Energy Independence is a Dumb Idea but not Because We Will Run Out of Oil

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.)

Parrish quotes Munger extensively from comments made at the Committee of 100 U.S.-China relations conference. Munger says,

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.

English: The cover of the second edition of Th...

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:

Peak Everything?Reason Magazine
http://reason.com/archives/2010/04/27/peak-everything

Wrong about running out | The Rational Optimist
http://www.rationaloptimist.com/blog/wrong-about-running-out

The dash for shale oil will shake the world – Matt Ridley
http://rationaloptimist.com/blog/the-dash-for-shale-oil-will-shake-the-world.aspx

The Limits of The Limits to Growth – Reason Magazine
http://reason.com/archives/2012/04/18/the-limits-to-growth-40-year-update

Where’s the Peak for Oil Reserves? – The PERColator
http://percolatorblog.org/2011/05/04/wheres-the-peak-for-oil-reserves/

The R/P Ratio
http://sppiblog.org/news/the-rp-ratio

Political Peak Oil – Reason.com
http://reason.com/archives/2007/01/05/political-peak-oil

Peak Oil Panic – Reason.com
http://reason.com/archives/2006/05/05/peak-oil-panic/singlepage

Apocalypse Not: Here’s Why You Shouldn’t Worry About End Times | Wired Science | Wired.com
http://www.wired.com/wiredscience/2012/08/ff_apocalypsenot/

Everything you’ve heard about fossil fuels may be wrong – War Room – Salon.com
http://www.salon.com/news/politics/war_room/2011/05/31/linbd_fossil_fuels

New drilling method opens vast oil fields in US : PERC – The Property and Environment Research Center
http://www.perc.org/articles/article1336.php

U.S. Oil Output to Overtake Saudi Arabia’s by 2020 – Bloomberg
http://www.bloomberg.com/news/2012-11-12/u-s-to-overtake-saudi-arabia-s-oil-production-by-2020-iea-says.html

 

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