Update: One more sentence has been added to Charlie Munger’s quote.
Over at the Farnam Street blog, Shane Parrish has a post titled “Energy Independence is a Terribly Stupid Idea.” I agree. But, apparently not for the same reasons that
Farnam Shane Parrish or Berkshire Hathaway Vice-Chairman Charlie Munger does. (But, hey more people follow that blog than mine and there are lots of really good things said about the site; so I must be wrong.)
In trying to get energy independence we would have destroyed our safety stock of oil within our own borders.
Oil and gas are absolutely certain to become incredibly short and very high-priced. And of course the United States has a problem and China has a worse problem….Every barrel that you use up that comes from somebody else is a barrel of your precious oil which you’re going to need to feed your people and maintain your civilization.
Perhaps Munger is right. But, a bit of skepticism toward his cynicism might be in order.
Resources are not resources until humans decide that rock or that bit of goo can be used for something; the Stone Age did not end because people ran out of stones. I would agree that it is wiser to purchase something from somewhere cheaper than it is to get it locally. That’s not natural resource conservation that’s making your resources (your time and money) work smarter.
I commented on the blog but it seems that the comment didn’t pass the spam filter possibly due to the high number of links provided. So I have provided my comment and the links for further reading are here:
The end of our resources has been foretold before. In 1865, the British economist, Stanley Jevons predicted the end of coal. In his book, The Coal Question, he wrote that Britain’s easy ride was over and soon coal, which, powered their industrial revolution, would be gone. It was “physically impossible” to continue. Therefore Britain needed to decide “between brief greatness and longer continued mediocrity.” William Gladstone, the Chancellor of the Exchequer, found Jevons’ argument so compelling he begged Parliament to pay down their national debt while they still could.
The ink had barely dried on Jevons’ book when the output of coal rose and the price fell. The first oil well was sunk in Pennsylvania six years later. Today, Britain still produces coal.
Some further reading:
The dash for shale oil will shake the world – Matt Ridley
The Limits of The Limits to Growth – Reason Magazine
Where’s the Peak for Oil Reserves? – The PERColator
The R/P Ratio
Political – Reason.com
Peak Oil Panic – Reason.com
Apocalypse Not: Here’s Why You Shouldn’t Worry About End Times | Wired Science | Wired.com
Everything you’ve heard about fossil fuels may be wrong – War Room – Salon.com
U.S. Oil Output to Overtake Saudi Arabia’s by 2020 – Bloomberg