The Other Side

Abstract

Most of the arguments to belittle the importance of resource constraints in general, and “peak oil” in particular, have come from the oil companies themselves and some official institutions and studies by economists including economic studies on natural resources. On theoretical grounds, conventional economic theories emphasize two main aspects concerning natural resources: the capacity of the industry to find new reserves and to develop substitutes for costly resources. Both argue against the importance of depletion. While we think both arguments are possible in theory, we believe that their development remains seriously incomplete, especially from an empirical perspective. On the other hand, the empirical studies carried out by many reputable agencies—such as the United States Geological Survey (USGS)—seem to have overlooked important issues about the reliability of the data sources they used. In any case, it is very important to provide the data used to support one’s perspective. For example, assessments which are based on access to expensive and presumably reliable private data—such as the ones presented by IHS CERA—cannot be verified, and their forecasts have had a dubious record so far. Of course, “The End of Cheap Oil” relied on private data too, but its claims seem to be more realistic when confronted with actual production and prices.