Energy Economics

This post is a result of post-panel musings from Orycon 30, the Oregon Science Fiction convention I just attended.  I was actually on two panels discussing energy futures – What Happens if the Oil Runs Out? and Alternative Energies.

Often a discussion gets you thinking about something you already know.  There was some discussion of the supply and demand curve and its affect on getting away from oil dependence. 

My musing goes like this:

No matter what anyone says, and even if we are past or at or near Peak Oil, there is a lot of oil around.

Price/Demand curves work with energy just like everything else.  When gas prices go up, people drive less and work to alter their lifestyle.   When gas prices go down, they drive more.   Price-points can be targeted by the people in control of the supply.  In other words, whatever we do to drive demand away from oil will increase oil supply, and thus reduce oil costs and increase oil use (and there are plenty of other drivers in emerging economies willing to use any oil we leave on the table even if we change our behavior).  Good choices we make don’t necessarily help that much.  It’s altruistic to conserve, but not effective.

This wouldn’t really bother me if we were just talking about the geopolitical issues of depending on foreign oil in the US,  After all, we can change our own patterns through incentives, education, and tax policy (although higher oil prices would be sure help).  We can’t change China’s or India’s oil consumption, at least not by much. 

The most important conversation isn’t about our dependence on foriegn oil.  It’s about world-wide carbon use.  Given that, how will we drive the world away from oil (no pun intended)?  Or help put into place the right structures to let the world find its way to cleaner energy?

What do you think?


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