Andrew Leonard recently posted on Salon about peak oil. I like Leonard's articles a lot. His is a rare progressive blog, whose arguments generally seem to go together instead of being heart-felt but mind-devoid beseechings. I recommend it especially for progressives wanting to know more of the economy. (I would further recommend Arnold Kling, but only if you can tolerate his libertarian conclusions.)
While this particular article has generally sound economics (I just ignore the obligatory progressive attacks on a large corporation), the shift at the end is jarring. There is no lead in to the following vociferous attack:
Demand for oil is increasing every day, and production is just barely keeping up, right now. It is in the best interest of the planet, the global economy, and every living creature that we devote all available resources to conservation, energy efficiency, and the development of alternative sources of energy and conservation.
I'll leave aside the question of what "all available resources" means (should I quit my job, then?). My first reaction to the article was to recall an article I had read earlier about Paul Ehrlich's predictions of shortages of metals. Paul Ehrlich took a bet with Julian Simon that over the next ten years (1980-1990, in this case), the price of metals would increase. Ehrlich picked (Simon let Ehrlich make the choice!) copper, chrome, nickel, tin and tungsten. Ten years later, all five of them had actually decreased in price -- i.e., they became less scarce. It is a good case to ponder for people who believe that scarcity is disastrous. (Or, for that matter, that Ehrlich makes good predictions.)
In fact, Leonard posted about "peak copper" on the same day, with the same conclusions as a market economist: changes in scarcity causes changes in prices causes shifts in what market participants use. That is, when one thing gets scarce, prices induce people to use less scarce alternatives. This all happens without needing any big movement, much less government intervention.
After a little thought, though, it's not Leonard's conclusion itself that most bothers me, but that he preceded it with a eulogy on just how much he does believe in price signals:
And we have a lot of sympathy for the almighty power of the price mechanism. Simple economics suggest that new technologies for extracting more oil from already existing fields and new oil from Canada's oil sands and the Rockies' oil shale will eventually become feasible....
Something must give. I have no doubt that sometimes price signals are incorrect. However, if as he says they work for oil, then why should "we" (a topic for another day) nonetheless ignore what oil prices are telling us? If oil is as scarce as he fears, then why has the price not already shot up?
Does he think oil companies are not greedy?