185. SHOULD WE MITIGATE EARLY BECAUSE THE MARKET IS MYOPIC?
In the comments we were discussing early mitigation. Anon wrote:
Roland, from your remarks I assume you live in the inner urban area of Sydney? Do you think that the scenario you describe will be practical for the satellite areas of Sydney... say western suburbs, central coast etc.? Many people live in areas where walking to shops etc. is not possible. [...]To this I replied:
I believe that a serious campaign must be launched immediately in Sydney to extend and consolidate public transport based on PO awareness. We can drop the doom histrionics and stick with the certain transport crisis, this is exactly the message Kjell Akelett described to me over a beer here in Sydney a couple of weekends ago. I also agree with Bob Hirsch, measures must be implemented BEFORE peak, a market based solution will be devastating.
anon, there is a risk here that Hirsch himself points out -- the risk of mitigating too early (see 2. and 15. in Appendix VI of the Hirsch report). For example, what if you build a new mass transit system to service the outskirts of Sydney, but nobody uses it for years and years because the price of oil doesn't rise enough to justify switching? It's the risk of wasting a big pile of money (private or public) on a fiasco people won't use. That's what happened with Jimmy Carter's "synfuels" program in the 70s and 80s. It turned out to be a porkfest where the oil companies burned through billions of dollars of taxpayer money and produced nothing of any value.I think people are still greatly underestimating the main risk of early mitigation: unrestrained pork. For example, consider this ironic development:
In Spain, Manuel Perez Becerra, secretary general of the Andalusian Beet Growers' Association, said that with current technology more energy is required to produce a litre of alcohol from beet than can be extracted from it once made.What Mr. Becerra is saying is this: the EROEI of beet sugar ethanol is less than 1, therefore his industry needs taxpayer money. Clearly this is peak oil heresy of the rankest sort. If a process returns less energy than it consumes, then (according to peak oil theory) it shouldn't be done at all, let alone be subsidized by the government. But the funny part is that Mr. Becerra will fight back with peak oil theory. We can't wait for the market to act because it will be too late. We need to start mitigating the inevitable liquid fuels crisis now. That's why my industry needs your tax money. Better safe than sorry.
Without tax breaks or subsidies of some sort it will not be viable to produce ethanol from sugar beet, he added.Source
The problem is this: If you step outside the market framework, you are talking about a big pile of taxpayer money, and all the snake oil salemen and subsidy feeders lining up to get a piece. Who get's the money? The corn ethanol lobby? The beet lobby? The coal lobby? The refining lobby?
You could argue that refiners aren't investing to expand refinery capacity because they're all waiting for a handout. All they have to do is sit on their butts, watch rising gas prices put the squeeze on, and keep stressing that they really can't get the job done without assistance from the government:
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.SourceIf the government is going to provide the funds because the market is too myopic, who will decide which projects get the funds? And how will they decide? I'd be interested in hearing serious answers to those questions.
-- by JD