Home > Economics - General > The Great Oil Fallacy

The Great Oil Fallacy

November 27th, 2012

That’s the headline for a piece I published in The National Interest last week. Opening paras

Among the unchallenged verities of U.S. politics, the most universally accepted is that of the crucial strategic and economic significance of oil, and particularly Middle Eastern oil. On the right, the need for oil is seen as justifying an expanded and assertive military posture, as well as the removal of restrictions on domestic drilling. On the left, U.S. foreign-policy is seen through the prism of “War for Oil,” while the specter of Peak Oil threatens to bring the whole system down in ruins.
The prosaic reality is that oil is a commodity much like any other. As with every major commodity, oil markets have some special features that affect supply, demand and prices. But oil is no more special or critical than coal, gas or metals—let alone food.

This piece expands on my earlier argument that the US has no national interest at stake in the Middle East, just a set of mutually inconsistent sectional interests and policy agendas. I don’t talk about climate change explicitly, but we’ll never have a sensible debate about climate change until oil is demystified.

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  1. Newtownian
    November 27th, 2012 at 17:56 | #1

    Thanks John. I absolutely agree oil is a commodity and ‘Peak Oil’ is problematic. Any reader of history should know its technically possible to manufacture oil from coal, gas, methane hydrates etc. in response to market demand and we hence arent about to run out.

    But oil (and other forms of commodity energy) is still special and different from metals and food in our economy in that it cant be recycled in the normal way we understand this concept. Further:
    1. The prices of many (I’d suggest most if not all) other commodities are ultimately a function of the price of energy – two illustrative examples being nitrogen fertilisers and aluminium which are essentially crystalized energy.
    2. Many commodities are or will become more pricey especially in to extract as the quality of orebodies decreases.
    3. The dream of reuse is possible to a degree but itself will require still more energy inputs.

    Which makes you wonder if we cheered on by progrowth economists are creating a red queens race – running faster and faster just to stand still http://en.wikipedia.org/wiki/Red_Queen%27s_race

    Certainly efficiencies can be made and we have a lot of fat/waste in our system – like big cars and 4WDs. But ultimately energy price sets a minimum for everything else and the trajectory is toward higher costs as entropy plays its part (do economists understand thermodynamics I often wonder ).

    Thus oil/energy still seems special because it has been the (nominally) cheapest energy available for years, we havent found a cheaper alternative and now oil is getting more expensive rather than less impacting on the economy to a degree that may not be counterable. A further worry is the unit price of energy is in effect increasing while we are simultaneously trying to come to terms with the ‘real’ environmental price of both energy and oil. The carbon tax is of course a starting point but it doesnt yet incorporate the costs to future generations.

    Could I ask if you might speak as well to this issue of the cost and availability and impacts of cheap v. increasingly expensive energy?

  2. Geoff Andrews
    November 27th, 2012 at 18:01 | #2

    Before commenting, watch “History of Oil” by Robert Newman (http://www.youtube.com/watch?v=2DCwafIntj0). Be entertained and informed for 45 minutes.

  3. iain
    November 27th, 2012 at 19:09 | #3

    How do you explain sustained oil price increases over the past 10 years (with the exception of the GFC dip) in the face of continual year on year increasing demand, with little compensating supply side increase? (including little in the way of confidence building substitute supply)?

    Is red lining at 84-86 mbpd what economics would predict?

    I guess we just wait and see if economics can always over ride geological limitations. The historical link between oil consumption and GDP growth is pretty conclusive, more so than for “any other commodity”. I guess it may also depend on whether you see energy as the most important factor within a society.

  4. Ikonoclast
    November 27th, 2012 at 20:05 | #4

    I am a bit conflicted on this issue. On the one hand, the claim that oil is just a commodity like any other commodity makes sense in some ways. On the other hand, the idea that other forms of energy can easily substitute for or replace oil without economic shocks or an energy shortage or bottleneck is something that I am dubious about.

    First, I don’t like to regard oil separately from natural gas or coal. They are all fossil fuels and they are all practicably, chemically convertible into each other albeit at an energy cost (except for conversion of the others into coal which would be both tricky and nonsensicle). Thus we should really talk about peak fossil fuels not peak oil. The main reason peak oil is not a problem is because (a) we have not yet hit peak liquids (oil and gas) and (b) we have not yet hit peak coal.

    The real crunch will come when we hit peak fossils. However, if we burn all these fossils our climate is wrecked anyway. If we add methane clathrates to the mix… well, welcome to Venus Mark 2 with surface temperatures of 300 to 500 degrees C.

    Therefore, we have to transition away from ALL fossils before using much more of any of them. I would say we have 25 years to reduce all fossil fuel use to zero globally or the climate is wrecked (6 degrees of warming or more will be built in.)

    So, can anyone demonstrate that economically and energetically we can transition to 100% renewables in 25 years? Second, if it is even possible is it actually probable that globally we will do that?

  5. Chris Warren
    November 27th, 2012 at 23:34 | #5

    It’s time to recognize that in the second decade of the 21st century, oil is just one commodity among many in an economy that is mainly driven by services and information.

    Hmmm … but haven’t we learnt by now, that humanity is better off if it rejects seeing these things as econ-rat “commodities”?.

    In fact an economy is mainly driven by goods, services, debt, degrees of monopoly, information and (nb) politics.

    In our modern era humanity cannot get what it needs through commodity mechanisms. This only suits middle and upper strata.

  6. Mel
    November 28th, 2012 at 00:43 | #6

    Iraq War oil conspiracy theorist, Dan, where are you? Don’t be shy, come set the unbelievers straight …

  7. Ikonoclast
    November 28th, 2012 at 05:30 | #7

    Global CO2 emissions in 2011 have again reached a new record of 34 billion tons. As a comparison, in 1990 the world was just 22.7 billion tonnes of carbon dioxide.

    “If the current trend continues, the global CO2 emissions increase by 2020 by 20 percent to more than 40 billion tonnes of CO2,” – IWR Director Dr. Norbert Allnoch.

    It is peak fossil use that matters not peak oil. This is true both for thermoeconomic issues and climate change issues. It seems to me that just about everybody has their head in the sand on this issue. If we burn all our fossil fuel endowment then global civilization is finished due to catastrophic climate change. If we fail to change over to 100% renewables within a reasonable “survival timeframe window” (probably about 25 years now) we will encounter severe climate change and a likely die-off of about 50% of the world population.

    So the key questions are;

    (1) Can the world economy be moved to 100% renewable energy within 25 years?
    (2) Is it technically feasible?
    (3) Is it economically feasible?
    (4) Is it politically (and geopolitically) feasible?

    At a wild guess I would say the chances of all these conditions being met are about 1 in a 100.

  8. rog
    November 28th, 2012 at 06:32 | #8

    Siegel writes that short term price movements are not consistent with long term trend

    Overall, real (inflation-adjusted) commodity prices have been in a downward trend for more than two centuries. The history of capitalism has been described (by Charles Gave, of GaveKal) as the history of falling real commodity prices.  The latest uptrend, covering roughly a decade, could be the end of the history of capitalism or it could be among the largest of many fluctuations that have occurred within the context of that steady decline without constituting a reversal of it.  If world population growth were accelerating, I might entertain the possibility that falling real prices (although not capitalism itself) are coming to an end.  With population stabilizing almost everywhere, however, the long-term downtrend in real commodity prices, including energy, is likely to continue. 

    http://advisorperspectives.com/newsletters12/48-critique3.php

  9. rog
    November 28th, 2012 at 06:45 | #9

    Evidence that $oil runs counter to all other commodities ie as demand increases $oil increases whereas as with non oil commodities increase demand sees a fall in price. Decreasing demand should see an easing in price.

    http://www.un.org/esa/desa/papers/2012/wp110_2012.pdf

  10. John Quiggin
    November 28th, 2012 at 07:50 | #10

    @Ikonoklast Your assessment is broadly correct, though I’d say we probably have 35 years, which makes quite a big difference. My answers to your questions
    (1) Is a summary of 2-4
    (2) Difficult but feasible with current technology, easy with attainable improvements in grid design, storage, electric vehicle technology
    (3) Yes, and at very modest cost
    (4) Less than 50-50

    So, my odds are much more favorable than yours, but still not very encouraging.

  11. Ikonoclast
    November 28th, 2012 at 08:20 | #11

    @John Quiggin

    Yes, I probably give a 1 in 100 chance on my pessimistic days. I hope I am wrong in doing that.

    The issue of technical feasibility re changeover to renewable energy encompasses several issues.

    1. Will renewable energy give adequate EROEI to run a modern civilisation? Here, I now part with the peak oil doomsters who say no. I say “Yes!” I think it’s pretty clear we can get 10:1 energy return with solar and up to 20:1 with wind. These ratios are still improving.

    2. Can the changeover (say in 35 years) be funded both energetically and economically? The answer economically is yes I think. I have seen numbers from Prof. J.Q., from Zero Emissions Australia and from my own further research and personal back of the envelope calculations that indicate it is quite economically feasible. The energetic funding should be fine too but I suspect that it might depend partly on transferring a considerable portion of remaining “implicit” fossil fuel burning from wastage in private autos to investing that energy in renewable energy infrastructure.

    Don’t forget renewable energy needs a large energy investment up front with delayed energy pay back times of up to 5 years per installation. Still, one wonders how does this compare with up front energy investment pay off times for say coal power stations?

    What I am saying is that a good portion of our remaining fossil fuel use must be used to bootstrap us up into a renewable energy economy. One can imagine that a pure renewable energy path historically speaking (bypassing fossils and nuclear) would have taken a very long time to bootstrap itself up to modern wind turbines and solar energy “farms” if it could have achieved it at all.

    (3.) Fossil fuels give that intense boost to put us over the threshold where large scale renewable is self-sustaining. Let’s hope we don’t continue to squander the “booster fuel” in the wrong way. Never forgetting that we can’t really afford to use all the booster fuel due to climate change danger which is the 3rd issue.

  12. Katz
    November 28th, 2012 at 08:40 | #12

    It’s time to recognize that in the second decade of the 21st century, oil is just one commodity among many in an economy that is mainly driven by services and information.

    Ikonoclast’s observation that we need to stop thinking about peak oil and start thinking about peak fossil is correct.

    Substitutes for oil are rapidly coming on line. Oil is now like many other commodities for which there exist economic substitutes.

    But all those substitutes are carbon-based.

    And the ineluctable fact is that in terms of calorific value to mass fossil fuel is much higher than any other source of energy.

    The lower profile of oil may break the nexus between energy and Middle Eastern geopolitics. However, energy geopolitics will simply generate new arenas of conflict.

    Let us not forget that some years ago a Russian submarine dropped a plaque at the North Pole, claiming it in the name of Russia.

  13. ts
    November 28th, 2012 at 09:15 | #13

    US oil production is set to surpass Saudi Arabia by 2020 and become a net exporter according to the International Energy Agency.

  14. quokka
    November 28th, 2012 at 10:54 | #14

    Katz :
    And the ineluctable fact is that in terms of calorific value to mass fossil fuel is much higher than any other source of energy.

    Not just wrong, but wildly wrong.

  15. November 28th, 2012 at 11:18 | #15

    @ts

    Apart from the many debunkings of the IEA available (eg: ‘theoildrum’), it was “North America” not “US” – ie: Canada = ‘tar sands’ (really bitumen). The IEA is an embarrassment.

    The most important oversight in the IEA report is price. The ‘tight’ oil such as Bakken and Eagle Ford are only economic to produce around $90/barrel. Leaving aside climate change “Game Over”, at a sufficiently high price there is a huge amount of expensive/dirty/difficult ‘oil’ in place.

    I don’t pretend to be an economist but Steve Keen seems to have looked at the question of the relationship between energy and economy (I think this was in ‘businessspectator’):

    “..the proper foundation for a “Theory of Value”.

    Econophysicists are taking us back to that foundation now, with the most well thought out work to date being done by Robert Ayres and his colleagues. Their empirically derived model, which treats energy as the key source of production and labour and capital as adjuncts to the exploitation of free energy, adds energy as an additional independent input to production. They call it an “energy-dependent Cobb–Douglas function”.

    Whereas Solow’s model (which has labour and capital as independent inputs, but not energy) misses over half the actual growth, Ayres’s model’s fit to the observed growth in economic output in the US from 1960-2999 has an R-squared of 0.999.”

  16. Hermit
    November 28th, 2012 at 11:37 | #16

    It should be pointed out that while liquid fuels have narrowly achieved an all time volume peak of 91.3 million barrels per day, we probably passed peak net energy from liquid fuels several years ago. Note the global economic slowdown started around 2008. Production of corn ethanol, tar sands, deep water oil, shale oil produced by fracking and gas-to-liquids each consume a large chunk of the output energy as input. Some of these fuels will be uncompetitive with crude oil less than $80 per barrel.

    When liquid fuels hit an undeniable volume decline it’s hard to see how things could get better. Iraq is getting back to pre-war output but it’s of minor help. The IEA assumes that increased shale oil in the US will coincide with reduced demand. Does that mean recession?

    I also wonder if irrefutable Peak Oil could do more for emissions than all the carbon taxes you can think of. Not only will vehicle miles decline, both business and recreational, but coal digging will get more expensive. Remote coal like Clive and Gina’s new mines requires huge amounts of diesel to excavate and shift to customers.

    Those who think wind and solar can lead us out of this dilemma somehow envisage electric farm tractors and grocery delivery trucks putting food on the table. I don’t see it.

  17. Greg vP
    November 28th, 2012 at 11:46 | #17

    Ikonoclast :
    …If we fail to change over to 100% renewables within a reasonable “survival timeframe window” (probably about 25 years now) we will encounter severe climate change and a likely die-off of about 50% of the world population.

    Do you have a source for this die-off figure, Ikonoclast? I’ve been trying to find some quantified assessments of climate change impacts, but they’re not exactly carpeting the internet’s floor.

    I watched a youtube of a presentation by Kevin Anderson, former director of the Tyndall Centre. He says–and, I see, the World Bank now agrees–we’re on course for 4 degrees of climate change by 2100. (Which is a way-point on the way to 7 degrees ultimately.) There’s no way we can stay under 2 degrees, and it’s unlikely we’ll stay under 3. So as of November 2012, 4 degrees above baseline looks the most likely.

    Anderson is quoted all over the internets as saying that there is a widespread belief that 4 degrees of warming will cause “up to a billion deaths”.

    That sounds horrific, but how bad is it really? A steady-state population of 8 billion, with an average lifespan of 80 years, has 80 million deaths per year. Ah, you say: the important thing is premature death. Well, a billion premature deaths in a century is an average of 10 million a year: about the same as we can expect from ischaemic heart disease, high blood pressure (strokes), and traffic deaths in a population of that size, that is slightly more affluent than we are (globally).

    And the “up to” qualifier is important. Sure, we might get additional premature deaths due to climate change at the rate of 10 million a year initially. But won’t we adapt? Strengthen our buildings and infrastructure, modify farming practices, use and re-use water more efficiently? We don’t need any new technologies to be able to cope with a four degree world, as far as I can tell. Or even a great deal of investment, over and above that which would already occur.

    It seems to me that if there is a population impact from climate change, it will mostly show up in foregone births. But it will be tough disentangling the effect of climate change from those of urbanization and rising affluence.

    Anyway, I hope you can point me in the direction of some accessible quantified research that backs up the general talk of 50% population losses and threats to civilization.

  18. quokka
    November 28th, 2012 at 11:49 | #18

    Megan :
    The most important oversight in the IEA report is price. The ‘tight’ oil such as Bakken and Eagle Ford are only economic to produce around $90/barrel.

    So? ICE oil futures are now trading at $109.8/barrel. There is also the possibility that technological advances will reduce production costs for unconventional oil. The unprecedented current investment in oil and gas exploration and production (over $1 trillion in 2012 alone) suggests that hopes of peak putting the brakes on the climate problem in the next decade look more like wishful thinking than anything else.

  19. Greg vP
    November 28th, 2012 at 11:52 | #19

    @Greg vP
    correction: not 80 million, but 100 million deaths per year, i.e., 10 billion per century.

  20. bill
    November 28th, 2012 at 12:07 | #20

    That Robert Newman ‘History of Oil’ clip is very entertaining – but do yourself a favour: watch the properly formatted, properly uploaded, properly lip-synched version, eh?

  21. November 28th, 2012 at 12:16 | #21

    @quokka

    The $1 trillion looks a lot like the ‘Red Queen’ mentioned above.

    Unfortunately, I don’t share any hopes of peak oil having much impact at all on CC. My guess is that most PO ‘doomers’ also don’t hold that hope. We’re probably going to get a perfect storm of PO/CC/financial collapse all together.

  22. Greg vP
    November 28th, 2012 at 13:26 | #22

    @bill
    Yes, quite funny. I wish I’d waited, although there was a certain quantum of humour in reflecting on the danger posed to Hollywood by amateur videographers…

  23. Ikonoclast
    November 28th, 2012 at 13:37 | #23

    @Greg vP

    I can claim no authority for my 50% die-off figure for 4 degrees C of global warming. However, the consensus seems to be that 6 degrees will be catastrophic with mass extinctions and even the extinction of homo sapiens being canvassed by a number of scientists. Given that, it seems a fair guess to me that if 6 degrees will do just about all of us in then 4 degrees could knock of half of us pretty easily.

    People often envisage gradual changes with climate change; gradual heating, gradual increase in droughts and floods etc. However, a rapid change of even 2 to 4 degrees is quite likely to take the climate past various tipping points and severely destabilise it. Instead of a smooth change there could be a shift to a very chaotic climate state before the climate attains some sort of new equilbrium. The new equilibrium if attained would be far less livable than now but the chaotic transition state before the new equilibrium could be even worse. It’s anyone’s guess how long achaotic transition state could last. It coould be anything from 100 to 1,000 to 10,000 years.

    “The past 10,000 years are anomalous in the history of our planet. This period during which civilization developed, was marked by weather more consistent and equable than any similar time span of the past 100 millennia.” – Wallace Broecker Scientific American Nov 95.

    Thus we are forcing the climate out of this fortuitous holocene climate benignity which enabled civilization to develop. As Broecker implies, our climate once forced out of this phase is likely to become much less consistent and equable.

  24. Greg vP
    November 28th, 2012 at 13:52 | #24

    ts :
    US oil production is set to surpass Saudi Arabia by 2020 and become a net exporter according to the International Energy Agency.

    This idea, if it takes hold in policy circles, may do more for world peace than just about anything else. With luck, the US will scale back its interference in Latin American and Middle Eastern politics…hmm, maybe not.

    (Of course the idea is predicated on the assumption that multiple-reservoir-contact wells employing multi-stage fracking won’t be drilled in Arabia – the technology somehow stops working at the US border. But we’ll just ignore that.)

  25. MG42
    November 28th, 2012 at 14:17 | #25

    ts :
    US oil production is set to surpass Saudi Arabia by 2020 and become a net exporter according to the International Energy Agency.

    When Australia/Norway do well from extractive industries: “LOL. It’s a resources boom. Doesn’t count.”
    When the US does well from extractive industries: “The victory of capitalism over socialism, of hard work over handouts, free markets versus slavery….”

  26. Greg vP
    November 28th, 2012 at 15:15 | #26

    @Ikonoclast
    Thanks for the reply, Ikonoclast.

    The effects of climate change will be disastrous for natural ecosystems. That is, they would have been, if we hadn’t trashed them all already. What we’re doing by burning all that oil and coal so quickly is really just screwing closed the coffin lid a little sooner.

    But as long as we have a modern technological civilization, humans should be able to cope with the effects, with only the same level of damage as that we freely inflict on ourselves–as far as I can tell. And it’s hard to see how we lose that civilization. Remember Adam Smith’s advice: “there is a lot of ruin in a great nation”. In a global civilization there’s even more.

    (Yes, we’ll probably have to abandon some regions, and we’ll certainly have to shift away from the coast, but we can do that easily. We rebuild our infrastructure every thirty to fifty years anyway. The lessons of Sandy vs. New York are being taken. Finally!)

    There are certainly long-run dangers. IMHO, the biggest of these is loss of topsoil due to drying, a general increase in wind speeds, and a great increase in the severity of the worst floods and dust storms. Over time the cumulative effect of increasing the rate of topsoil loss might be very awkward. We’ll need to do something about that.

    Non-linearities in the response to climate forcing are certainly possible, even likely. And they will cause spikes in the death rate. But how big will those spikes be? Surely we can put some bounds on the numbers, but it seems as though no one has tried. When I try four degrees in a back-of-the-envelope exercise, I get excess deaths in the region of 12 million in a bad year (which matches the “up to a billion” quote). I’d like to see what I’m missing and doing wrong, though.

    Non-linearities are possible, but I haven’t come across reports of hyperkinetic chaos showing up in climate models (along the lines of the movie “The Day After Tomorrow”). Yes, the South Asian Monsoon becomes erratic, the intensity of the worst storms and droughts increases, the Amazon becomes savannah, etc., etc. Things change far too fast for ecosystems to adapt. But too fast for machine-wielding humans? That I haven’t heard.

    Things get over-hyped in the media. The Great American Drought of 2012, for instance, has reduced global food supply by no more than five percent; likewise the Great Russian Heatwave and Pakistani Floods of 2010. No more than five percent. (One doesn’t see many counterbalancing reports about this year’s glut of rice in India.)

    We can easily cope (and we will cope) with much worse than five percent losses, simply by bringing Asia up to European and Australian levels of productivity and water efficiency, and building multi-year grain storage. And Africa is more or less untapped in terms of harvest potential – from a cursory look, it should be possible to increase harvests there ten-fold with only minor investment, certainly less than $1 trillion. We can diversify our “growing region portfolio”, and make the existing investments more resilient.

    It’s hard to see how we starve, or die of heat or dehydration or disease, or die of drowning, or from lack of energy, or from resource exhaustion (with the noted exception of topsoil), in civilization-threatening numbers. What’s left? Only self-inflicted wounds (i.e. war–bringing us back to oil, the stupidest ‘reason’ for war), or loss of the desire to reproduce.

  27. November 28th, 2012 at 15:38 | #27

    “…with the noted exception of topsoil…”

    Great! If the productive capacity of the world’s arable lands declines by, say, 50% due to this one alone – we’re looking pretty dicey. I think the idea is not that we all simultaneously drown or fry or starve etc.., but rather that lots of increasingly bad (different) types of things happen more frequently.

    Floods wipe out homes and crops in one place, fires and droughts wipe out homes and crops in another place, disease vectors grow all over the place, fish stocks plummet etc.. with sufficient magnitude to cause big problems, including a lot more deaths than normal.

  28. Ikonoclast
    November 28th, 2012 at 16:04 | #28

    I guess we are just speculating really. However, I see global food and fresh water shortages as the biggest looming problem.

  29. Ikonoclast
    November 28th, 2012 at 16:14 | #29

    There are so many compounding dangers one does not know where to start in listing them.

    http://www.abc.net.au/news/2012-11-28/un-warns-permafrost-is-melting/4396340

  30. ts
    November 28th, 2012 at 16:18 | #30

    Megan :@ts
    Apart from the many debunkings of the IEA available (eg: ‘theoildrum’), it was “North America” not “US” – ie: Canada = ‘tar sands’ (really bitumen). The IEA is an embarrassment.

    I haven’t read the actual report as it appears to cost EUR120 to purchase, however you appear to be very confident you are correct so I assume you have?

    The article I quote below (emphasis mine) from Bloomberg is incorrect?

    The U.S. will pump 11.1 million barrels of oil a day in 2020 and 10.9 million in 2025, the IEA said. Those figures are 500,000 barrels a day and 100,000 barrels a day higher, respectively, than its forecasts for Saudi Arabia for those years. The desert kingdom is due to become the biggest producer again by 2030, pumping 11.4 million barrels a day versus 10.2 million in the U.S.

  31. John Quiggin
    November 28th, 2012 at 19:59 | #31

    Those who think wind and solar can lead us out of this dilemma somehow envisage electric farm tractors and grocery delivery trucks putting food on the table. I don’t see it.

    Let me Google that for you

    http://www.smithsonianmag.com/science-nature/Forget-the-Volt-Make-Way-for-Electric-Trucks-169807746.html

    http://www.toledoblade.com/Energy/2009/12/09/Farm-tractors-go-electric.html

    Generally speaking, I’d suggest avoiding argument from incredulity

    http://rationalwiki.org/wiki/Argument_from_incredulity

  32. November 28th, 2012 at 20:30 | #32

    “The article I quote below (emphasis mine) from Bloomberg is incorrect?”

    Yes.

    The media is also an embarrassment.

    Almost all those millions of extra daily barrels of “US” oil come from Canada.

  33. quokka
    November 28th, 2012 at 20:52 | #33

    @John Quiggin

    I’m not sure what dilemma you are referring to, but if it’s a question of fuels for ICE propelled heavy transport or agricultural machinery, I can’t see why CNG could not substitute relatively painlessly for petrol or diesel. There may be some reduction in CO2 emissions and improved engine life.

    It doesn’t materially affect the issue of emissions, but it does address “peak oil” which in any case may not be upon us for some time yet.

  34. November 28th, 2012 at 21:49 | #34

    Speaking of the state of our media, how many people in the West know that Russia is the world’s largest producer of oil? They out-produce KSA.

    When you look at all the rubbish in the media and from IEA and CERA etc.. you’d be forgiven for thinking that all “our” ‘oil’ comes from Saudi Arabia.

    In October 2012 Russia produced 10.46 million barrels a day of crude oil. Not “unconventional” oil, but the real thing. That should help put the IEA story into perspective.

    Also, the USA gets most of its oil from non-middle eastern countries as it is. The meme of “middle east + oil + war” is, literally, part of the whole US military industrial complex Eisenhower warned about.

    If you stood at Niagara Falls for 8 hours straight and watched the volume of water going over you would see the rough equivalent (in volume) of the oil that the world burns through every single day.

    Finite, non-renewable, complex hydrocarbons – every day.

  35. November 28th, 2012 at 23:55 | #35

    PS: And as an added bonus! About 98% of the 270 million ‘barrels’ of water going over Niagara Falls every day are melt-water from the last ice age – rather than natural rainfall or seasonal melting snow.

  36. BilB
    November 29th, 2012 at 04:27 | #36

    Further to #21,

    Saab, the truck division, before being bought by the Chinese were developing a 9 litre E100 engine. This ethanol fuelled engine was to power trucks, busses, tractors, and farm machinery. When an engine is built to take full advantage of ethanol’s high octane rating it is as efficient as standard diesel engines.

    Now no one is saying that there is enough ethanol production capacity in the world to do a mono fuel conversion to ethanol from petrol and diesel, whereas the deniers use this argument to attemt to say that bio fuels are a waste of resources as they cannot be a monofuel solution. But ethanol, along with bio diesel, bio mass, solar wind tide wave and geothermal electricity forms part of the renewable energy fuel mosaic that will be our children’s energy future. And that is a future really to live for.

    I think that the full transition to renewable energy will take 60 years, but the bulk of the transition can be achieved in 35 years, less if there was a determined global effort to achieve the transition. Fossil fuels will be being used still in 200 years, but only in the most extreme or remote places.

    One thing that is finally being appreciated universally is that solar energy is not only distributed energy generation (conversion), it is also distributed investment. In other words the process of conversion to renewable energy will be bourne by every one individually, and each person/household will get the benefits of that investment directly. And that direct return translates into an increase in each person’s standard of living when compared to the present and the near future fossil fuel (including nuclear) energy situation.

    But what amazes me about this is that I am yet to see any economist take this understanding and rethink future economic outcomes based on this future reality. Distributed electricity generation where it provides all of family electricity consumption, water heating, airconditioning, and the powering of the family vehicles, will by 2020 amount to a 20% improvement in the standard of living, not to mention quality of living. Furthermore it also amounts to economic growth without resource consumption once the renewables energy transition has been completed.

    Quite some years ago I was negative to the view that the market was the solution to the fossil fuel dilema. But with the knowledge that I now hold of how the future will shape up I see that, whereas the market is hopelessly inefficient as a strategioc performer, once pointed in the right direction the market is very efficient at driving a transition from older to newer technologies. One only has to look at the impact of the iPhone concept along with all of its downstream consequences to see that this is true. The iPone was impossible until a number of key technologies were developed, but once those technology elements became a reality along with the correct degree of creative thinking, the iPone solution was inevitable. It took nearly 20 years from the first attempts by apple to pull off the hand held computer solution ( I know this because I spent a lot of money on their very first releases) but persistence prevailed and the market did the rest.

    The very same path is certain for renewable energies. At the moment there is a tsunami of technological change heading our way. Once sufficient solutions (solar conversion compounding, batteries technologies, control systems, smart transmission systems, etc) have stabilised into an economically manufacturable amalgamation, rapid transition will begin. In preparation for that change the Carbon Pricing device is setting the stage by raising the market cost of BAU competitive energy solutions, bringing the forward the transition commencement time. Once the conversion to renewables is well under way the Carbon Price will no longer be necessary as the economics of the distributed energy model far exceed that of BAU the fossil fuel model.

  37. rog
    November 29th, 2012 at 04:35 | #37

    This says it all, imagine Syd/Mel with two driver reviver stops and $0 fuel cost.

    http://www.businessweek.com/articles/2012-09-25/tesla-fires-up-solar-powered-charging-stations

  38. BilB
    November 29th, 2012 at 04:51 | #38

    And here is a little further reading, courtesy of The Oil Drum links, that seems to be relevent (haven’t read it yet)….

    http://www.peakprosperity.com/blog/80037/new-future-energy-policy

  39. Greg vP
    November 29th, 2012 at 05:24 | #39

    BilB :
    One thing that is finally being appreciated universally is that solar energy is not only distributed energy generation (conversion), it is also distributed investment. In other words the process of conversion to renewable energy will be bourne by every one individually, and each person/household will get the benefits of that investment directly. And that direct return translates into an increase in each person’s standard of living when compared to the present and the near future fossil fuel (including nuclear) energy situation.
    But what amazes me about this is that I am yet to see any economist take this understanding and rethink future economic outcomes based on this future reality. Distributed electricity generation where it provides all of family electricity consumption, water heating, airconditioning, and the powering of the family vehicles, will by 2020 amount to a 20% improvement in the standard of living, not to mention quality of living. Furthermore it also amounts to economic growth without resource consumption once the renewables energy transition has been completed.

    On the contrary, Bilb, economists have thought about this, at least cursorily, and the picture is not so rosy. There are a few drawbacks.

    First, the payback period is several years. If a household invests in solar in its current house, it is “trapped” in that house until the investment has paid off, unless the remainder of the investment can be capitalised when the owners sell. But as things are, even when there is a premium, the buyers discount the value of the system because they don’t know what it does or what condition it is in.

    Economists tend to be fans of the idea of people being able to go where the jobs are, when the jobs are there. So they don’t like things that pin people in place.

    More importantly, investment is a function of income and follows a Pareto-type distribution. Most households do very little investment; the bulk of it is done by a minority of mainly older households. It’s not very reasonable to say that young adults with low incomes and young (expensive!) children should have to make a lump-sum investment in solar on top of everything else they need.

    Distributed power generation sounds attractive–power to the people, and all that–but it turns out that centralised generation with distribution almost always works out cheaper (large investors borrow more cheaply), as well as being better maintained and therefore more reliable (as seen by individual households). And there are the benefits of cost smoothing and pay-as-you-go. The costs of repairs and maintenance are shared as a continual small charge, rather than being a bolt from the blue when a tree falls on your PV system, or you have to replace $10k of batteries all at once.

    The effect of promoting and subsidising household-level distributed solar has been to take the tax money of poor people and give it to relatively affluent people. But hey, that’s just consistent with the drift of policy over the last three decades…

  40. rog
    November 29th, 2012 at 05:33 | #40

    According to Tesla the rapid charging stations will be powered by solar, which will neuter the argument that they are swapping oil for coal as primary energy source.

    http://www.technewsworld.com/story/76251.html

  41. Hermit
    November 29th, 2012 at 05:51 | #41

    According to Peak Oil Australia in 2011 we produced just 36% of the oil output of year 2000. That is a dramatic decline exposing us to billions more in escalating import costs. Some suggest heavy vehicles switch to compressed or liquefied natural gas CNG or LNG. However a rapid shift to gas as a transport fuel could cause a price shock to the current industrial customers for gas. Suppose the diesel rebate was fully withdrawn and truckers had to pay say $1.40 per litre of diesel. That’s for 35 MJ of energy which is 4c per MJ or $40 per GJ. Industrial gas is about $5 per GJ.

    There’s still the question of excise, costs of compression or liquefaction and engine conversion. The point remains that the transport industry is prepared to pay a number of times the unit price for energy that the stationary sector is. The resulting price shock (at least double you’d think) from transport demand could be too steep for power stations, food processors, households and other non-transport gas users.

    There’s been some talk of a national domestic reservation policy for gas like the 15% in WA. Perhaps we’ll need two interventions
    1) setting aside some gas from export
    2) setting aside some non-export gas from transport.
    In other words keeping the gas price artificially low for some users.

  42. Newtownian
    November 29th, 2012 at 06:03 | #42

    @Greg vP

    “Distributed power generation sounds attractive–power to the people, and all that–but it turns out that centralised generation with distribution almost always works out cheaper (large investors borrow more cheaply), as well as being better maintained and therefore more reliable (as seen by individual households). And there are the benefits of cost smoothing and pay-as-you-go. ”

    Technically true but there are a couple of complications here. The first is the price gouging by the distribution companies like the 46 c kWh peak in NSW v. generating cost around 6 to 8 kWh. This is making home generation and storage increasingly attractive with oncoming price hikes. The fun time will be around 2016 when the subsidies are removed.

    Another important issue if personal preference/perception. An illustrative albiet slightly different example is rainwater tanks which dont make much sense in terms of conventional economic analysis (at least before recent price hikes to pay for desalination). But there was still a lot of interest and uptake probably because of the personal satisfaction gained. Maybe this says there is more to people’s personal selection of energy source than price alone.

    Conversely there is the solar thermal hot water situation – very cheap energy – but which has quite low uptake still. My point here is that response to commodity availability isnt fully rational in both directions.

  43. Greg vP
    November 29th, 2012 at 06:16 | #43

    Ikonoclast :
    I guess we are just speculating really. However, I see global food and fresh water shortages as the biggest looming problem.

    I used to think so too, Ikonoclast. I recommend reading Kay McDonald’s blog “Big Picture Agriculture” for a while, and reviewing the Wikipedia articles for Maize, Rice, and Wheat–especially the “heat maps” of production and the discussion of yields in Asia versus those in Europe and the USA. There is so much unused potential in food production, it’s ridiculous.

    We could triple food production and shrink the area of land used, without any GE nonsense, through a sub-trillion investment in farmer education, banking regulation and anti-corruption measures (so farmers can borrow to invest, and keep the benefits of investment), eliminating regulations prescribing what farmers are to grow and the price they sell at, and (finally) irrigation and transport improvements. Don’t listen to the hype about “food crisis” and “must have GE now now now”: it’s rubbish. All we need is what worked in England and Australia.

    Food production and distribution are seriously inefficient, so there’s plenty of “buffer” against the effects of climate change. Why are they so bad? Because of politics. There are a lot of things wrong, but I’ll just give you the top problem.

    If you’re worried about food security, persuade the EU to get rid of its farm subsidies. As well as distributing food production more widely across the globe, that would help the poorest people in the poorest countries to start to make a living–two virtues for the price of one. No, wait, it’s three: the subsidies come out of taxes, so this is another case of money being taken from (relatively) poor people and given to rich landowners and large corporations. Stopping that would be good.

    Water security is also a function of income. If a farmer has a decent income, she can invest in rainwater detention and piped irrigation. She can also hire others to work on her farm, so they can then afford clean water to drink. (Life is different in poor countries.) A country whose citizens have higher incomes can build more effective water cleaning and management systems (pace JQ and the Murray-Darling mess).

    Once again, the EU’s and the USA’s farm subsidies are the biggest evils here. The world got rid of CFCs in the Montreal Protocol. Can it get rid of the EU’s Agricultural Policy?

  44. John Quiggin
    November 29th, 2012 at 06:17 | #44

    billions more in escalating import costs

    Well yes, but since the Australian economy produces a billion dollars every four hours, you need a lot of billions before you have a noticeable impact on anything. Putting some actual numbers down, Aust imported $15 billion worth of oil in 2010
    http://www.indexmundi.com/australia/oil_imports.html
    and exported $10 billion
    http://www.indexmundi.com/australia/oil_exports.html

    The gap of $5 billion is about 0.3 per cent of national income.

  45. Ikonoclast
    November 29th, 2012 at 06:55 | #45

    On the original topic, Prof. J.Q. is certainly correct to say, “So, if the multi-trillion dollar Iraq war really was a “war for oil,” it was exceptionally ill-advised.”

    Economically it makes no sense to prosecute a $3 Trillion war to secure Iraqi oil imports… which oil could have been purchased from Iraq or elsewhere by open trade in any case. $3 Trillion would have purchased a lot of renewable energy transition.

  46. Newtownian
    November 29th, 2012 at 07:00 | #46

    @rog

    “This says it all, imagine Syd/Mel with two driver reviver stops and $0 fuel cost.

    http://www.businessweek.com/articles/2012-09-25/tesla-fires-up-solar-powered-charging-stations

    This looks more like moonshine than sunshine.

    Cynicism aside it doesnt consider the bigger exergy and emergy issues http://en.wikipedia.org/wiki/Emergy http://en.wikipedia.org/wiki/Exergy which dont seem to be getting recognition here by name even though much of the discussion is implicitly about environmental economics and these concept.

    What I have been hoping to see is something along the lines of this extreme but illustrative analysis Bardi, U., 2010. Extracting Minerals from Seawater: An Energy Analysis. Sustainability 2, 980-992. (open access journal) whose bottom line is it takes more energy to extract uranium from seawater than you would ever get out. – an excellent example of the Red Queens Race.

    Or this more nuanced assessment Steen, B., Borg, G., 2002. An estimation of the cost of sustainable production of metal concentrates from the earth’s crust. Ecological Economics 42, 401-413. which starts to quantify the horrific impacts of Herman Kahn’s proposal for mining bedrock in search of commodities – which we currently avoid by virtue of high grade ores and cheap energy especially oil still being available.

  47. Greg vP
    November 29th, 2012 at 07:02 | #47

    @Newtownian
    Complications: agreed. Notice how they arise from forcing the market model onto a situation where it doesn’t really fit.

    Preferences/rationality: I have no problem with choice, but I do object when governments force poor people to pay to enable richer people to indulge their whims.

  48. BilB
    November 29th, 2012 at 07:05 | #48

    GregVP #39,

    Greg, your comment is riddled with false assumptions.

    The assumption that a person who has fitted solar to a house and then decides to relocate is trapped in their present house is false because a) the person can move and take the loss along with all of the other losses that one incurs in the course of moving. b) You make the assumption that there are no houses on the market with solar fitted in the location to which the person is moving. This is almost certainly false for a number of reasons not the least of which is that solar is more common in houses of a certain price range and/or servicing income level, so equivalence is more probable than not.

    The assumption that solar is unaffordable and will continue to be indefinitely is false because a) solar system costs are declining steadily while their efficiency is increasing with better technology in all of panels, inverters, and storage. b) As fossil based energy costs rise the investment times reduce because the cost of a system is ultimately paid from the ….offset costs….. ie the savings made through having the system When wall charged electri vehicles are included in this package then those offset costs take in the family’s petrol bill. This feature loops back to demonstrate that people are not trapped in their house as the cost of the system represents a zero extra outlay. In fact many installations represent a line item on the consumers electricity bill which for those lucky enough to be on the FIT gravy train is often zero for the whole bill.

    Trees falling on rooves, destroying a complete solar array in the process?? Please. Have you got any probability figures on that? A very very small part of 1% is most likely.

    Big investors borrow more effectively? You’re over looking the fact that the benefit to the “big investor” is a function of their yield (selling price less costs) 6 cents per unit less costs. The benefit to the householder is a function of their buying price 25 cents per unit less finance servicing costs.

    In my assessment of distributed solar I assume absolutely no government involvement at all. ie no “tax money of poor people and give it to relatively affluent people”, at all. The upcoming distributed solar energy systems will be fully viable on the offset costs alone, and have repayment times under 6 years in most cases. Furthermore they will have indefinite life spans with only minor periodic maintenance.

    If you are one of the economists that has given this subject “cursory attention” then I suggest that you do the work again as I do not see that you understand the economic model at all.

  49. Greg vP
    November 29th, 2012 at 08:18 | #49

    @BilB
    Bilb, it doesn’t matter whether the assumption is true or false.

    The Sunk Cost Fallacy is a fallacy, but it affects people’s behaviour anyway. When house prices fall, some houses are withdrawn from the market. When asked why, the owners say that they will wait until they can make their money back. No-one has suggested they’re lying about their motivation. The same behaviour is observed for other sunk costs: people wait until they make at least a nominal profit.

    People are more rational when it comes to benefits: they won’t pay for them if they don’t believe the claims made for them. Even if two houses have PV, a family moving from one to the other will be dubious of claims about the health of the batteries and the performance of the system in the second house: after all, they don’t know how well the sellers looked after the system.

    In your model, PV systems are miraculously reliable machines and everyone knows this. In reality, they’re not and they don’t. The systems have major ongoing costs, and accidents do happen to them. It is easy to insure the capital cost of a PV system, but not so easy to insure the cost of negotiating for its replacement and the time spent without its services. And there are other risks; among them, the fire hazard from a twenty-year-old PV system, installed by an average installer in an average suburban house and having received average inattention, is presently unknown. People are rightly chary of claims made about PV.

    Meanwhile, distributed PV drives up overhead costs for distribution and per-unit generation costs, so poor people pay anyway.

    (Off topic: I like PV. I wish these problems did not exist. But the invisible pink unicorn hasn’t answered my prayers.)

    The appropriate investor for natural monopolies is a government. Properly run governments look for a social return on investment, not so much a financial one. (This view is unfashionable these days, I freely admit.)

    If we must have private investment, I don’t see why households should not share some of the benefit they derive from a safe, reliable electricity service. Trying to keep the whole pie means someone is going to go hungry.

  50. Ikonoclast
    November 29th, 2012 at 08:44 | #50

    @Greg vP

    “It is easy to insure the capital cost of a PV system, but not so easy to insure the cost of negotiating for its replacement and the time spent without its services.”

    It certainly is easy to insure a PV system. When I asked my house insurer they said. “Is it (the system) bolted onto the house?” I said, “Yes of course.” Reply was, “Then it’s covered by your existing policy. Just reveiw your total insured value and ensure you are satisfied with that.”

    As for storm damage, a storm which extensively damages solar panels or associated equipment is, in most cases, going to cause other extensive damage to the house. In that case it’s a general claim and no more onerous to make as a claim just because solar equipment is involved.

    As for moving, the only real loss is the loss of the solar subsidy IF your selling price and buying price are both for houses with equivalent systems and both are similarly discounted in the market with respect to the attached solar systems. Moving houses entails all sorts of costs and benefits. People weigh up these costs and benefits as best they can. People are certainly not totally rational, perfect calculating agents who can fully assess all economic utility to the nth degree. There are too many uncertainties and too many problems of complex, combinatorial mathematics for that to happen. Not to mention emotive factors… oops, I mentioned it.

  51. ts
    November 29th, 2012 at 08:53 | #51

    Megan :“The article I quote below (emphasis mine) from Bloomberg is incorrect?”
    Yes.
    The media is also an embarrassment.
    Almost all those millions of extra daily barrels of “US” oil come from Canada.

    If it’s not overly strenuous for you, do you mind providing a source?

    That’s generally what normal people do when refuting a statement someone else has made backed up by a source. Simply calling my source an embaressment doesn’t provide any evidence whatsoever for your claim.

    To be clear, I’m not suggesting you are wrong – just that your flippant dismissal of my source is pretty juvenile. Bloomberg isn’t exactly a peer reviewed journal, but neither is it news.com.au. I’m always happy to be proven wrong and change my opinions accordingly when the evidence is presented.

  52. BilB
    November 29th, 2012 at 09:12 | #52

    GregV,

    I think you are wrong in saying that the “sunk cost loss” applies to solar panels on rooves. It applies to swimming pools because not every one wants them and they are a cost to maintain. Solar panels on the other hand are a positive as they reduce the operating costs of the property or residence. So I think that you are making that up and have no proof that a solar system on a house does not add to its value. I would accept that it does not appreciate the propery’s value proportional to the full capital cost, but that it adds no value I do not accept.

    All of the negatives that you attribute to solar PV, an incredibly pesimistic list, also apply to Automobiles, and people happily buy those devices new and second hand.

    Electricity prices lept up due to the monumental greed of the grid energy operators, not because of solar PV. You are trying to have your negative cake and eat it too. One minute you claim that a person selling a house with PV cannot reasonably expect to find a property to buy that has a similar system, while also having PV the exclusive domain of the rich out of reach of poor people, then just a post or two later you declare that there are so many PV systems that they are distorting the market price of electricity.

    There is a huge plausibility gap in your arguments, Greg.

  53. Dan
    November 29th, 2012 at 12:29 | #53

    @iain

    You might want to have a look at this for an explanation of the oil price bubble:

    http://www.rollingstone.com/politics/blogs/taibblog/wikileaks-cables-show-speculators-behind-oil-bubble-20110526

  54. Dan
    November 29th, 2012 at 12:34 | #54

    @Mel

    I really don’t know why you continue to flog this, but for the record, I can see no other realpolitik reason for the US to invade Iraq. That’s not a conspiracy, that’s deduction. I’d add that it was, without doubt, a miscalculation.

    Given how astonishingly incoherent other explanations are (WMDs? democracy?), I really don’t understand why you continue to gnaw at this entirely tired topic.

    I also note that you supported that war in the first place, while I opposed it strongly at the outset. Readers can make up their own minds about who has the better judgment.

  55. Mel
    November 29th, 2012 at 14:22 | #55

    @Dan

    Why? Read PrQ’s article. Even better read some intelligent analysis by respected historians.

    Here is the Brookings Iraq Index. The situation in Iraq, while still none too flash, has vastly improved in recent times in respect of civilian deaths and the economy. Indeed, monthly deaths are now way below the death rate attributable to Saddam Hussein’s regime.

    No-one apart from Dan, George Galloway, some nutters from the Pilger-left and Saddam’s old cronies think the old days were better.

  56. Mel
    November 29th, 2012 at 14:23 | #56
  57. Dan
    November 29th, 2012 at 14:28 | #57

    iirc, ProfQ said if it was oil-related, it was a miscalculation.

    I’ve already agreed with that at #4, just above.

    Unless you have a more convincing explanation for war than either the ludicrous official line, or my view, I propose that there’s no point continuing the conversation.

  58. Dan
    November 29th, 2012 at 14:32 | #58

    Incidentally, can you direct me specifically to information backing up your ‘way below’ claim? I would like for you to be right, I have absolutely no issue with the contention that Saddam’s regime was awful. All of the time series I’m glancing at here go from 2003, ie. from the outset of the war.

  59. Katz
    November 29th, 2012 at 16:50 | #59

    Mel:

    No-one apart from Dan, George Galloway, some nutters from the Pilger-left and Saddam’s old cronies think the old days were better.

    Of course, supporters of the Shiite theocrats that the US left in charge of Iraq would agree with Mel.

    Whether the US geopoliticians left to cope with the mess left by Bush Jr would agree with them is another question:

    WASHINGTON — Iran has resumed shipping military equipment to Syria over Iraqi airspace in a new effort to bolster the embattled government of President Bashar al-Assad of Syria, according to senior American officials.

    http://www.nytimes.com/2012/09/05/world/middleeast/iran-supplying-syrian-military-via-iraq-airspace.html?pagewanted=all&_r=1&

    Was an Iranian corridor to the heart of the Middle East a policy priority of the Bush regime?

  60. Fran Barlow
    November 29th, 2012 at 18:59 | #60

    I don’t regard oil as irrelevant to the Iraq escalation in 2003. I’m just not persuaded that it was a decisive factor in motivating the assault in 2003. I regard it as much more likely that ‘wag the dog’ factors were key, and the oil was merely something that would serve as a distraction from that reality that this was domestic politicking. How does Iraq get to be a vital interest of the US but for the oil? Oil eas an enabler of a policy that the Bush administration (correctly) thought politically useful. That much quoted “reality-based community” jibe attributed to Rove really was about that.

    It was a huge boondoggle (to borrow an Americanism) in which massive amounts of payola would go to groups of stakeholders in the defence industries, logistics, oil etc but which because it was for the war effort, would go under scrutinised. Of course, the Bush regime gets to play tough guy, and kick butt in the middle east and be on the same side as the Israelis. From a misanthropic and parochial point of view, what’s not to like about that?

    Bush helps out his backers and gets good PR. Murdoch starts to talk about $20 oil. Americans like the sound of that.

    So oil isn’t irrelevant, but it’s not the huge deal it’s made out to be. It’s always cheaper to just buy the stuff.

  61. Mel
    November 29th, 2012 at 19:05 | #61

    PrQ caught in mod, ta.

  62. Mel
    November 29th, 2012 at 20:35 | #62

    Dan: Dexter Filkins, author of the “Forever War” and various other put Hussein attributable deaths in the order of 2 million. Saddam was in power for 24 years hence the monthly death is:
    2,000,000/ (24*12) = 6,944 per month. This is significantly above the current figure, which is trending down.

    Katz, the US left a democratic Iraq that, much to my surprise, has outlived the CoW departure.
    The other point worth making is that the Hussein regime, like all dictatorships, would have eventually fallen even without the CoW invasion and this would have inevitably caused a murderous Sunni Arab/Kurd/Shi Arab/Other minority shit fight much like what we saw after the CoW invasion.

    Given democracy is holding and the death toll has plummeted to well below Saddam era levels and continues to trend down, the CoW invasion must be deemed a stunning success, at least from a consequentialist perspective.

    I won’t comment further on Dan’s infantile oil war conspir@cy theory unless he provides references to pertinent publications by war historians. As I’ve said previously, there is no point spending billions (or as it turned out trillions) to control something that you can easily purchase in the marketplace. Moreover, since the Neocons clearly set out from day one to turn Iraq into a democracy, any notion of control is risible.

  63. Mel
    November 29th, 2012 at 20:37 | #63

    Dan: Dexter Filkins, author of the “Forever War” and various others put Hussein attributable deaths in the order of 2 million. Saddam was in power for 24 years hence the monthly death is:

    2,000,000/ (24*12) = 6,944 per month. This is significantly above the current figure, which is trending down.

    Katz, the US left a democratic Iraq that, much to my surprise, has outlived the CoW departure.

  64. Mel
    November 29th, 2012 at 20:38 | #64

    The other point worth making is that the Hussein regime, like all dictatorships, would have eventually fallen even without the CoW invasion and this would have inevitably caused a murderous Sunni Arab/Kurd/Shi Arab/Other minority bun fight much like what we saw after the CoW invasion.

    Given democracy is holding and the death toll has plummeted to well below Saddam era levels and continues to trend down, the CoW invasion must be deemed a stunning success, at least from a consequentialist perspective.

    I won’t comment further on Dan’s infantile oil war conspir@cy theory unless he provides references to pertinent publications by war historians. As I’ve said previously, there is no point spending billions (or as it turned out trillions) to control something that you can easily purchase in the marketplace. Moreover, since the Neocons clearly set out from day one to turn Iraq into a democracy, any notion of control is risible.

  65. Katz
    November 29th, 2012 at 21:45 | #65

    Doubtless, the Shiite ascendancy in Iraq represents the aspirations of the majority of Iraqis still living in the country.

    A regime that employs the armed forces as death squads that perpetrated one of the more effective and ruthless acts of ethnic cleansing in history can hardly be termed democratic. This is the most notable accomplishment of the Maliki regime.

  66. Jordan
    November 29th, 2012 at 22:51 | #66

    @Mel
    Since you decided to be extremely sellective when counting death toll, let me be selective too.
    Lets count death tolls after the Iraq/Iran war since then were most deaths under Sadam and then you can count todays death toll.
    If you want to be a bit more objective then you should start averaging death toll since 2003 till today. That will give you a bit credibility. I think you will find terifing numbers. If you also add the toll of exodus of people then you will have full credibility.

  67. Jordan
    November 29th, 2012 at 22:52 | #67

    @Mel
    Maybe add the death toll caused by embargo, or discount.

  68. Mel
    November 29th, 2012 at 23:27 | #68

    Jordan, you would have more credibility if you could demonstrate a capacity for constructing a coherent sentence and a logical train of thought.

    Most of the bloodletting after the CoW invasion was a civil war in which the CoW were largely ineffectual bit players. The viciousness of the civil war was in large part an inevitable suffix to Saddam’s 24 years of brutal rule. That suffix would have resulted regardless of the cause of regime change.

  69. Jordan
    November 30th, 2012 at 04:11 | #69

    Mel, I would say that i have plenty of credibility, since you did not notice that english is not my first language, and i do not use ad homminem attacks. Sometimes i do not proofread my comment but it depends on time i have for it.
    Now you are giving excuses for why not include full death toll under CoW and i gave you my excuses for other side. What gives you the right to accept only one side excuses? What do you think about that? Are you a death toll police?
    I am from Croatia so i lived trough a war and i can tell you that both sides have excuses for their crimes, but nobody asks wictims of the war for their excuses.

  70. Katz
    November 30th, 2012 at 07:06 | #70

    Mel:

    Most of the bloodletting after the CoW invasion was a civil war in which the CoW were largely ineffectual bit players.

    Incorrect. The US bankrolled, armed and trained the Iraqi armed forces and national police, aka Shiite Death Squads.

  71. Dan
    November 30th, 2012 at 08:53 | #71

    I really don’t get why you’re so wound up about this.

    But okay, let’s assume democracy was the goal.

    How do you reconcile that with the US’ conduct in other countries in the Middle East, and particularly in Latin America?

    When exactly can we expect the US to invade Saudi Arabia?

  72. Dan
    November 30th, 2012 at 08:55 | #72

    The above was @Mel – so the below.

    You’re being exceeding selective with the way you’re using your mortality figures, to the point where I’d be surprised if even you were genuinely fooled.

  73. November 30th, 2012 at 10:13 | #73

    If anyone doubts that massive cuts to greenhouse gas emissions are technically or economically possible, I’ll mention that Germany now installs solar for under $2 a watt. Adusting for lower labour costs in many places, $2 a watt makes point of use solar electricity cheaper than grid electricity for most of the world’s people.

  74. Hermit
    November 30th, 2012 at 10:44 | #74

    @Ronald Brak
    I think you’ll find a few firms here will install 5 kw of PV for $10k. Mind you a lot of them seem to go out of business quickly. I paid $8/w for PV some years ago. I’ll acknowledge that the price drop has been remarkable, probably due to the Chinese handing out $30bn in subsidies to their manufacturers.

    Next we want cheap, safe longlife batteries. I note some old EV batteries will be used in houses
    http://inhabitat.com/general-motors-repurposes-expired-chevy-volt-batteries-to-power-homes/
    If that can achieve a 75% price drop then we’re talking major inroads. Like the bunyip I’ll believe it when I see it. Batteries won’t be practical for aluminium smelters and other big power users.

  75. Newtownian
    November 30th, 2012 at 11:12 | #75

    @Dan

    “@iain
    You might want to have a look at this for an explanation of the oil price bubble:
    http://www.rollingstone.com/politics/blogs/taibblog/wikileaks-cables-show-speculators-behind-oil-bubble-20110526

    This is the same line as in the book ‘Grifftopia’ also by Matt Taibbi. While the latter is an excellent and informative polemic he makes the mistake of reducing things purely to manipulation of things by the vampire quid of Goldman Sachs, populist attacks on which have made him very popular.

    To be sure there is speculation but say this is everything is like saying commodity shortages in wartime are created solely by short term profiteering, while the breakdown in supply chains and reallocation of resources have nothing to do with long term chronic shortages, rationing and prices hikes.

    If anything speculators thrive because there is an underlying supply problem which may be structural or virtually absolute.

    Nevertheless the profiteering issue is a central one to raise at it confounds efforts to disentangle different supply drivers as everyone tends to blame their favorite straw man rather than recognise short term availability is the result of a complex of factors including social ones which are often more about fetish (4WDs is my favorite) than actual need for a good civilized life – while long terms ones (which is what the ‘peak oil’ is about) while related, likely differ even if there are qualitative commonalities.

  76. rog
    November 30th, 2012 at 11:32 | #76

    I signed up to this, they say it’s not to be witch hunt more an examination of the process. http://iraqwarinquiry.org.au/

  77. quokka
    November 30th, 2012 at 12:28 | #77

    I you ask me (and nobody did!), the purpose of the war on Iraq was to destroy the Iraqi state as an entity capable of acting in opposition to perceived US interests. As Chomsky said, leave the family and bad things happen. It is a repeated pattern of US foreign policy around the world post WW II.

  78. Jim Rose
    November 30th, 2012 at 15:32 | #78

    The USA may well have invaded for the reasons it gave at the time. These may not have been good reasons, but do not so easily dismiss them.

    Attacking supposedly nuclear armed countries is never wise. Why are Iran and Iraq not allowed to be nuclear armed but North Korea is? Diplomatic solutions are always preferred to stop the Hermit Kingdom from going nuclear.

    The fatal flaw in any conspiratorial explanation of the Iraq Invasion is Bush 43 would have to be the ring-leader. The Left cannot maintain that Bush 43 is a dope unable to find his backside with both hands and a map but at the same time he rallied both digits of his IQ to led a vast international conspiracy.

  79. Katz
    November 30th, 2012 at 15:38 | #79

    Don’t conflate JR.

    There are some on the left who perceive conspiracy. There are others on the left who detect comical incompetence driven by hubris.

    I know of no individual who holds both views simultaneously.

    Myself. I subscribe to the cretin thesis.

  80. David Irving (no relation)
    November 30th, 2012 at 16:35 | #80

    Katz, a third possibility is that Bush was an innocent (!) dupe, and the conspiracy was actually directed by Cheney or Rumsfeld or someone.

  81. frankis
    November 30th, 2012 at 17:38 | #81

    Great piece!

  82. sdfc
    November 30th, 2012 at 19:00 | #82

    Jim it was no secret that the weapons inspections had been largely successful in destroying Iraqi weapons programs. Invading Iraq doesn’t suggest Bush is anything other than a dope.

  83. Mel
    November 30th, 2012 at 21:07 | #83

    As far as I can tell, the democratically elected Maliki government in Iraq isn’t exceptional in respect of human rights violations when compared to other fledgling democracies in civil war situations. If Katz has information to suggest otherwise, I’m all ears.

    It may well be true that some American funding has made its way to Shia “death squads”, as Katz suggests, however it is painfully obvious that but for the CoW presence, Iran would have stepped in to a post-Saddam Iraq and the consequent carnage would have been many times greater than it was.

    I should also point that I agree that the Bush Presidency mishandled the war. They really did expect an easy victory and were not prepared the what actually occurred. Still, half a loaf of bread is better than no loaf at all. Hopefully things will continue to improve.

  84. sdfc
    November 30th, 2012 at 21:30 | #84

    Iraq is a shambles. A nice little playground for Al Qaeda.

  85. Katz
    November 30th, 2012 at 22:08 | #85

    It may well be true that some American funding has made its way to Shia “death squads”, as Katz suggests, however it is painfully obvious that but for the CoW presence, Iran would have stepped in to a post-Saddam Iraq and the consequent carnage would have been many times greater than it was.

    1. It is undeniable that the US bankrolled, armed and trained Shiite death squads.

    2. There is no way of knowing how Iran may have acted. To state otherwise is to indulge in magical thinking.

    3. Iran is as pleased as it could reasonably be with the way post-2003 Iraq has turned out in the aftermath of trillions of dollars spent by the US to get the kind of Iraq the US wanted. I repeat: Iran is now using Iraq as a corridor for its arms and equestrian into the Levant. Iran could not do that in 2003.

  86. Katz
    November 30th, 2012 at 22:17 | #86

    equestrian = equipment.

    Damned predictive text!

  87. Jim Rose
    December 1st, 2012 at 07:55 | #87

    The oil explanation for U.S. involvement in the middle-east has three flaws at least.
    1. oil usage is a much smaller part of GDP;
    2. The middle-east is a much smaller share of global oil production;
    3. We live in the era of post-heroic warfare. The small size of families make voters less willing to tolerate casualties;

    All of the factors should have made the middle-east less important to the USA as the decades have passed.

  88. Bring back Birdy at Catallaxy
    December 1st, 2012 at 08:09 | #88

    Oh, I dunno, Katz, a massive cavalry invasion of Israel would seem to be right up Ahmadinejad’s alley.

  89. Katz
    December 1st, 2012 at 08:22 | #89

    “The 40,000 Horsemen of the Apocalypse”

  90. Katz
    December 1st, 2012 at 08:35 | #90

    America’s original sin in the Middle East was the overthrow of Iran’s Mossadegh and the restoration of the Shah.

    There were elements of oil hegemony built into this plot, but mostly it was a Cold War, not Oil War, play.

    Similarly, the Carter Doctrine, that provided a rationale for US militarism in the region, was driven by Cold War priorities.

    Let us not forget, however, if the USSR had been by some means, capable of incorporating Iran and a number of other Middle Eastern oil exporting nations into its sphere, this oil would have ceased to be fungible in world markets.

    Therefore, the practical effect of US Cold War geopolitics in the Middle East was access to oil, even if its primary motivations were not. After the demise of the Soviet threat what remains of the Carter Doctrine is the idea of access to oil. This reflex is understandable.

  91. Ikonoclast
    December 1st, 2012 at 09:36 | #91

    At the risk of invoking Godwin’s law, is Iran the new Nazi Germany? In some ways it is. On balance though , I would have to say not really, or not solely, mainly because the West too now acts in a Nazi fashion at least in its Middle East policy.

    The other huge geopolitical difference is that in WW2 we had Russia and China as allies. Russia and China did the heavy lifting of winning WW2 in human cost terms. Whereas, the West is only strong when it has a huge technogical and material advantage. That advantage is disappearing fast. Now Russia and China are firmly aligned with each other and with Iran. And China is about to become the technological and industrial giant of the world as well as the population giant.

    Google the Shanghai Cooperation Organisation. Were it not for the nuclear element (mutually assurred destruction) the West and its allies would be in a very parlous situation in terms of any protracted conventional war.

    The Shanghai Cooperation Organisation if it got serious could eventually destroy the West in conventional terms. As Jim Rose points out (correctly in this case) the West appears to be in the post-heroic stage in every sense. We are weak, soft, decadent and decaying. The Shanghai Cooperation Organisation leadership would not blink at the loss of 50 million or even 100 million soldiers in conventional war. No way the West could match it.

    The West is also decaying economically, mainly due to neoliberal ideological madness and expeditionary military madness. The Chinese are chuckling at how stupid and self-destructive the West is. They will play the long game. They have no need to push anything to a conclusion yet. Every year that passes makes China stronger and the West weaker. China are quite happy to play a 100 year game or 500 year game; whatever it takes. The Chinese have not forgotten the “100 years of humiliation” and the colonial, imperialist rape of China by Britain, USA, Japan et. al.

    However, climate change is the wild card. There is no telling what effect climate change will have on all this.

  92. Geoff Andrews
    December 1st, 2012 at 10:59 | #92

    Jim Rose
    Huh? Your three reasons for why the US apparently did not invade Iraq are very convincing.
    I can just see Dick, Donald and George ticking all three boxes – oil usage is on the wane? Yep. Middle east oil? Almost gone.
    Post-heroic?
    “The last thing the electorate wants to see, George, is you in battle dress on the flight deck of an aircraft carrier making a fool of yourself”
    “Aw gee, Dick, that would have been fun too. But the Godfather says I should finish him off like HE should have done when he had the chance- he was trying to muscle in on our territory”
    Concern over casualties in a nuclear family? Too silly to even parody.

  93. Mel
    December 1st, 2012 at 12:32 | #93

    Katz, our erstwhile keyboard philosopher in one sentence squawks about Iran’s Ah Me Dinner Jacket meddling in distant Syria then a minute later dismisses the assumption that Ah Me Dinner Jacket would meddle in in Iraq, a much more strategically important country that hw has long meddled in, as “magic thinking”.

    Have you had a stroke or something, Katz? You were sharper than this back in 2006, when we first made acquaintance.

  94. Katz
    December 1st, 2012 at 14:23 | #94

    Flattery will get you nowhere Mel.

    Did I say that Iran wouldn’t involve itself in Iraq? For your information, and you seem to be in deep need of some … any … information, during the time of Saddam, all the major Iraqi Shiite parties, i.e., the present governing and some of the major opposition parties, were HEADQUARTERED in Iran and bankrolled by Iran. Your assertion that Iran might have meddled in Iraq appears to arise from ignorance of this fact.

    Thus, Mel, my argument is and has always been that Iran has always involved itself deeply in Iraqi affairs. It took the Americans’ incompetence to enable Iran’s ambitions for a Shiite theocracy in Iraq to come to fruition.
    Indeed, it is hard to imagine how Iran could have meddled more short of outright invasion. But why should they invade? Iran influences Iraq sufficiently already without open recourse to arms. Iran leaves invasion and military occupation to the cretinous Americans, choosing to bide their time and win the peace rather than lose the war.

  95. Ikonoclast
    December 1st, 2012 at 16:59 | #95

    @Katz

    Pretty much right. US foreign and domestic policy is cretinous. They are doing themselves more damage than any enemy could. It’s hard to see how the US can climb out of the hole they have dug themselves into. What baffles me is how the US ever got to the top anyway given their mindset. I guess it all comes down to having everything handed to you on a platter;

    1. Old world technology
    2. Old world labour and ever more migrants
    3. Richest continent on earth, untouched and untapped.
    4. Plundering the world of good brains.

    However, all that is over now. The technology lead is gone. Migrants only increase their underclass given the current system. The continent is (semi-) plundered. And the foreign brains will soon stop coming. The current US education system is failing on all fronts. The oligarchic neoliberal lunacy and religious fundamentalism rule their society. Impossible to see any way forward for them.

  96. MG42
    December 1st, 2012 at 19:02 | #96

    Ikonoclast :
    @Katz
    What baffles me is how the US ever got to the top anyway given their mindset. I guess it all comes down to having everything handed to you on a platter;
    1. Old world technology
    2. Old world labour and ever more migrants
    3. Richest continent on earth, untouched and untapped.
    4. Plundering the world of good brains.

    This was a conclusion that I came to a little while ago. Once it is realised that the US had spectacular advantages in all kinds of natural resources, labour supply and freedom from 20th century industrialised warfare, then you tend to become a little bit more sceptical on matters of philosophy, economics and “weltanschauung”.

    For examples, I would propose that these advantages led to the doctrine of “rugged individualism”. The climate was so good and the pickings were so easy, hence everyone can do it all themselves, the reasoning went, and if you failed, then you must be lazy. The Chicago School of economics is another consequence. The supply of factors of production was such that there was no need to think about the consequences in the long-run and the best use of resources given the limitations. Hence, the focus on the golden idol “ECONOMIC GROWTH” and disparaging of government simply because, under their circumstances, it was less necessary than in other places. The truth is that any market-based economic system would have worked, from “benevolent” dictatorship to social democracy.

    Truly a fascinating thought experiment.

  97. Ikonoclast
    December 2nd, 2012 at 05:30 | #97

    My above post sounds very anti-American. In a sense it is and in a sense it is not. If one is criticising American policy today, one is criticising the American elites not the mass of the ordinary American people. This is because it is the oligarchic elites who run the country. America’s pseudo-democratic system does not allow the masses to have any real say in running the US.

    To the extent that the US masses are uneducated, religiously fundamentalist and suffering from all the classic false consciousness of being in the thrall of oligarchic capitalism then the masses are indeed unenlightened and culpable. Their condition is understandable to some extent.

    US claims of Manifest Destiny and US exceptionalism do not hold up to scrutiny. There is nothing special about the US people nor is there anything special about their system. The rapid historical rise of the US is explicable in the following material terms;

    1. The country was formally founded when it was declared independent from Great Britain on July 4, 1776. The intellectual and mass ferment of revolution was growing in the West (French Revolution 1789 – 1799) and US intellectuals and founding “fathers” benefited from this ferment of ideas. The US founding “fathers”, mostly oligarchs themselves, perverted the revolution and ensured the US Constitution enshrined the rights of oligarchic land owners and nascent capitalists.

    2. The US was founded at virtually the perfect time to benefit from the Industrial Revolution in England and Europe circa 1750 to 1780. Being a new nation there was no feudal/post-feudal ancien regime nor related farming and cultural practices to overthrow. It was a clean slate.

    3. The US was lucky to possess / take possession of the richest, unspoilt continent swathe untouched on earth. Climate and natural resources were perfectly suited to vast, rapid and successful expansion.

    4. The US benefited from massive immigration. Immigrants bring labour, brains and energy essentially gratis. The large inputs to raise them to adulthood were in most cases paid by the Old World. The immigrants arrived adult and ready to work.

    5. The US benefited (or at least the oligarchs, land owners and free persons’ wealth did) from slave labour.

    6. The US benefited from the theft and consequent destructive exploitation of the lands of the indigenous peoples. (They are not the only nation that did this. Canada and Australis come to mind.)

    7. In general, the US benefited from European innovations re capitalism and later contributed their own. Since the 1970s, the US innovations in the capitalist paradigm have been negative and have led to the progressive relative deterioration of the low and middle classes and of the relative position of the US in the world economy.

    In summary, the US received a massive intellectual, human and material inheritance. This is what is “special” and what made America. Unfortunately, the accruing arrogance and hubris, resulting in specious claims about Manifest Destiny and Exceptionalism, has led the US astray. They are now in complete denial about their real problems and the need to change their oppressive system at home and abroad.

  98. rog
    December 2nd, 2012 at 06:55 | #98

    @Ikonoclast On point 6 you could say ROW, disputes over territory stretch back thru time.

    So in this regard I don’t think the US is exceptional and in general by selecting only negative events I do think you are not being fair in your analysis.

  99. Ikonoclast
    December 2nd, 2012 at 09:49 | #99

    @rog

    I had to look an acronyms dictionary for ROW. It has 20 common or not so common acronyms. Rest of World makes sense.

    On all of the points taken together the US is exceptional but this is not exceptionalism in the sense the US commentators usually mean. As a people they did no more than any other modern national people. They just drew the perfect hand to use a poker analogy.

  100. Jim Rose
    December 2nd, 2012 at 11:20 | #100

    @sdfc As I recall, after the end of the 2003 war it was found that Saddam destroyed most of his nuclear capacity so he was not caught with it by inspectors. He then played a fine game of bluff so they he looked like he had them so he looked strong and dangerous. He did seek to protect his much more concealable biological weapons capability.

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