Noam Chomsky in his recent posting suggests that peak-oil coming sooner rather than later is actually beneficial to the human species, as it will force us to rethink our ways fast, and will lessen the pollution we create from burning carbonhydrates.
I’d say that he would be right if we knew when peak oil came, or would know it if we were there already: then we probably would align our efforts to a sustainable new energy regime better and more effectively.
One other thing he says is interesting:
Talk about “shrinking our economies” is pretty meaningless. Our economies would shrink substantially if we got rid of huge expenditures for the military, for incarceration, and other highly destructive activities. Sustainable economies might lead to highly improved quality of life.
This sounds like what Martin Roell, Johnnie Moore and I were theorizing over lunch October 2003 in Brussels, when we postulated that in a fully developed knowledge economy GDP would actually go down significantly, compared to our current still largely industrialized economies, because its benefits and value would be outside the scope of our measurement and governance systems.
A few posts back I discussed how the oil-price quadrupled in the past few years. Well that was two months ago. Now the oil-price stands at 55$ per barrel. That is five times the price of early 1999.
I have been reading Curt Rosengren’s weblog the Occupational Adventure with pleasure for some time. It turns out that he too is blogging on alternative and renewable energy sources.
Like me and Siert he experiences some difficulty in keeping that blog flowing. My guess is that’s because it lacks the conversational pace that we enjoy in our main blogs. So I added him to the blogroll on the right, in the hope that we are weaving the beginnings of a little network that keeps itself active.
Curt, I’m looking forward to new conversations on this topic!
Last month the traditional opening of the Parliamentary Session 2004/2005 took place, by Queen Beatrix. In the weeks after this ceremony the cabinet’s plans are presented and discussed in Parliament, and of course the national budget is one of the key factors in this. Most discussion was around a large number of budget cuts, with counterproposals etc.
Last week I read a newspaper article, or it might have been a column, (and I don’t remember where) that asked a very interesting question. How does the oil-price affect our national budget?
Our minister of finance Gerrit Zalm has a reputation for being cautious in his economic assumptions, which in the late nineties resulted in budgetsurpluses and diminishing national debt. In the budget estimates of future oil-prices play a large role.
Rising oil-prices, as they influence many product prices, fuel, food, chemicals, pharmaceuticals, are a source of inflation. It puts pressure on the margin of cost-driven companies, which is most of industry, and thus on the possible speed of economic recovery of the decline of the last couple of years.
High oil prices via inflation also put pressure on the social security system, and other government spending. On the other hand expensive oil also boosts income for the government, as the price of domestically produced natural gas, a major energy source in the Netherlands, is linked to international oil prices, and it also boosts fuel-tax revenues.
So predicting oil-prices has a significant impact on economic models, and therefore on budgetary outlooks. Even though minister Zalm is viewed as generally cautious, he assumes a significant decrease of the price of oil. $35 in 2005, and $26 in 2006. This even though the oil price consistently rose, with some fluctuation, from $11 to currently $51 in the last 4 to 4,5 years. Even if I am mistakingly assuming Zalm uses American oil-futures as price indicator, in stead of Brent-oil futures this looks counterintuitive to me. [[Addendum: on Oct. 12th Brent-oil also shot through the $50 price]]
Even more strange is that opposition proposals are not challenging the basic assumptions of oil price, they are making even more optimistic assumptions. The same goes for other nations, according to the article I read, there too lower oil prices are assumed. So Zalm seems to be more cautious than his colleagues, but it looks awfully optimistic to me. I heard someone from Merrill Lynch remark on tv the other day that the high prices were only temporary as it was “only caused by peak demand”. However I don’t see how demand could become lower, especially in the middle or long run. Sounds like risky speculation to me.