Hooray for market forces (John Tulloch)

Economists tell us market forces (with checks and balances to prevent extremes like banking crises, etc.) produce the most efficient way to allocate resources.

“Peak Oil” is often played by renewable energy campaigners as a trump card in the debate over whether we should reduce fossil fuel burning and by how much (“even if carbon dioxide doesn’t cause global warming, you’re going to run out of oil so you’ll have to stop burning it, or our grandchildren will perish, anyway!”).

It’s intuitively obvious that exploiting a finite resource to exhaustion with rising population and wealth will lead to a production peak followed by a decline and rising prices, so when people scoff at “Peak Oil”, it isn’t the principle they dismiss, rather, the simplistic, doom-laden, outcomes campaigners infer from it and spin for their causes.

We really don’t know how difficult “Peak Oil” will be or when it will occur since there’s plenty of oil, the issue is cost and we can only guess where technology will take us in the next 50, never mind 500 years. Too often, we imagine technology will stand still; for example, just as coal replaced wood during the Industrial Revolution, oil demand may be replaced by, say, gas or nuclear energy; on the other hand, we will discover how to produce oil more cheaply and use it more efficiently.

Gas can replace oil for heating, transport, power generation and manufacturing plastics, etc, and in the US, where “unconventional” (shale) gas production is already well developed, gas prices have tumbled and their hitherto moribund chemical industry is booming.

“Conventional (gas) recoverable resources are equivalent to more than 120 years of current global consumption, while total recoverable reserves could sustain today’s production for over 250 years.” (International Energy Agency Special Report, “Are we entering a golden age of gas?”)

This excludes the potential for extracting gas from methane hydrates, frozen deposits on the seabed and under polar ice. Japanese engineers are already developing technology in the Sea of Japan and in a joint venture with Canada in the Arctic. They have 250 years in which to succeed and when they do world reserves will dwarf all other fossil fuel resources. The expected timescale, however, is 30 years following which supplies will be available for well over 500 years.

Apart from that there’s booming shale oil technology and vast reserves of tar sands, developing genomics, nano-technology and synthetic biology will combine to produce oil biologically and of course, new nuclear technology in the form of fusion power and thorium reactors is in view – and of course, Old King Coal still reigns supreme!

Thorium nuclear reactors produce virtually no long term toxic waste, they can re-use conventional nuclear waste and there’s thousands of years’ supply of fuel. Despite the US having an operational prototype in the 1960s the technology was shelved, presumably, because it’s useless for making bombs.

So should we really stop using fossil fuels to “save our great-grandchildren” in 500 years’ time, it would be like Henry VIII commanding his subjects not to burn wood to save us now?

We’ve emerged unscathed from “Peak Widd” and similar Dark Ages excesses. We disregard economics at our peril and fighting market forces is digging us ever deeper into fuel poverty via green taxes and heavily subsidised renewables.

Humans have progressed from wood-burning to coal, to oil and now to gas and hydro, dramatically reducing carbon dioxide emissions along the way.

“Neither Queen Victoria nor Abraham Lincoln decreed a policy of decarbonisation. Yet, the energy system pursued it. Human societies pursued decarbonisation for 170+ years before anyone noticed.” (Jesse Ausubel, International Journal of Nuclear Governance, Economy and Ecology, 200764.)

The US is reviled as the only advanced nation not to sign up to the Kyoto Protocol yet it is the only region of the world to reduce energy consumption (per capita) between 1990 and 2008 (Wikipedia, from IEA/OECD/World Bank).

Sounds like market forces have been doing the better job!

John Tulloch


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  • Kevan Brown

    • October 24th, 2011 12:54

    It may be good that John Tulloch doesn’t apportion judgment to the historical characters he mentioned as they would not have foreseen our age. I wouldn’t intend to detract from his evident erudtion either. However, applauding dictatorial market forces, justifying them as it might save us fuel poverty, whilst so many in our world live in a state of abject want, due to our needless greed, is terribly sad.

  • John Tulloch

    • October 24th, 2011 17:43


    It wasn’t me who said “Hooray!” That said, I agree it’s sad to see so much poverty in the world, however, I think you’ll find that’s largely due to abuse of market forces by greedy individuals and countries, as opposed to the market forces themselves which are simply forces of human nature – if a pint is dearer in a certain pub than in another then, all other things being equal, we’re likely to take the cheap one.

    Why do governments want us to be in the EU? So that we are guaranteed free access to its markets. That means those outside don’t get free access. African countries will tell you they don’t want aid, they want open access to western markets.

    Several years ago my wife and I had a holiday in Madeira where we enjoyed some of the best bananas we have ever tasted, however, we discovered they are unable to export their bananas to Europe because they are – wait for it – too straight!

    What poor countries need most of all is cheap energy yet we are trying to cajole their governments into “decarbonisation” of their economies so that the hitherto fossil fuel poor EU can narrow the energy price gap to remain competitive – and of course, sell those poor countries a load of useless scrap at extortionate prices, in the name of “saving the planet.”

    Fortunately, the developing countries haven’t been taken in and suddenly, now that we discover Europe has abundant shale gas, the EU is becoming distinctly less enthusiastic about unilateral “decarbonisation.”

    It’s outfits like the EU and others who corner markets to defeat market forces, who are the greedy ones. Witness what the Euro has done for southern Europeans – don’t they wish they still had their old floating value currencies?

    I quoted that the US is the only region of the world to reduce per capita energy consumption despite being the only advanced nation not to sign up to Kyoto. During the same period, its population increased by over 20% (up 55million!) which I think we may assume was mostly (poor) Hispanic people from Central and South America. This compares to the EU population increasing by about 5% over the same period and everyone is complaining about immigration.

    The US has many faults, however, it would appear that cornering markets and tight immigration limits are not among them .

    PS See also letter on EU from Vic Thomas.

  • Kevan Brown

    • October 26th, 2011 18:50

    Mr Tulloch,

    Thanks for your reasoning and kindly explanations. I’m obliged to you.

    As a broadening out of this discussion and an eye opening overview, I think anyone who were to read the book “The Life You Can Save” yet remain unmoved by it, may be made of stone.

    Having lived in Shetland, and being aware of its beautful harshness, I know too that life can be very tough for many. I assure you, if you read the above book, you’ll see how much of a Paradise life in the Northern Isles really is, in comparison to elsewhere.

    What is worse is that; greedy magnates aside; we common folk can make a big difference but choose not to do so, sometimes, to our shame.

    Kevan Brown.

  • Kevan Brown

    • October 27th, 2011 8:59

    Mr Tulloch,

    My apologies. The book mentioned earlier was written by the ethicist, Peter Singer.

    Kevan Brown.


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