Thursday, September 29, 2011

PO Doomers Confronted With a Contradiction at The Oil Drum

Historical Price Trends for Energy and Energy Services in UK

An amusing situation has cropped up at the peak oil doomer site, The Oil Drum: An economic analysis of the long term trends in energy and energy service prices managed to slip through the censors and get published. The piece is a bit long, and links to some important supporting information which is much longer yet, but the ideas are much deeper than what the doomers are accustomed to. As a result, the comments reflect a certain amount of incredulity and indignation, that they -- the enlightened -- should be forced to undergo the undignified cognitive dissonance of confronting a sophisticated argument which refutes their enlightened beliefs. Quite interesting and more than a bit amusing, overall.

The key idea is that consumers pay for "energy services," rather than for specific forms of energy. Heating, lighting, transportation, power, etc. are among the many forms of energy services for which consumers are willing to pay. Some useful inferrences can be drawn from looking at the overall energy future in this manner.
....research shows that it is not the price of energy input (depletion) which matters for the economy, but the cost of energy input per unit of output (depletion + technology). Something which seems obvious but is often forgotten in the energy discussion. Also at The Oil Drum we often erroneously talk about effects of the oil price on the economy, and not the cost of an oil or energy service delivered to the economy. The latter not being affected just by energy prices, but by all inputs and the efficiency and cost.

Energy prices have risen considerably since the beginning of the twenty-first century. It is valuable to place these price rises within a historical context. Many peaks preceded the price hike of 2008, and there will, no doubt, be many more. However, if future trends follow past ones, then it is tempting to conclude that the long-run trend in individual and average energy prices will be generally stable or downwards. _TOD

The piece looks at likely future energy and energy services price trends based upon known energy resources. Links to downloads for PDF documents supporting the claims in the piece are included:



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