. As the Saudis have proved in recent years at Ghawar, additional investment — to find new deposits and drill new wells — can keep a field’s overall production from falling.

When their shaky claims on geology are exposed, the peak-oil advocates tend to argue that today’s geopolitical instability needs to be taken into consideration…

In the end, perhaps the most misleading claim of the peak-oil advocates is that the earth was endowed with only 2 trillion barrels of “recoverable” oil. Actually, the consensus among geologists is that there are some 10 trillion barrels out there. A century ago, only 10 percent of it was considered recoverable, but improvements in technology should allow us to recover some 35 percent — another 2.5 trillion barrels — in an economically viable way. And this doesn’t even include such potential sources as tar sands, which in time we may be able to efficiently tap.

From the NY Times article “Turning Around the Idea of Student Loans“:

LAS VEGAS — Over sandwiches and pizza, a group of high school students here debated the pros and cons of combating poverty in five desperate nations. They scrolled through Web sites, analyzed statistics and considered how much they knew about the economy, language and culture of each country.

This was no mere academic exercise. The students, at the Meadows School, have real decisions to make and, they hope, real people to rescue. By the time they scattered after their lunch period, the group had deferred until next month the decision on where to spend the $25,000 they had raised, but seemed to be leaning toward Peru.

That may seem like a lot of money for a student group, but it was the entry fee for the school to become investors in Pro Mujer, a nonprofit lending institution based in New York that issues small loans to poor women in foreign countries to use for buying tools to start or expand small businesses.

In raising the money and investing it with Pro Mujer, the Meadows School is by all accounts the first high school to operate a microbank. “In all the contacts I have had, I’ve never seen a school do this in that particular way, so it’s definitely something extraordinary,” said Brad Hales, assistant director of the Economic Self-Reliance Center at Brigham Young University, widely seen as the academic backbone of the microfinance movement. “At most schools, a club may start and raise a couple of hundred of dollars and the larger microbanks will take their money as a donation, but it’s not enough money to have much say.”

The founder of the Meadows Microcredit Action Group, Justin Blau, 17, and its faculty adviser, Kirk Knutsen, have bigger plans for their endeavor.

Pro Mujer will mete out the $25,000 to recipients in the country the students select and return to the school both regular status reports as well as a modest amount of earned interest. The group plans to use that interest and other money raised locally to invest in smaller, more specific projects through Kiva, another microfinance lender, with no minimum entry requirement.

“We wanted to have a much larger impact and establish ourselves as the first high school microbank so we could make sure that it continues in an ongoing basis and so we could encourage other schools to do it,” said Justin, a senior who recently worked as a Congressional page for Representative Shelley Berkley, Democrat of Nevada. “This is a five-year loan, and that helps ensure a certain amount of longevity for this project.”

Justin said he first became interested in poverty issues while researching a debate team speech on problems in sub-Saharan Africa. His debate teacher, Mr. Knutsen, had recently become intrigued by what he had read on microfinance and its chief theorist, Muhammad Yunus, the Bangladeshi economist who received the 2006 Nobel Peace Prize for promulgating the view that such lending creates work and income.

Because, as Milton Friedman (1912-2006) wrote in an 1928 essay, “Only a crisis, actual or perceived, produces real change. When the crisis occurs the actions that are taken depend on the ideas that are lying around.” (emphasis added)

The New York Times was already re-evaluating Friedman’s legacy in April, 2008 with a short article titled “A Fresh Look at the Apostle of Free Markets“.

The chief object of their scorn was John Maynard Keynes, and his message that government had to juice the economy with spending during times of duress. That notion dominated policy in the years after the Depression. Mr. Friedman would spend much of his career assailing it: He argued that government should simply manage the supply of money — to keep it growing with the economy — then step aside and let the market do its magic.

So firm was his regard for market forces, so deep his disdain for government, that Mr. Friedman once said: “If you put the federal government in charge of the Sahara Desert, in five years there would be a shortage of sand.”

Friedman, in a 1976 essay, claimed “the Great Depression was produced by government mismanagement.”

See also:

My previous post “Blogger Changes A Country” from June 2008.

Wikipedia entry for Milton Friedman.