Re: POL: Reaction to Microsoft Ruling

From: Michael S. Lorrey (
Date: Sat Apr 15 2000 - 13:59:47 MDT

Charlie Stross wrote:
> On Thu, Apr 13, 2000 at 12:56:41PM -0400, Michael S. Lorrey wrote:
> >
> > And you are saying that more taxes and government controls are a good thing?
> Under some circumstances, yes.
> Clue: I am _not_ a libertarian; I'm a liberal, in the classical sense
> of being a member of the Liberal Party of the United Kingdom (not to be
> confused with those running-dog revisionist-socialist Liberal Democrats).
> I'm on your side on the civil liberties issues, but I don't believe in
> simplistic economic nostrums and uncontrolled free-market economics as
> the final solution to all our woes.

At least we know where you stand now..

> > > If you remove OPEC, bad things happen:
> > >
> > > Firstly, the price of oil crashes. Each oil producer in the middle east
> > > will start pumping like crazy in an attempt to maximize revenue, because
> > > everyone will be trying to undercut their neighbour and when you cut your
> > > prices you have to make it up on volume.
> >
> > Outstanding. This is NOT a bad thing. This is a very good thing.
> In dealing with a finite resource?
> You gotta be joking.

You are making the infounded assumpution that it is a finite or
practically finite resources. This is an incorrect assumption.

> > There won't be a shortage, this is bull. The market will finally meet the demand
> > at a market determined price, not a producer determined price. If the british
> > oil unions go out of work, well, I won't cry for them.
> There ain't no such animals; just high-tech companies that specialise in
> extracting oil from under half a mile of frigid and turbulent ocean.

Good, so answer my other point.

> > > Basically, prices will yo-yo violently. The whole process will be aggravated
> > > by the diminishing reserves -- wildly fluctuating prices will discourage
> > > oil companies from exploring for new fields, too.
> >
> > Fine. We already have plenty of fields as it is, most of which are not being
> > explored only because of governments setting these areas aside in order to
> > maintain an artificially high oil price.
> Check out last year's Scientific American run -- there was a rather
> worrying feature in it (by some geologists specialising in petrochemical
> prospecting) who pointed out that the official figures for known reserves
> have been gerrymandered by governments (yeah, OPEC members) for political
> reasons relating to their OPEC-assigned extraction quotas. Basically,
> they moved a lot of stuff that was officially off the books onto the
> books in the last decade, in order to justify increasing their output
> at a time of diminishing prices. The actual undetected but retrievable
> reserves are believed to be pretty small -- nobody is too interested
> in oil fields where the energy cost to extract a barrel exceeds the
> product. By their estimate, we pass the 50% exploitation level some
> time between 2005 and 2010, and from there on out oil prices _will_
> climb as the accessible reserves are worked out and the only new fields
> coming on-stream are highly inconvenient (e.g. the Atlantic fields).

There's the Atlantic fields, theres the whole north slope of Alaska and
the Yukon, there's a huge amount in Russia and Khazakstan. beyond that,
we have the hydrate deposits all over the world which at the very least
are twice the amount of oil. Moreover, if prices stay at the level they
are now, there are thousands of wells in Texas that are now profitable
again, and exploration in the Tex-La. region is profitable again. I've
got a freind who is retapping old retired and abandonded wells down by
the gulf coast now and he's pulling 50% annual returns out of his
operations for his investors, all of which is tax free....

the 50% exploitation level was only describing reserves that were
recoverable at a profitable level at the then market price of $10.00 per
barrel. This is the oldest trick in the tree hugger book. Now that the
oil prices are up in the $25-30 range, the date of 50% exploitation is
somewhere between 2050 and 2100 (we're not totally sure because we don't
know of all reserves that are capable of being recovered profitably at
that level).

> Encouraging people to think that oil is cheap and will remain so in
> perpetuity is a Bad Thing(TM) in terms of long term collective self-
> interest; we need to be able to migrate from an oil-burning civilization
> to something more efficient and sustainable, and cheap oil encourages us
> to stay fat and lazy and not bother doing things like developing
> nuclear or renewable energy sources. By the time the oil price begins
> climbing steeply because the oil is running low, there may not be
> enough money around to begin such a large-scale conversion without
> widespread economic dislocation.

If we assume that nanotech will become popularly feasible by 2050, then
so long as oil reserves last until then, we are fine. Oil reserves only
need to last until nanotech arrives, at which point the nanites can live
off of the organic compounds in dirt for their energy needs. There is a
significant amount of organic compounds in dirt that are not refinable
at this point in time. So long as we can afford rising prices in oil
thanks to increased economic productivity from computerization and
automation of manufacturing, then we will be fine.

> I _hope_ I'm wrong about this, but I really don't want to see unhampered
> deflationary price wars in the oil industry end up forcing us back into
> the nineteenth century by the mid-twenty-first.

Which is an unreasonable fear. They won't cut prices to the point of
losing money. They will raise prices to meet the increasing cost of
recovery if and when that arrives. We will continue to become more
energy efficient (we cut our per dollar of GDP output consumption of oil
by some 30% between 1980 and 1995, which is partly why energy prices
were so low), and more efficient at use of other resources. Another part
of the spike in prices is due to the fact that a number of nuke plants
were retired as of january 1 2000, and the replacement generators burned
oil or oil derivatives, increasing demand that was not accounted for
properly. Some hydropower dams have been retired as well. I think that
once prices increase to a $35-40 dollar range that we will see more nuke
plants being built (as nuclear will be profitable again), and
solar/wind/ocean energy sources will become profitable alternatives as

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