Oil is not soon running out!

People do not realize that gas, in a free market, does not suddenly run out.

Gas does not suddenly, in a free market run out. Prices today reflect “expectations” of the available supply and demand for goods and services “today and tomorrow”. If, for instance, the expectation is that oil supply will decrease or will be less than demand in ten years time, it will influence oil prices today. Prices today will go up. People will have the incentive to conserve (demand will decrease) and to develop new alternatives.

Actually, we are probably conserving too much, because of OPEC and Governments taxations are keeping prices higher than they otherwise would be. “That oil soon runs out” is a political slogan that keeps coming up to keep politicians busy. This political slogan sounds true and will, therefore, “in the political market” sell. Only true markets can handle this sort of complex things. Compared to markets, Governments are too simple minded and primitive, because of the fact; they lack the essential tools that are needed to solve these kind of “problems”. They primitively, for example, regulate car manufacturers (and in the end consumers) to produce cars which improve gas mileage and impose upon people speed limits*, without knowing if these actions are good or bad. Only markets can tell if conservations are good or bad, because market prices gives people the necessary signals of supply and demand, and people can therefore compare these prices to their own values if they are profitable or not to realize. The essential tools that are needed (which Governments are always lacking) are, as mentioned, “market forces and the market price mechanism”. Without these mechanisms nothing can be done. For example, a scientist will not reach the truth in trying to calculate physical available quantities and compare that to what he expects physical demand will be. It is silly, it is static and mechanistic.

Every individual and every business around the whole world, with all the different knowledge, all the time, and in all possible situations, and which are directly influenced of higher prices, will conserve and try out alternatives. Even people and businesses that are not directly influenced of higher oil prices, also, have incentives to find out alternatives. These things happen all the time with all goods, services, capital and raw materials, and it run smoothly without us even noticing it. If Governments were going to replace the markets, we would probably end up with no available goods and services at all! In a sense, this would solve the “conservation problem” (joke).

To make an example of this lack of knowledge and the belief that you can ignore markets, look at the so called “Club of Rome”, a group that made fools of themselves in the 70s with their book “Limits to growth” http://www.answers.com/the+club+of+rome?gwp=11&ver=2.0.0.453&method=3
If their predictions were right, we would barely, even, live today!

Alex Kozinski wrote and I quote;


“The Limits of Growth made some very concrete and highly
alarming predictions: “there will . . . be a desperate [arable] land shortage before the year 2000 we would run short of gold by 1979, of silver and mercury by 1983, of petroleum by 1990, of zinc by 1988, of tin by 1985 and of natural gas by 1992. The book’s forceful message was that we were headed for a world-wide calamity, and must fundamentally — and immediately — change the way we live. Nor was this merely a question of physical survival; at stake was humanity’s very
soul: “The crux of the matter is not only whether the human species will survive, but even more whether it can survive without falling into a state of worthless existence.””


http://notabug.com/kozinski/gorewars.pdf


* Information

Regulations on cars manufacturers to improve fuel efficiency and the imposition of speed limits were not imposed to combat pollution but were imposed for the reason to conserve oil and to reduce oil consumption. This started during the 70s.

I quote from answers.com;

“regulations in the United States, first enacted by Congress in 1975, exist to regulate and improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) sold in the US in the wake of the 1973 Arab Oil Embargo. It is the sales-weighted average fuel economy, expressed in miles per gallon (mpg), of a manufacturer's fleet of passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 pounds (3,856 kg) or less, manufactured for sale in the United States, for any given model year. The National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) regulate CAFE standards.

If the average fuel economy of a manufacturer's annual car or truck production falls below the defined standard, the manufacturer must pay a penalty, currently $5.50 per 0.1 mpg under the standard, multiplied by the manufacturer's total production for the U.S. domestic market”.


Please go to;
http://en.wikipedia.org/wiki/Corporate_Average_Fuel_Economy
And to;
http://en.wikipedia.org/wiki/1973_oil_crisis


Björn Lundahl
Göteborg Sweden