We are never going to run out of oil

Each time there’s a temporary spike in gas prices, science-centric liberals allow themselves a purely ideological indulgence, claiming – as Krugman, Paul Ehrlich, John Holdren and countless others have – that we’re rapidly approaching a point when producers will hit the maximum rate of extraction of petroleum. Peak oil. With emerging demand, fossil fuels will become prohibitive. And unless we have our in solar panels in order, Armageddon is near.

In a 2005 New York Times Magazine piece, ominously titled “The Breaking Point,” Peter Maass warned: “Few people imagined a time when supply would dry up because of demand alone. But a steady surge in demand in recent years — led by China’s emergence as a voracious importer of oil — has changed that.” I can remember sitting through a number of editorial board meetings during the 2000s watching peak oil cranks pull out charts that, with pinpoint accuracy, predicted exactly when this tragedy would hit – even as enormous new deposits were being discovered and advancements in productivity were debunking those claims in real time.

And while everything is “finite” in a galactic sense, there has never been any consensus as to when oil, gas and coal will hit peak production. Probably because we’re never going to run out of any of them. Julian Simon is still right, and spikes in oil’s price only create more innovation and better productivity:

“The reason that the cost of energy has declined in the long run is the fundamental process of 1) increased demand due to the growth of population and income, which raises prices and hence constitutes opportunity to entrepreneurs and inventors; 2) the search for new ways of supplying the demand for energy; 3) the eventual discovery of methods which leave us better off than if the original problem had not appeared.”