Libertarian Thoughts on Peak Oil

There was an article on LewRockwell.com today about peak oil.  The author of the piece gives some history on the subject and the lack of accuracy by those who have warned about peak oil in the past.  He also gives some statistics about oil production and oil reserves that seem to refute the peak oil proponents.

I can't confirm or dispute the numbers.  I don't really have any criticisms of the article, but I do want to add some comments about the subject.

While I found the article interesting, in the long run, it doesn't matter all that much whether peak oil is real or not.  It doesn't matter all that much how many barrels of oil are being produced or how much is in reserve or how much has yet to be discovered or how much demand there will be in the future.

The thing that matters most is that governments get out of the way and stay out of the way.  The oil market is already heavily regulated.  Governments tax oil and gas.  Governments regulate oil drilling and refineries.  Governments own land with oil, almost everywhere it exists.  I could go on for pages about different ways that governments interfere in the energy markets.

Most things done by the government restrict the supply.  Most Republicans think that the U.S. government should drill in ANWR and other places.  The problem is that it shouldn't be up to the government.  The U.S. government should either return the land to its proper owners or else sell it to the highest bidder.  Then the owner or owners of the land could drill.

It would also help if the U.S. stopped running an empire around the world.  Whether the motives involve control of oil or not, bombing Iraq and Libya, and threatening to bomb Iran, does not help the situation.  It causes disruptions in supply or fear of disruptions.

As long as we live in a relatively free market system, then peak oil does not matter much.  If the world really is running out of oil, then prices will go up to reflect the situation.  They will go up in anticipation. Higher prices will encourage people to cut back on demand.  It will also encourage an increase in supply.  Higher prices are the best solution to high prices.

If there is concern about peak oil by the market and prices go up, then the market will turn to other alternatives.  Perhaps the oil in tar sands will be extracted.  This is a more expensive process, but it may be worth it if the price is high enough.  Also, the market will most likely respond with other technologies.  Maybe electric cars are viable, but they shouldn't need to be subsidized by the government.  If gas gets expensive enough, then consumers will voluntarily switch to other forms of energy if they find it is worth it.

There is one thing I may disagree with on the article regarding peak oil.  The author states, "for at least the next hundred years, oil will remain our primary energy source because it is abundant, inexpensive, and reliable."  While he may turn out to be right, it is impossible to know right now.  If the government gets out of the way and stays out of the way, there are endless possibilities for providing energy in the future.  There may be things that don't exist right now that we can't even fathom.  How many people could have fathomed the internet and text messaging 50 years ago?

In conclusion, don't worry about peak oil.  Instead, worry about the government interfering with the free market.  If the market is left free, then peak oil will not be a problem, if it even exists.