“Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist.” —Kenneth E. Boulding.

That quote is lifted out of Deffeye’s “Beyond Oil.”

“I am not an economist. So perhaps I am being unfair to write a chapter with this heading All the same, I am not alone in expressing scepticism of the economist’s skill in predicting events, as the economic forecasts of most countries confirm. They do not seem any better in dealing with the oil business. I have witnessed many false economic evaluations of prospects, and have seen companies fail in their endeavors by allowing themselves to fall too much under the influence of economists. Certainly, the great international oil companies were built without the intervention of economists. I read economic reports that seem incapable of grasping resource constraints, and I am therefore less than convinced that they are working from the right premises in their work.”

That is the first paragraph of “Chapter 10, Economists Never Get It Right” in the book “The Coming Oil Crisis” by Colin Campbell, 1977, Multi-Science Publishing Company, England. Campbell is these days the founder of the Association for the Study of Peak Oil&Gas (APSO), which is an association of international scientists with chapters in many, many countries, and publishes a monthly newsletter (from the Ireland chapter) edited and perhaps authored by Campbell, available at www.peakoil.com. He is supposed to have published a new book, which I want to read, called “The Availability of Non Conventional Oil and Gas’. The reference to the book was found on www.energybulletin.net but the author of the note (Rob Hopkins) did not supply the name of the Campbell’s publisher, and I can find no reference to it at www.amazon.com or www.bn.com. Hopkins has apparently read it, and suggests that alternative fuels aren’t going to amount to much according to Campbell.

Daniel Yergin, perhaps the economist of energy, recently reassured Congress that nothing need be done by the Administration about the supply of energy. The market will take care of it. The following rules will apply.

(1) Prices will rise. Given that incentive, oil companies will find more oil. They always do.

(2) Even if they don’t, new technologies will present themselves and will provide sufficient alternative fuels to service our compelling need to use ever more and more amounts of energy.

I see a couple of problems with those assurances. If the petroleum geologists can’t new sources of oil, who will? Economists?

The second problem is price increases. Remember the 70s? 17% interest on mortgages? Shortages of everything? Gas lines? The deepest recession since the great depression? That resulted from a temporary 5% decrease in supply. Peak oil suggests a 5% decrease of supply every year, with the results cumulative. What do you think mortgage interest might look like then? Don’t worry about it say the economists. ‘Scuze me, but I think it is something worth worrying about. It won’t bother me much. I’m too old, but I hope my grandkids make it.

I have a couple of problems with economists other than this peak oil thing. Imagine an old growth forest, clear stream bubbling through it, fine spring day. Where I might relish the clear air, the splendid new growth, the sounds and smell of vibrant nature, the economist will probably be evaluating it in terms of board feet in the lumber yard. The dismal science, it’s been called.

Campbell discusses an economic theory that in effect limits their concerns to a ten year period. I did notice, when I was an active (and effective) environmentalist, that American corporations had that same very limited field of view. They were quite unprepared to deal with a longer time frame.

I also discovered, in the 70s, that an awful lot of theory is built on trend lines. If it’s been going up, it will continue to go up. ‘Technical’ stock trading relies precisely upon that economic verity. Had you the kind of broker I had, your broker would, a few years ago, have been pushing Enron with its ever rising stock price. Listen to him, you could have lost your shirt. History is littered with trends that changed direction. New technologies replace older technologies. The trend lines on the old technologies reversed, didn’t they?

European businessman aren’t caught in that trap. The Club of Rome report of the 70s, which forecast the present situation, was the work of a group of European businessmen. They, and their Asian counterparts, do look well beyond ten years and they are a good bit less impressed by trend lines. Europe is certainly in much better shape now than America they never became as addicted to petroleum as we are. Drive on a European highway and you don’t see massed congestion. You do in the cities, but that’s because the cities never moved over for the automobile. Still the same streets they had hundreds of years ago–no freeway construction then, now, or in the future in the heart of the cities. Pain in the neck to drive European cities. So get out of the car. That’s what Europeans do.

Italians use Vespas. They’re something else. Hint: Don’t even dream of taking an auto into Florence. Haven’t tried it yet, but I think they wouldn’t work well in Venice either.

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