Wonderful news! We’re not going to run out of oil after all! (Or are we?)

We are saved! 

• "Leonardo Maugeri, a fellow in the Geopolitics of Energy Project at the Kennedy School’s Belfer Center for Science and International Affairs—and a long-time critic of Peak Oil analysis—has just published a new report, "Oil: The Next Revolution," in which he forecasts a sharp increase in world oil production capacity and the risk of an oil price collapse." 

Though ‘conventional’ oil may be running out, there’s plenty of ‘unconventional’ oil to take its place, i.e. deep-sea oil fields, tar sands, shale oil, etc. Production of all of these things is on the up – much of it in friendly countries like Canada and the US.

So can we add ‘Peak Oil’ theory to all those other predictions of doom that haven’t quite come to pass, e.g. the Millennium Bug, the avian ’flu epidemic and that new ice age they used to talk about in the 1970s?

The trouble is that for every dodgy prediction of doom, there’s an equally dodgy prediction of boom. For instance, whatever happened to those Space Age lifestyles we were supposed to be living by now? The new iPad is very nice and everything, but it’s not exactly a personal jetpack, is it? And what about all that lovely nuclear power? It’ll soon be too cheap to meter, they said – but, in fact, it got more, not less, expensive. One might also mention the vast sums of money that were staked, until recently, on the idea of a never-ending boom in property values, share prices and the magical ability of the Greek government to defy economic reality.

Thus when it comes to any notion of a boom in unconventional oil production, a reality check is surely in order – supplied here by Richard Heinberg – a noted pessimist on these matters: 

• "…there are a few observations that no serious energy analyst can dispute. Oil exploration and production costs are skyrocketing (Bernstein Research estimates that this year the industry needs prices in the range of $100 a barrel to justify new projects)." 

So, yes, we can have as much unconventional oil as we like, as long as we pay a recession-inducing price for it.

Also, when the boom-sayers quote figures at you, check to see whether they’re talking about actual energy content or mere volume: 

• "…some of the fuels (ethanol, natural gas liquids) counted… in the ‘all liquids’ category have significantly lower energy content per unit of volume than regular crude oil; thus an increase in barrels-per-day of "all liquids" does not necessarily mean an increase in the amount of energy delivered to society." 

The same goes for the difference between gross and net energy production: 

• "…all the unconventional liquid fuels (including biofuels, tar sands, and "tight" oil) offer a low energy return on the energy invested in producing them. Therefore, even if the number of barrels of liquid fuels delivered to market is still gradually increasing, the amount of useful net energy being made available by the petroleum and biofuels industries, when energy costs are accounted for, is probably already declining." 

Finally, if you have to import your energy, remember that energy production isn’t the same thing as energy availability: 

• "…available global crude exports are declining rapidly as producing nations use more of their oil domestically—leaving less each year for importing nations like the US, Europe, and China…" 

In the end, the best guide to these matters is not Mr Heinberg, nor Mr Maugeri, but the Danish physicist Neils Bohr, who once said: "Prediction is very difficult, especially about the future."

Elinor Ostrom – everything an economist should be

When Elinor Ostrom won the Nobel Prize for Economics in 2009, not everyone was happy; according to her obituary in the Economist, there were those who "looked askance":

It wasn’t that she was a woman – the first to win the economic prize – but that she gleefully defied conventional categories. For a start she wasn’t a ‘pure’ economist: 

• "Her own field, institutional economics (or "the study of social dilemmas", as she thought of it), straddled political science, ecology, psychology and anthropology. She liked to learn from all of them, marching boldly across the demarcation lines to hammer out good policy, and she welcomed workshop-partners from any discipline, singing folk songs with them, too, if anyone had a guitar." 

In other words, she was an economist of the real world, rather than of mathematical models and equations. This, surely, is a good thing – especially given the mockery that recent events have made of conventional economics.

Proper conservatives ought to be attracted to Ostrom’s practical approach. However, her work does challenge one of the right’s favourite economic ideas, the so-called ‘tragedy of the commons’. This is the theory that in the absence of private ownership, shared resources are inevitably over-exploited to the point of exhaustion. In practice, however, it doesn’t have to be this way and often isn’t: 

• "Years of fieldwork, by herself and others, had shown her that humans were not trapped and helpless amid diminishing supplies… over time, human beings tended to draw up sensible rules for the use of common-pool resources. Neighbours set boundaries and assigned shares, with each individual taking it in turn to use water, or to graze cows on a certain meadow. Common tasks, such as clearing canals or cutting timber, were done together at a certain time. Monitors watched out for rule-breakers, fining or eventually excluding them. The schemes were mutual and reciprocal, and many had worked well for centuries." 

So, private ownership need not be condition of good stewardship. Yet, far from contradicting conservative ideas, Ostrom’s work is a vindication: 

• "Mrs Ostrom put no faith in governments, nor in large conservation schemes paid for with aid money and crawling with concrete-bearing engineers. "Polycentrism" was her ideal. Caring for the commons had to be a multiple task, organised from the ground up and shaped to cultural norms. It had to be discussed face to face, and based on trust." 

Believing the world to contain "a large body of common sense", she argued that local initiative could tackle even the largest problems – up to and including global warming.

But what happens when common sense runs headlong into nonsense – especially the very special kind of nonsense that emanates from the state? Doesn’t this get in the way of what people could achieve if they were left to their own devices?

Politicians are finally understanding that society isn’t the same thing as the state – and that it is from the former, not the latter, that the most effective management of shared resources can be expected. But unless the politicians release these resources from the grip of the bureaucracy, then ordinary people will have nothing to work with: not so much the tragedy of the commons, as the tragedy of the Big Society.

OPEC (Oil Prices Explain Crisis)

On the Deep End we don’t exactly overlook the contribution of the Eurozone to the great economic crisis of our times. But there is another multinational enterprise that deserves the occasional mention – the Organisation of Petroleum Exporting Countries (OPEC).

Writing for the American Interest, Gal Luft and Anne Korin remind us of the importance of oil prices to the economy: 

• "All but two of the post-World War II recessions were preceded by a sharp spike in oil prices; there is no question that the fivefold increase in oil prices since 2003 has contributed to the current economic dislocation. For perspective, forty years ago, at the zenith of the Cold War, the United States spent $4 billion on oil imports, an amount that equaled 1.2 percent of the defense budget. In 2006, the United States paid $296 billion, equal to half of the defense budget. By 2008, U.S. foreign oil expenditures grew so much they almost equaled the entire defense budget." 

It’s become common for politicians – especially American politicians – to worry about the extent to which we depend on oil imports. But as Luft and Korin point out, it is price not supply that is the real problem. The market for oil is thoroughly globalised, therefore there’s not much that oil producers can do to block supplies to particular importers. But at the same time, there’s not much that importers can do to reduce their consumption – at least not in monetary terms: 

• "…when major consumers reduce net demand for whatever reasons, OPEC responds by throttling down supply to drive prices back up to its ideal price level, what it calls a ‘fair’ price, or just sitting on its hands while developing world demand picks up the slack. The thing is, this ‘fair’ price keeps rising. In 2004, OPEC’s ‘fair’ price was $25 per barrel. Two years later it was $50. In 2010, OPEC’s secretary general, Abdalla Salem El-Badri, argued for $90, and by the end of 2011, with OPEC’s oil revenues topping $1 trillion, he adjusted the price to $100."　 

Thus while America has reduced the quantity of oil it imports, the total cost keeps going up. There’s every reason to think that this will continue: 

• OPEC’s "fair" price is based ultimately on the budgetary needs of the cartel’s members, whose appetite for petrodollars has increased significantly since the onset of the so-called Arab Spring. Hoping to avoid the fate of leaderships in Egypt and Tunisia, Persian Gulf regimes have showered their people with gifts and subsidies. Saudi Arabia alone almost doubled its budget, committing $129 billion to entitlement programs." 

Luft and Korin say that the only way out for the west is to switch from oil to a different fuel altogether – preferably one not controlled by a cartel of hard-up despots. This would, of course, be a major undertaking – but since when did small ideas solve big problems?

A witness on the kill floor

The industrial slaughter of animals for food is not something that we like to think about – and thanks to modern production methods, we don’t have to. From the point of view of most consumers, the whole messy business takes place out of sight and out of mind.

But what would we see behind the slaughterhouse doors if we could? The answer, according to the author Timothy Pachirat, is surprisingly little – a conclusion based on his own experience as a worker at an industrial abattoir in Kansas. Interviewed in the Atlantic he describes just how few people actually witness the process of killing:

• "The slaughterhouse as a whole is divided into compartmentalized departments. The front office is isolated from the fabrication department, which is in turn isolated from the cooler, which is in turn isolated from the kill floor. It is entirely possible to spend years working in the front office, fabrication department, or cooler of an industrialized slaughterhouse that slaughters over half a million cattle per year without ever once encountering a live animal, much less witnessing one being killed.
• "But second and most importantly, the work of killing is hidden even at the site where one might expect it to be most visible: the kill floor itself. Of over 800 workers on the kill floor, only four are directly involved in the killing of the cattle, and fewer than 20 have a line of sight to the killing. And only one worker – the knocker – delivers the blow that begins the irreversible process of transforming the live creatures into dead ones. As long as that one person exists, there can be some plausible narrative that concentrates the heaviest weight of the dirtiest work on this one. Then the other 120 kill floor workers can say, and believe it, ‘I'm not taking part in this.’"

One might think that this effort to minimise human exposure to the act of slaughter would represent a bottleneck in terms of meat production. Yet, astoundingly, abattoirs (of the kind that Pachirat worked in) ‘process’ five animals every minute – hence the title of his eye-opening book: Every Twelve Seconds.

Of course, the efficiency of this killing infrastructure is a key reason why meat is so abundant and affordable. With vegetarianism apparently in decline, one can therefore expect the slaughterhouse conveyor belts to keep turning. But that is no reason not be aware of what others do on our behalf.

The city as a home

Though mostly occupied with his fellow liberals, David Goodhart also lays down a challenge to conservatives:

• “…the right remains attached to its own form of abstract universalism, more concerned with the procedures of the market than what kind of society they have helped create. Some of the notions of loyalty, civility and respect that conservatives are so comfortable with in politics need to be reintroduced into the economic sphere.”

To judge from his brilliant essay for the American Enterprise Institute, Roger Scruton would appear to agree:

• “In one area in particular, neither market solutions nor bureaucratic controls have worked in a way that the ordinary citizen would wish: city planning and the built environment.”

Uncontrolled urban sprawl, he argues, not only destroys city centres, but all the things that depend on city centres:

• “Markets depend on cities, which are the principal places where people come together to exchange goods and services, as well as knowledge, aspirations, and ideals. ‘Civilisation as we know it is inseparable from urban life,’ wrote Friedrich Hayek in The Constitution of Liberty.”

However, the “suburbanised city”, he says, is a “city of absentees” – sucking the life from its very heart:

• “A city begins as a means but lives on as an end… even if the city’s population is constantly changing, it owes its attraction and success to what is permanent. Cities are made by their long-term residents, by the institutions and facilities that grow within their boundaries, and by the public-spirited benefactors who care for them as a home… Nothing is more important to a city than its center, and when the center decays, the result is an ecological disaster.”

The ‘Broken Windows’ theory tells us what happens to an abandoned home. We shouldn’t be surprised if a parallel process of decay takes hold of a half-abandoned city centre.

Prince Charles

The Bible tells us that a prophet has no honour in his own land. As a man of faith, Prince Charles will no doubt be familiar with these words. Indeed, he might even be tempted to take them as a personal motto, such is his treatment in the British press. But writing in the American Conservative, Rod Dreher provides a refreshingly highminded profile of the "Philosopher Prince".

Giving voice to supporters and critics alike, Dreher explores the complicated relationship between the Prince's philosophy and various strands of conservative thought:

• Charles’s support for organic agriculture and other green causes, his sympathetic view of Islam, and his disdain for liberal economic thinking have earned him skepticism from some on the British right... Others, though, see in Charles a visionary of the cultural right, one whose worldview is far broader, historically and otherwise, than those of his contemporaries on either side of the political spectrum.

Roger Scruton, our greatest living conservative philosopher, is certainly in the latter category:

• “All in all, the criticisms of Prince Charles from self-styled ‘Tories’ show just how little they understand about the philosophy they claim to represent."

But perhaps the most interesting comment comes from Charles Moore, both a supporter and a critic of his royal namesake:

• “If you believe in conservatism as a force for good rather than just a negative thing, you have to respect Prince Charles... He doesn’t just say modern buildings are awful. He tries to help people build good modern buildings. We need more people like that, who will work to improve the cultural fabric, the environmental fabric, from a traditional point of view."

Positive conservatism. Now there's an idea we can all work with.