Wednesday, October 19, 2011

Peak Oil for Economists

A few quick thoughts on Jim Hamilton's new magnum opus.  The paper is essentially a summation of Jim's current thinking on the evidence that peak oil is near enough to care about and that it's likely to be quite economically disruptive.  It is thoroughly researched, superbly argued, and very clearly written, as one would expect from this author.  I hope and expect that it will be quite influential in getting economists to take the whole subject more seriously.

In terms of the content, long-time readers of mine will probably find a limited amount they didn't already know and little to disagree with.  Six years ago, when I first began exploring and blogging about peak oil, Jim and I had some spirited debates on his blog as well as at The Oil Drum (see here for a flavor).  However, I like to think that we are both empirical and pragmatic and six years of additional data have been enough to cause our views to increasingly converge.

The one thing that I think is sad (though perhaps understandable) is that one will search the references in vain for names like Hubbert, Campbell, Laherrere, Hirsch, Hall, etc.  The argument is couched completely without reference to the line of thinkers about peak oil that stretches back over the last fifty years.  Given the enormous walls of incredibility that prevent diffusion of thought between academic disciplines, that is arguably necessary to make a persuasive case to macroeconomists.  However, from the standpoint of giving intellectual credit where it is due, it's unfortunate that it's not possible to recognize that a number of thinkers had earlier come to quite similar conclusions using their own methods (even where one might disagree with aspects of those methods - disagreements one is free to note).


Greg said...

I agree: Jim's work is a very good summary of the debate so far - the debate within the economics discipline, that is. Eventually he'll grind them down!

(I've more-or-less given up on complaining about the hermetic insularity of economists. One just has to accept that to them, if an economist didn't say it, it hasn't been said.)

My one disappointment was that Jim didn't note, alongside the discussion of the effect of emerging economies in the last decade, the increasing effect of exporters' own consumption (in particular Saudi Arabia's). Perhaps he could have pruned a picture of spring-pole drilling to make room for that.

Stuart Staniford said...


He does give a nod to that: "What we do
know is that, for whatever reason, Saudi Arabia produced 600,000 fewer barrels each day in
2010 than it did in 2005, and with growing Saudi consumption of their own oil, the drop in
exports from Saudi Arabia has been even more dramatic."

James said...

I would love to see someone do the math on what oil prices would do if they all of a sudden started to be in line with Hotelling's model.

It is nice to see Stuart and Jim linking to each other (though of course not surprising given their intellectual honesty and mutual respect for the scientific method). If only the rest of the blogosphere behaved the same way. Perhaps it is because Stuart and Jim share a meta-paradigm while others don't.

Fixed Carbon said...

Wow, the Hamilton paper is quite the antidote to Yergin.