Friday, November 30, 2012

Closing in on the end of the S-Curve

Jim Hamilton is one of those very measured economists that you can always trust to have some actual data handy.  And one of the particular areas he always has handy data about is the long-term history of oil production.  We've probably all seen these charts before, but one particular phrase in a recent post caught my eye:
We like to think that the reason we enjoy our high standard of living is because we have been so clever at figuring out how to use the world's available resources. But we should not dismiss the possibility that there may also have been a nontrivial contribution of simply having been quite lucky to have found an incredibly valuable raw material that was relatively easy to obtain for about a century and a half.
My view is that stagnant world oil production and doubling in the real price of oil over 2005-2010 put significant burdens on the oil-consuming economies. Optimists may expect the next century and a half to look like the last. But we should also consider the possibility that it will be only the next decade that looks like the last.

I think I have developed a general prejudice to see a lot of what people take to be skill and intelligence as just plain luck.  This applies to people working in the markets and as well as people making predictions about the future of nearly anything complex.  Maybe it also applies to societies and technologies as a whole.  Perhaps all our self-congratulation at having built a machine for innovation and increasing standards of living is premature, and we simply blundered into a great source of energy.  

This is not an argument that such a self-sustaining machine does not now exist.  Just that it's not as smart as you thought it was.