Econ 101: Why Peak Oil is Peak Idiocy
Related to these two recent CD posts about peak oil and how we never run out of natural resources, Mike Munger provides some excellent commentary on his KPC post "Peak Idiocy":
Of all the idiotic things that people believe, the whole "peak oil" thing has to be right up there. It is literally impossible for us to run out of oil. We have never run out of anything, and we never will.
If we did start to use up the oil we have (though, counting shale oil, we still haven't used even 10% of the total KNOWN reserves on earth, and there are lots of places we haven't looked) but suppose we were on our way to using it up. Three things would happen.
1. Prices would rise, causing people to cut back on use. More fuel effcient cars, better insulation on houses, etc. Quantity demanded goes down.
2. Prices would rise, causing people to look for more. And they would find more oil, and more ways to get at it. Quantity supplied goes up.
3. Prices of oil would rise, making the search for substitutes more profitable. At that point (though not now!) alternative fuels and energy sources would be economical, and would not require gubmint subsidies, because they would pay for themselves. The supply curve for substitutes shifts downward and to the right.
This is Econ 101.