Supplement to Peak Oil...

Written circa August 19, 2005...

The true capitalist nature was made very clear to me the other day as I was watching "Mad Money". Jim Cramer's financial advice was for longer term invetors to look to the coal markets [companies] for long-term gains as a result of the rises in oil costs. It is fairly obvious that hte fule of the first industrial revolution will also, eventually, be the fuel of the continuance of the third. As the quantity of coal and its ease of extraction make it a cheaper alternative than such renewable sources such as wind and wave power. But once again, it is not a renewable resource and will follow the same long-term price pattern as petroleum. We, as a society, moved away from the use of coal many years ago as oil was not only slightly easier on the environment, but considerably cheaper [and versatile]. Now, as the price of petroleum steadily skyrockets, it has become abundantly clear that the move to oil was due to the latter rather than the former.
We start with coal, move to petrol, and end up going back to coal? This leads me to the belief that the use of fossil fuels was part of hte beginning of the end of not only the environment, but truly sustainable evolutionary innovation. The resources that we use will continue to be depleted and increase in environmental and economic cost. We are stuck in the resource trap that was created by the Industrialists [Illuminati?]. All of which relates back to human nature, summed up in one word: Now. We are fixated on material wealth and objects, and fial to se (or maybe just care about) our own doom we create with our greed.
As all prices in the economy are indexed to the price of the driving commodity, oil, all goods will continue to rise in price. Even those renewable goods which mathematically, should be more elatic in price, are made more expensive due to the use of oil-fuelled machinery and methods of transportation, for example.
To semi-conclude, its obvious that there are forms of unseen control in the economy that keep our main source of energy non-renewable. Although, man is ultimately the one to blame for this dismal trap, as we refulse to recognize this inevitability or attempt to change it.
If all goes as planned, I forsee the intersection of ever increasing demand for goods (greed) and the ever decreasing supply of non-renwable energy. Accompanied with the basic assumption that all goods are producted with oil being an input [whether it be direct, or indirect] the depiction is as follows...

[ Insert Graph... or imagine Supply (non renewable) convex to origin and downard sloping, Supply (renewable) convex to origin and upward sloping; and Demand convex and upward sloping. Y axis - Quantity, X-Axis - Time.
d[S(r)]/dT > d[S(nr)]/dT
d[D]/dT > d[S(r)]/dT
and a lot more than i can describe w/ words ]

To argue that the supply of renewable energy could meet the demand for goods would be a definite overstatment, thus that is shown in the diagram as S(r). We are currently at NOW (as always); where the worlds demand for goods is rising and the suply is decreasing, but at such rates that S(nr) is still at an affordable level for almost everyone. This will not remain as, a) the clock continues to click, b) demand continues to grow, and c) resources continue to grow more scarce. [Think China and India and their domestic supplies].
Even if we had invested all of our money into renewable resources from day one, it would not be enough as D includes a variable for convience which could not be met aas well with S(r) as it can with S(nr). The argument for the conspriacy to control mankind with S(nr) is sen when we look into the future. The market price in a situation where demand exceeds supply (a monopoly, oligopoly), will be determined by the willingness of demanders to pay a higher price. i.e. when demand is inelastic they will pay a surreal premium. (WEAK ARGUMENT)
The gap between the demand for energy and the supply of energy are the surreal profits that are made by those with the control of the energy. A gap would still exist between D and S(r), but these profits would be spread mor equally amongst competition as there are fewer barriers to energy in the S(r) than in S(nr). The only known [to the author] barriers to entry to S(r) are access to capital as well as applicable patents (Wave Power, e.g.). Whereas, there is one main barrier in S(nr), and that is the ownership of unextracted resources (oil sands, wells, etc.). As there is an effective monopoly (oligopoly)on S(r), the gap (alpha + beta) will be surreal profits left for the few rich who own stakes in the oil companies. (Alpha+Beta) > Beta, and...
Beta/n < (Beta+Alpha)/n, where n is the number of vested stakeholders.
Meaning the alternatives are...
a) S(nr) -> more profit for fewer people
b) S(r) -> less profit for more people
A rebuttal to one who argues that incorporation allows for the sharing of profit among many holders is that incorporation and stock ownership are available in both scenarios.
i.e.) it doesn't matter what the type of energy or resources used, the wealth will be shared in thsi way all the same.

I am focussing primarily on the elite few at the top, the Industrialists.

The sooner people realize this, the more we will all save and the more 'wealthly' we will all be. Not in absolute terms, but in relative purchasing power.
The price of all goods whicha re processed using energy will continue to rise due to the scarcity and demand; but thse rises would be severly deafened if the primary indirect input was a renewable energy source due to the elimination of rising energy costs and the near elimination of opportunity costs of energy [maybe? to the latter]. Not to say that renewable energy sources will be constantly infinite, but are not bound in the long-term; leading to a lower opportunity cost of energy.
Although the world is inevitably heading to a world of unprecedented excess demand for energy, the exploration of renewable energy sources is a net pareto efficient move. The eletite few will be worse off by alpha, but the world will be less burdneed by this amount alpha; and share more equally in the amount Beta.
I write this as an economist [a bad one...], not as a left-wing, flower-power, hero.

As well, as an economist [again, a bad one...], I believe in the rationality of human beings and the incessant greed of man; which means that as S(r) becomes more economically viable that even those who seek wealth and control with S(nr) will see the long-term sustainability and profitability of renewable energy sources.
Eventually people will stop buying oil because of the price, and the elite will already have deloped and patented forms of renewable energy. The only difference this time is that there will be a perpetually sustainable method of control that we could have actually avoided a long time ago.
This is the plight of mankind - myopia.
What is this obsession with controlling mankind?
How did they get so smart and wist yet stay so evil?


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