Nearly all instances of "we'll run out of oil" are calls to action to innovate and adapt to ensure that the problem never comes to pass.
Claiming it's a bet against that is disingenuous at best.
Claiming it's a bet against that is disingenuous at best.
Hardly. In my experience, most alarmist calls about the finite nature of oil or resource xyz come with it a series of proposals to regulate or "conserve" whereas prices in and of themselves provide incentives to increase supply either through greater extraction/technology or substitutes.
Price systems are natural means of conserving/rationing resources.
1) An incentive to use a preferred technology
2) A disincentive against using an unfavored technology
The basic functionalities of commodity markets aren't questioned by anybody. Implying otherwise is nonsensical.
There's a secondary argument about risk tolerance in that some people default to doing things until proven harmful, whereas others default to not doing them until proven safe, and the whole spectrum betweeen.
But that said, as far as I can tell, the heart of nearly all environmental/energy debates is "is X mispriced?", where X might be gasoline, natural gas, water, trees, or darned near anything else. I'm not sure why you choose to deny that.
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edit: full disclosure, I believe that decentralization of energy production is important for a number of reasons, and that increased diversity of energy production methods is also important for a number of reasons.
I believe this so strongly that I have invested a fairly large sum of money into a startup that works to make energy costs more transparent, and that works to help entities evaluate and integrate multiple energy sources in an intelligent and cost-effective manner.
Obviously they attempt to do more than point out an item is mispriced. Otherwise, their best course of action would be to buy resource XYZ as it's pure arbitrage in which case it is a bet against our ability to innovate and adapt.
edit: I notice you've modified a significant portion of your response and added a disclosure. I tend to agree that the grid will get smarter and we will become more energy agnostic. That merely goes back to proving the point that the markets themselves create the incentives for resources allocation - ie innovate and adapt and for this reason it has been historically foolish to bet that we will run out of a given resource.
- Q causes asthma. - I own a factory. - That factory is cheaper to operate if it emits Q than if it doesn't.
This is an externality.
If I emit Q, I gain profit, and others take a loss, as they have to deal with the medical bills, and reduced quality of life associated with asthma. If I am never forced to pay for this, it's an uncaptured externality, meaning that effectively, I'm paying too little to emit Q.
There's no arbitrage opportunity, the only way to stop me from emitting Q is to find a way to capture the externality. In the United States, this would probably occur either via a lawsuit that attempted to make things right, or I'd simply be stopped via regulation that prohibited the emission of Q at unsafe levels.
The general criticism against fossil fuels is that they have a similar, but harder to quantify issue. Scientists generally agree that changing the atmosphere changes weather and hydrology in somewhat hard to predict ways. This means that whenever you add carbon, you're really increasing the risk of expensive problems. As a simple example, if you raise the ocean level by even a foot or three, there are huge amounts of infrastructure that are suddenly underwater, or that need expensive protection.
Or perhaps the additional carbon causes weather patterns to change in manner that leaves the Dongjiang basin dry. Then a large area is useless for agriculture and industry, and the existing infrastructure is devalued.
But I can burn oil all day, and I don't actually pay for those damages. They're uncaptured externalities. My use of oil is cheaper than it really should be, because it doesn't reflect all the costs.
As such, there's nothing to arbitrage.
* How do you suppose these conservationists aim to correct these "externalities"?*
Generally speaking, the goal is to come up with some sort of estimate on what costs are being incurred to others, and then apply that charge.
An example of a situation where this worked very well was with SO2 in the United States. Sulphur Dioxide emissions were causing acid rain, which caused a number of harms to others. As such, the government set a limit as to the total amount of SO2 that could be emitted, and created a market where companies could bid for the right to emit that SO2.
This encouraged companies to innovate, and find ways to reduce SO2 emissions. It worked incredibly well, costing companies far less than anticipated, and essentially solved the SO2 emission problem in the US, reducing it to levels that don't cause meaningful damages.
That merely goes back to proving the point that the markets themselves create the incentives for resources allocation - ie innovate and adapt and for this reason it has been historically foolish to bet that we will run out of a given resource.
You're seeing what you want to see. Markets are not perfect problem-solving devices. The price of oil reflects only the costs to get it from the ground, and the demand to burn it right now. It does not include the portion of the harm that may be accumulate from billions of people burning oil every day for decades.
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edit: and you see how bad people are with understanding the financial impacts of long-range things all the time. An easy example is to look at how poorly insulated many houses are, even in cold climates. The homeowners could spend $1,000 on insulation and save $600/yr for the next 15 years, but they don't do so, because the true price isn't sufficiently transparent.
Markets aren't perfect problem-solving devices - no one has said that they are, however, the regulatory "cure" is often worse than the disease. Regulations are certainly not the ideal way to deal with concerns a given resource are finite. Further, prices are signals in markets that themselves call for market innovation/adaptation - vocal calls for conservation are redundant.
(As a side note: it is also noteworthy however that the drop in sulphur dioxide emissions happened far before the creation of regulated markets suggesting that the fall in SO2 might have occurred irrespective of the regulation - further, from purely an economic efficiency standpoint, pigouvian taxes tend to be more efficient than the added structure of artificial pollution markets. Further, as an addendum to acid rain/"dead lakes" - this was a big concern for Canada until someone noticed that the primary reason the lakes were dead was because of reduced logging and the sediment that it disturbed)
The "Peak Oil" crowd as I understand them, are concerned that oil field production will stop growing, while demand continues to rise, and the price of oil could grow fairly rapidly, with hard to predict economic effects.
As such, they tend to advocate the development of higher efficiency consumption and exploration of alternative forms of energy while oil is still cheap. It's basically a position that calls on innovation today to avoid a problem altogether, or to soften the blow by laying some groundwork.
You clearly prefer a position where you don't innovate until your back is against the wall, and you mock anybody who does it earlier, and accuse them of not believing in innovation.
Whatever. I don't even care.
Where is the mocking? Again, the point being that the concerns over peak oil are wholly unnecessary - further to assume that anyone who uses the word "endless" in the context of any finite physical resource is hardly "dumb" as was suggested. Prices create the incentives for innovation - and that's not just when "your back is up against a wall" (any number of cheap emerging technologies being good examples). For someone who doesn't care, you seem terribly emotional and intent on personalizing the issue.
The opinions of those who are later on that curve are not more valid than the opinions of those who are sooner on it, or vice versa.
The people who advocate action sooner do not disbelieve in innovation. They just have different risk and utility functions, and these result in different advocated actions.