X-Message-Number: 24349
Subject: Re: A major libertarian figure acknowledges Peak Oil
From: Michael Hartl <>
References: <>
Date: 06 Jul 2004 18:39:29 -0700

I'm cc'ing this to CryoNet since it might be of general interest.

http://www.guardian.co.uk/print/0,3858,4962730-103676,00.html

> His [Jim Rogers'] central argument is that a new bull market has
> started that will match the fireworks seen in the dotcom-fuelled stock
> markets of the late 90s. This time, though, the bull market will be in
> commodities not shares.  Rogers' reasoning is straightforward: raw
> materials are running out. 
> 
> "There has been no great oil discovery in the past 35 years," he
> argues. "The North Sea has peaked. Alaska is in decline. Mexico is in
> decline. All these great oilfields are in decline. To anybody who
> thinks I am lying about this, I would ask: where is the oil going to
> come from? 
> 

Hi Mark,

Thanks for the link to the article about Jim Rogers.  I'm not sure what
Rogers said to give The Guardian the idea that there's a general
shortage in commodities, but that's quite different from the peak oil
claim.  (The notion that we're running out of commodities is highly
dubious; commodities in general are so plentiful that recycling isn't
economical, but instead requires coercion or additional incentives to
make it profitable.)  As I mentioned in my earlier post to CryoNet, I'm
inclined to believe that peak oil production is indeed nearly upon us,
but this isn't major cause for concern -- and, to the extent that it is
cause for concern, free markets are the most effective way to deal with
the situation.  

Indeed, it is precisely speculators like Jim Rogers and George Soros who
will provide the advance warning: by building up supplies ahead of
projected shortages -- sometimes pejoratively called "hoarding" --
speculators bid up the price of a commodity well in advance of the
actual scarcity.  In effect, speculators bring the future to the
present, and allow market forces to act as if the resource were already
scarce.  Speculation is one way that free markets are able to act with
seeming foresight -- a point apparently lost on those urging collective
(i.e., government) action to avert the crisis, on the grounds that we
need more foresight than markets can provide.  It is an unfortunate
irony that those who counsel government intervention in place of free
markets are often among those who condemn speculators most vociferously.

Markets are not panaceas, but they are brilliant at performing their
core duty of economic calculation.  Free markets effectively act like
supercomputers optimized to solve economic problems.  Making the
transition to a post-petroleum world is a brutally difficult problem,
but it's *exactly* the kind of problem that free markets crush into
irrelevance.  I'm not saying that there won't be any bumps along the
way, but I'll bet that forty years hence the doomsday scenarios being
bandied about will look as foolish as the predictions of Malthus or the
Club of Rome.

Michael

-- 
Michael Hartl
http://michaelhartl.org/

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