Open Thread #155

If it were possible to drill for oil on land or close to US shores in shallower water, it does not seem likely that oil companies would be drilling in the deep water. That condition is due to an artificial regulatory constraint — which constraint, it should be noted, was not established by Obama although it’s definitely a product of leftism.

Your question asking if BP were “forced” to drill in the Gulf of Mexico sets up a false choice, as if the choice were to drill or not to drill. BP — it’s an energy company — does not have the option not to drill for oil, and more importantly, the United States does not have the option not to drill for oil.

Oil is everything modern. It enables everything we depend on for life. Oil is food, in an almost direct equation. If oil stopped tomorrow 90% of us would be dead in a year. The people who bring it to us, at a cost less than the cost of an equivalent quantity of milk, with such thin margins, aren’t bad guys.

The Ixtoc spill was in Mexican waters, by Pemex, the Mexican oil monopoly. It seems possible that the Mexican state company, 30 years in the past, has a different level of competence from BP and Transocean today. At the very least they’d have no benefit of the last 30 years’ progress in all areas of technology.

we don’t need any hopey-dopey delusion, around 55%-60% of oil is used for fuels

And fuel is used for transport, and to power heavy machinery like tractors and combines and fishing vessels. Without oil, farming — especially American and European farming which produces large food surpluses — and fishing stops. Without American and European farms, and fishing, humanity stops. I wish more people understood this.

I wonder what the substitute is. The whole biofuels delusion is a net energy loss, because it requires oil to harvest and process biomass to turn it into some form of less energy-rich oil substitute. Sorry, but that’s the truth.

Nuclear power is the only thing that offers anything close to the energy in petroleum, but nuke plants are large and quite heavy. Not to mention expensive to build and operate safely. The Navy can do it, sure, with its nearly bottomless pit of money — but how do we power the world’s civilian shipping and fishing fleets?

Solar works only when the sun is shining. Wind only when the wind is blowing gently (too strong a wind, and the blades must be feathered or dismantled for safety). There’s nowhere to store that energy to be used in the off times — like night time. And both of them currently cost several multiples more than oil (ten times more expensive, which means one can only afford 1/10 as much of their output). Solar panels, by the way, require an enormous amount of energy to manufacture as they are semiconductors just like RAM chips, CPUs, and LCD/LED panels. Several economists have estimated that solar, too, is a net energy loser. And I believe them.

The hopey-dopey crowd will argue that mankind was able to go to the sea in ships for thousands of years before oil, using human power (rowers) and the wind (sail). We also used wood and coal for steam engines, I guess, but coal’s off limits and do we really want to cut down all the trees? Does anyone know how large those pre-petroleum era vessels were? Where will the cargo and fish go? You know fish need to be either kept alive in tanks with water refreshed by pumps (thanks, Deadliest Catch), or processed on a factory ship and thrown into freezers. How are those powered? Solar panels?

Sorry, hopey-dopers — your prescription is simply for a lot of us to drop dead. Probably won’t be me, either, at least not at first because I’m smart, well-educated and have some money. I’m going over to Sperwer’s house because I think he’s got a footlocker full of guns and won’t shoot me. Tripling the cost of food means I buy a few less suits and iPods and save less money. Instead, it will be a lot of people in the developing world (i.e., poor brown people) who have just recently slipped the grasp of starvation and misery thanks to the Green Revolution (the real one, Norman Borlaug-style), and the more marginal members of the industrialized world. I’m talking about you, English teachers.

you don’t know jack about farming bro. when productivity is measured in terms of production per acre, or of energy consumed or capital invested, smaller farms have greater productivity. the large, mechanized modern monocultures only come out best when productivity is measured in terms of numbers of people employed.

I’m three generations removed from the farm, thank goodness.

Of course American and European farmers use more energy and capital. They have it. Riddle me this: Do those farms, and the countries in which those farms reside, produce surpluses or do they run deficits? Are those societies net exporters or importers?

So your proposal is that we all become serfs again after the big die-off. Is that right? No thanks.

Even though world soccer “dwarfs all American sports put together,” the worst team in our NFL brings in more money than the best soccer team in the world (look it up). So yeah, we’re probably gonna stick to using our own words for things, thanks.

I don’t think that’s true, and I couldn’t resist the invitation. Presumably you’re talking about Real Madrid, which Deloitte says earned €365 million in its 2007/2008 season.

Forbes says the Minnesota Vikings earned $195 million in 2008, placing them at the bottom of NFL team revenues. That’s not even half Real Madrid’s take.

So Brendon, are you suggesting that oil is The Way, and only way to keep us fed and advancing? And if so, what do you think about the remaining oil reserves? If all the easy oil is gone, doesn’t this spell disaster for the future?

Nope. I believe in Milton Friedman. Free markets and the innovation of natural human creativity will take care of us.

There’s no need for governments to try to “will” things along prematurely before the cost of oil drives investment to alternative energy naturally. We saw a flood of investment in solar back in 2008, chasing both subsidies and the prospect of competing against what they thought would be permanently much more expensive petroleum. The subsidies went away rather abruptly, as well as the expensive oil, because of the financial crisis. But the solar guys will be back. When solar’s price competitive, I’m all for it. Technology is cool.

Now’s not that time. In a way, dumping “government money” on wildly uneconomic things like solar through feed-in tariff manipulation (i.e., by making everyone pay more for energy) means robbing poor people to pay venture capital. I say they’ll gladly pay for it once it makes economic sense. The market will let us know when that is through price signals. Fortunes will be made — just as with oil. Could be real soon now.

There was another guy who wanted government to “will” things into being before their time. His name was Vladimir Lenin. Karl Marx believed that class consciousness and therefore communism would evolve naturally; Lenin thought the masses were asses and needed firm guidance from their betters so as not to make the wrong choices. Lenin was not so great on freedom, and it should not be unreasonable to be suspicious of those who espouse similar philosophy. I’m not a fan.