free html hit counter Peak Oil Debunked: 79. LOW HANGING FRUIT

Monday, September 05, 2005


A lot of peak oilers use the following argument:

"People pick the low hanging fruit first, therefore the costs of harvesting resources must increase over the the long term."

Let's call this the Low Hanging Fruit hypothesis.

The Low Hanging Fruit hypothesis is often called the "Law of Diminishing Returns" (LDR), but that is just sloppy thinking. Here are some definitions of the LDR, as it is found in economics:

in economics, law stating that if one factor of production is increased while the others remain constant, the overall returns will relatively decrease after a certain point.Source
When increasing amounts of one factor of production are employed in production along with a fixed amount of some other production factor, after some point, the resulting increases in output of product become smaller and smaller.Source

The LDR describes a short-term phenomenon, and does not apply when all the factors of production are increased, or when there are significant changes in technology. My impression is that economists are making a distinct point of not subscribing to the Low Hanging Fruit hypothesis because it isn't true.

Here's one example: According to Low Hanging Fruit, it was easier to catch tuna in the year 1550 than it is now, using sonar, explosives, helicopters, speed boats and huge purse-seine nets.

Or to paraphrase Mike Lynch: According to Low Hanging Fruit, it was easier to produce oil in 1908 Persia than to produce oil in 5000 feet of water in the Gulf of Mexico. (Define "easy"!)

Here's another:
If the extraction of commodities becomes harder and harder by the year, then why do they keep getting cheaper and cheaper (click images for a clearer picture)?

Here's another data point, from Gillett's nanotech paper*:
The extraordinary decrease in the cost of computing over the last few decades has already had a significant effect: the cost of domestic [oil] production since 1984 has dropped from $14 to $4/bbl, largely through information technologies (Paul, 2001).Source

This is backed up by the data. Over the long-term, oil has gotten cheaper to find:Source

And to lift:

So let's cut the crap. Those claiming that the Low Hanging Fruit hypothesis is valid need to provide some evidence to support it. It is not the Law of Diminishing Returns which economists adhere to.

*) Thanks to Lorenzo for this link.


At Tuesday, September 6, 2005 at 1:24:00 AM PDT, Anonymous Anonymous said...

umm yeah let's cut the crap...

decreased costs of oil production and discovery hasn't helped us discover enough to replace consumption or lift U.S. production. So what is your point exactly? Doesn't this reinforce the peak oil view point?

Let's take your tuna example... a depleting resource because catches have been unsustainable. It doesn't matter how much 'easier' it is to catch tuna with sonar, explosives, helicopters, speed boats and huge purse-seine nets, the fact these measures must be employed is striking. There is a lot less tuna to find.

Oh and I wonder why the price shoots up in the early 70's on that commodity chart?

At Saturday, January 13, 2007 at 4:58:00 AM PST, Blogger inquisitor said...

I've never heard any peak oil proponent talk about the law of diminishing returns. I think you are referring to the term (Energy Return on Investment). EROI is the energy you need to invest in order to get an amount of energy.

For example...if it takes me 5 barrels of oil to produce 4...then that oil stays in the ground. It's not about diminishing returns it's about ANY return.


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