103. EARLY MITIGATION PORK
Many peak oilers believe that global peak oil is imminent, and the world is completely unprepared for it. They like to cite this passage in the Hirsh report:
The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and without timely mitigation, the economic, social and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.(P. 4)These folks are alarmists, in a big hurry, who claim that the only prudent course is to start mitigating NOW!! Then if peak comes early, we'll be ready, and if it comes late, there is no harm done. But this ignores the fact that mitigating too early does cause harm.
Hirsch et al. allude to this problem in their report:
2. Oil Peaking Risk Analysis: Cost of Premature Mitigation versus WaitingThat's putting it charitably. What we're actually talking about here is massive-scale pork, the classic example being oil shale in the late 70s, early 80s:
The date of world oil production peaking is unknowable, but it may occur in the not too distant future. Large-scale mitigation is needed more than a decade before the onset of peaking if economic hardship is to be avoided. If major efforts were initiated early and peaking was to occur decades later, there might be an unproductive use of resources. (Hirsch report, P. 88)
The second great challenge the Democrats faced was an OPEC-induced surge in energy prices. Carter came in with some good and some bad ideas about how to alleviate the energy crisis. Democrats in Congress rebuffed the president's best plan--Carter's attempt to lift the price controls Richard Nixon had imposed on domestic energy. But congressional Democrats eagerly adopted his bad ideas, including the creation of the Department of Energy, which would become perhaps the most dysfunctional agency in Washington. House Speaker Tip O'Neill set up a task force to speed along passage of the authorizing bill, getting the agency running in a matter of months. Congress happily signed on in 1980 when Carter asked it to set up the Synthetic Fuels Corporation. The program ultimately spent $88 billion subsidizing American oil and gas companies to try to extract petroleum out of oil shale, an enterprise only slightly more cost-effective than trying to wring water from a stone. The SynFuels concept dispensed a lot of taxpayer money to a lot of Democratic interest groups but did nothing to solve the energy crisis.SourceThere you go. $88 billion of public money oinked down by Unocal and others in the hog-trough of "early mitigation". That's the cost of mitigating too early.
Speaking of pork, wasn't the Iraq war a $200 billion subsidy for the oil companies and a porkfest for Halliburton?
Coal "synfuels" are still a multi-billion dollar a year tax credit scam 25 years after Jimmy Carter.
And right on cue, the refiners just can't seem to get the job done without another government hand-out:
Bob Slaughter, the president of the National Petrochemical and Refiners Association, told a House committee last week that Congress could expand tax incentives included in the energy bill as a way to encourage growth of the refining industry.Source: The Hill