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Comment by marcus_holmes | Hacker News Reader

It's not like the oil is going anywhere, either.

I can imagine a point in 30 years where there are new, safer and better ways of getting the oil out, and oil is necessary for processes that don't involve burning it into the atmosphere, and the price is considerably higher than it is now.

I despair of (my current home country) Australia's attitude of digging up all the resources it possibly can and selling them for cheaper than everyone else. And being proud of this, like it's a good thing. These resources are irreplaceable and belong to the whole nation. Maybe leave some in the ground for later when the prices have gone up?

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As an Aussie that’s moved to Norway. I was shocked that the government here in Norway did the smart thing and monopolised the whole industry. Taxes are the same here in Norway as is in Australia, but it’s such a richer country. Everyone treats the oil money with such respect. We know that it came to us, and was temporary and instead of squandering this opportunity, it was done correctly.

> Taxes are the same here in Norway as is in Australia, but it’s such a richer country.

This is not a sensible comparison. Norway produces 313,661 barrels per day per million people, which is higher than all other countries besides Kuwait, Saudi Arabia, and the UAE. Australia produces 12,010 bbl/day/millon-people, i.e., just 3.8% of Norway's per capita production.

https://en.wikipedia.org/wiki/List_of_countries_by_oil_produ...

The extreme amount of mineral wealth that each Norwegian citizen has inherited makes Norway very difficult to compare to non-Arab countries on any issue connected to economics (i.e., basically everything).

Relatedly, the cost of living in Norway is much higher than Australia, despite Australia's extreme remoteness.

https://www.numbeo.com/cost-of-living/rankings_by_country.js...

Australia produces 12,010 bbl/day/millon-people

You should not look at just oil, but natural resources in general (in case of Australia, iron, coal and gold in particular).

Norway still comes out on top, but only by a factor of ~2 (cf https://atlas.media.mit.edu/en/profile/country/nor/ https://atlas.media.mit.edu/en/profile/country/aus/ ).

It's not the yield, but the profit.

Statoil makes huge margins on their oil because once the tricky rig was set up, it just comes out like Gold.

Most other natural resources have much thinner margins due to processing, overhead.

'Sweet Crude' i.e. the kind you get in the desert, and 'sweet once it's setup to be' i.e. Statoil ... this is a different thing together from other natural resources.

Norway is like Kuwait, it's almost impossible to compare it to anything else.

They can leave the Oil in the ground for now because they are very rich and have more money than they know what to do with.

You know what also comes out like gold? Actual gold :p

As far as I'm aware, profit margins on iron aren't too shabby either, though I'd have to do some digging how this all shapes up in these specific cases (Norwegian oil vs Australian gold, iron and coal).

The difference is not just profit margins, but very different capex and opex. Capex on oil rigs is large (especially offshore), but opex is pretty reasonable. I would imagine iron mining has much higher opex. A better approach it may be to loot at the graphs of average fixed/variable/total cost, which are very different.

I did, which is already reported further down in this thread, and my eyeball estimate was the Norway exceeded Australia per capita by more than a factor of 4. Happy to see more accurate numbers.

Sure. We're looking for something that's equivalent to Norway's oil industry. According to the links I gave, Norway's top exports are Crude Petrolium and Petrolium Gas, in 2017 accounting for 53% of all exports at $55.8B. Assuming a population of 5.3M, this translates to $10.5k per person.

Australia's top exports are also based on natural resources, namely, Iron Ore, Coal Briquettes, Gold and Petroleum Gas, accounting for 60% of all exports at $144.6B. Assuming a population of 24.6M, this translates to $5.9k per person.

Thanks. As discussed further down the thread, it is disingenuous to add natural resources to Australia's total but not Norway's total. (Metals and fishing are both 10% each of Norways exports.) This makes it 15.5k per person in Norway, giving a ratio of 3, halfway between the ratio I eyeballed (4) and the one you did (2).

As far as I'm aware, metals and fishing do not contribute to the Government Pension Fund of Norway, which is why I did not include them on the Norwegian side and similarly only looked at the top items on the Australian side (eg adding Refined Petrolium on the Autralian side would push the balance closer to 2 again).

Point is, while Australia isn't quite as well off as Norway, there are resources aplenty to pull off something similar on a somewhat smaller scale.

That may be your point, which is fine, but the original comment I was replying to was comparing the tax rate of Norway and Australia, and I was arguing this is not a sensible comparison in light of the much larger natural resource inheritance of Norway.

I think the original comment only really mentioned taxes in passing and then the discussion went off down a rabbit hole; but a wonderful rabbit hole in which each subsequent comment added more interesting and relevant information.

Fishing, unless you feel that the fisheries are being overfished, is in quit a different bucket because it's a renewable resource.

Metals is an interesting case because on the one hand they are definitely a non-renewable resource. On the other hand, it seems like there's a difference between exporting ore and exporting refined metals, in terms of whether it's "just" resource extraction or not...

you also have to look at extraction costs - Statoil is very high yield and low cost extraction which survives even the tightest OPEC squeezes.

Iron ore extraction isn't bad but it's nowhere near as profitable as Norway's oil extraction

You'd have to do that across the entire range of resources and then divide per capita - on that basis I think Norway would blow by 4x Australia just based on off-the-top of my head estimate

Add lithium to that list.

Australia exports (perhaps much) less than $1B/year of Lithium, so that's way smaller than the rounding error of this discussion.

The quantity is not a rounding error, whereas the value is low only because the Australian government prices lithium far below its value.

Sure can't deviate from its modus operandi; it's not Norway, after all.

And by that I mean that Australia favours enriching corporate coffers over collection revenue from its natural resources so as to benefit the whole nation with a long term view.

I think the broader point is that by nationalizing a shared resource, Norway achieved an outcome that benefits their entire society.

They are fortunate that they are one of the few countries with functional government that could handle the oil wealth responsibly.

If you compare it to the United States, we socialize many of the risks associated with oil production, refining and transport, and let the extractors, refiners, and transporters reap the benefits.

There's no shared resource. It requires risky exploration and investment in extraction. Do you really think the 25m Australians can afford to gamble on hundreds of billions on LNG terminals? One bad investment or a big drop and the whole country is bankrupt.

Currently private sector and foreign business takes the risk. Then Australia gets a share of the profits through royalties and taxes as well as the labour income through employment of workers.

>Currently private sector and foreign business takes the risk.

Australia provided mineral exploration incentives of $31m for 2018/19 at the tax payer’s expense, to mitigate that risk.

https://www.financeminister.gov.au/media-release/2018/06/26/...

> It requires risky exploration and investment in extraction.

Which represents a tiny amount of value compared to the energy stored in the oil.

As another fellow Aussie emigrant (not to Norway though), I believe they were not only talking about oil resources but all the other natural resources Australia is selling.

My bet is Uranium is going to be an important one too in the future.

Uranium is actually quite common; it's cheap because it's an extremely controlled market (who are you going to sell it to?) with fairly limited demand (it doesn't take that much uranium to run a power plant or make a nuke, a cube about a meter per side can run a reactor for a year). Because it's so cheap, it's not substantially prospected so there is a good chance there are large reserves that can be exploited if we go looking for them.

And, if it comes down to it, we can pull near-unlimited quantities from seawater at $200-1000 per kg (~10x current pricing). The costs of nuclear power generation are almost entirely capital costs and insurance, the fuel costs are practically a rounding error, so this does not substantially change the costs of nuclear power generation.

https://www.newsdeeply.com/oceans/articles/2018/06/28/the-nu...

So, uranium will probably never be super valuable. Strategically important, and nice to have in a conveniently accessible form, but not economically valuable.

Eye-balling the numbers, you'd pick up less than a factor of 5. I encourage you to look at the details and report back. You should also correct for the natural resources that Norway has the Australia lacks, like fish (almost 10% of Norway's exports inclusive of oil!).

Energy is about 50% of Norway's exports, and minerals + energy is about 60% of Australia's exports. These are extractive industries that are structurally similar.

Norway exports about $50 billion USD / year. Australia exports about $120 billion USD / year.

This is probably why the Australian is comparing the situation with Norway.

https://www.minister.industry.gov.au/ministers/frydenberg/sp...

https://www.norskpetroleum.no/en/production-and-exports/expo...

I'm aware that comparison he's trying to draw, but the comparison has to be fair. First, most obviously, Australia has almost 5 times the population of Norway! Second, if we're going to start increasing the scope of exports we're including, to make a fair comparison we should include minerals in Norway's total (not just Australia's), and we should really include other resources that Norway has that Australia doesn't (rather than just picking a category where Australia has larger exports). What are the numbers in this case?

Again, I think this works out to a per capita endowment of that is still much, much larger for Norway, but you'd actually have to do a bit of work to check.

Compare respective sovereign wealth funds: https://www.economist.com/finance-and-economics/2016/09/24/h...

IMO you're on a hiding to nothing trying to support your position that the comparison isn't valid. The economic export situation is structurally quite similar between Norway and Australia, and the difference in how they've handled it is vast, far greater than any multiple in population.

Huh? No one disputes that the countries handle things differently. But if you want to say that one way of handling things is better, and the only evidence you give are better outcomes, then inputs ought to be similar. But if one country has 30 times or 3 times the input (corresponding to oil or most natural resources, respectively), then this is a very poor comparison unless you do a lot more work to correct for it.

Here's a simple way of looking at it: Norway has converted its resources into a $1 trillion pot of funds, while Australia has, to a first approximation and over a longer time frame, zero or less (the country runs a budget deficit). So it doesn't really matter if the input is 3 or 30 times bigger if the function converting it into output is broken.

Australia doesn't have ocean access and fishing industries?

Fish makes up just 0.13% of Australian exports

https://atlas.media.mit.edu/en/profile/country/aus/

Next time, consider looking the number up yourself and reporting back rather than just asking the question and so forcing me to look up the answer for you (or else look like I'm ignoring the issue).

Fish being a minor part of Australian exports is a claim with absolutely no relationship to whether or not Australia has fish. You claimed it didn't, and that is not credible.

In context, my claim was clearly that Australia did not have access to fishing resources that had economic effects that were remotely comparable to its total exports.

To OP really between coal and LNG alone dalore is making a fair comparison.

An Australian's context here is that a minerals tax was proposed to build something remotely akin to the Norwegian fund, but was killed for political reasons. The key piece of the discussion for Australians is not the tax comparison or oil comparison that you've latched onto, but of a missed opportunity.

Where the Norwegians could appreciate what the sovereign fund meant for them, the attempt in Australia was lambasted as another tax, copped serious lobbying by mining giants, etc.

Granted it would have been nice to have a mining tax in collecting money for Australian social expenses.

However if they would introduce such a tax now then it might encourage new mining developments and let them be sped through the environmental checks faster than they are now. So there is a danger we would have many more Adani like mines popped up.

Though yet again maybe having a high enough mining tax would possible discourage such endeavours?

The major form of mineral production in Australia is mining, not oil.

Per http://www.worldstopexports.com/coal-exports-country/ in 2017 Australia exported $40.6 billion of coal, for a population of ~25 million. Per http://www.worldstopexports.com/iron-ore-exports-country/ it also exported $49.3 billion of iron ore. Per http://www.worldstopexports.com/gold-exports-country/ it also exported $13.1 billion of gold. Just between those three items that works out to ~$4k per person for the year.

Per http://www.worldstopexports.com/worlds-top-oil-exports-count... Norway exported $26 billion of oil, for a population of ~5 million. So about $5k per person for the year.

Now both countries do other resource-extraction stuff too. Norway's natural gas exports are almost equal to their oil exports, as far as I can tell. Australia's annual exports of natural gas seem to be in the $40-$50 billion range depending on the year you look at (it's grown a lot recently). And Australia is doing a bunch of non-iron-ore and non-gold mining too (gems come to mind).

Overall, per capita resource extraction revenue in Norway is certainly higher than in Australia, but it's not the "25x" higher than the oil numbers alone would indicate. Maybe 2x.

>313,661 barrels per day per million people.... Australia produces 12,010 bbl/day/millon-people

Would be way easier to understand the comparison if the notation would be the same on both numbers. I assume bbl means billions of barrels, this means Australia's number is higher by few orders.

They are the same notation, look it up. If Australia was producing 12,010 billion barrels of oil per day per million people you'd probably be able to see that portion of the globe turn black from space, everyone in Australia would have drowned in it and an oil tsunami would be heading towards New Zealand.

bbl is market jargon for barrels, not billions of barrels...

That's goofy, most abbreviations drop letters rather than adding them.

So why not use the same for both numbers?

Diamonds in Botswana, Copper in Chile, farmable land in the US, etc.

The point is that Norway has managed it's natural advantages to the benefit all of their citizens compared to other countries whose resources primarily enrich individual companies/owners.

For this Norwegian expat, it's extremely hard to not see Australian politicians as corrupt - and inept, prioritising the wealth of the rich over that of the nation.

Canada did the opposite. Canada takes all the oil money for granted and basically has not used it to innovate anything. Instead, it's been drained by a few supposed elite that run oil companies and their cronies. The future of the oil provinces looks bleak.

The attitude of those in the oil industry does not help this at all. I work in oil and talking politics to those I work with just makes me sad. There is a lot of anti-government hate. People are still resentful about the National Energy Program and that ended 30+ years ago. Its kind of a mess.

I think its the notion that all the provinces are competing against each other, and that under any oil program some provinces will win and other lose that really holds us back. No one can see that we can all win by collectively working together. It doesn't help at all that there are now moneyed corporate interested involved that are not interested in seeing any changes take place.

> People are still resentful about the National Energy Program and that ended 30+ years ago. Its kind of a mess.

As someone from Ontario, I wouldn't even care about it being federalized as long as it was better "provincialized":

* https://en.wikipedia.org/wiki/Alberta_Heritage_Savings_Trust...

At the very least only payout dividends on a portion of the returns on investment from the fund:

* https://en.wikipedia.org/wiki/Alaska_Permanent_Fund

> Canada did the opposite.

Not "Canada", but the province of Alberta. Norway is a 'monolithic' country, but Canada has federalism where the provinces have jurisdiction over certain areas.

And Alberta did/does have a fund, but over the decades various governments (generally Conervative) have decided not to really invest into it:

* https://en.wikipedia.org/wiki/Alberta_Heritage_Savings_Trust...

Canada's oil is very different from Norway's oil. Tarsands are extremely energy- and water-intensive to exploit. This makes it far less economical of a resource than the North Sea oil produced by Norway.

Because Norway's oil is more profitable, it can be taxed much more heavily. If you were to tax the tarsands at the same rate, it would put the companies out of business.

Wasn't really what I was getting at... which is more in the lines of the oil industry is going the way of the dinosaurs we need to found some new industries with its profit in ordr to survive the next century. However, since you want to talk about it, oil companies fleece Canada as well...

"While royalty rates in Newfoundland are the highest in Canada, in Alberta they have fallen from a 40 per cent high during the 1970s to less than four per cent, and a complex system of exemptions ensures companies often pay even less."

That's insane.

https://www.theguardian.com/environment/true-north/2017/oct/...

What's even more amazing is that ~2% of Canada's GDP is oil, yet if you were listen to the braying of the oil companies, and their bought-and-paid-for stable of politicians, they make it sound like that number is ~25%.

We are literally bending over backwards to subsidize and prop up a rounding error in our economy.

It is around 25% of Alberta's GDP. Much of the service and secondary industries that derive profits as a result of that industry and are directly affected by it. So if that industry dies, there will be far reaching effects since there is nothing to take its place. The service economy which is a much larger part would be significantly effected.

And the population of Alberta is only ~12% that of Canada. It's addiction to oil is dragging the rest of the country down every time there's a drop in oil prices - as well as in our obligations to meet our carbon commitments.

Right now, 33 million people have to suffer, and pay more for energy, because one province is increasing its carbon output.

Edit: I am not a bastard, and I fully think that other provinces need to financially help Alberta disentangle itself from the tar sands. But it needs to be ready to accept this help, first.

If you listen to the rhetoric in Alberta, many Albertan's feels they are paying more than their fair share - there's talk this election cycle about somehow renegotiating the transfer payments. It's all talk about rolling back subsidies for alternative energy, and going even more whole hog into O&G. I'm an Albertan and I don't get it, I don't get it at all. I'll be voting for what seems to be the losing party this election.

> I'll be voting for what seems to be the losing party this election.

You might be surprised. Last election we saw spots of orange and red appear in what was once always blue. Demographic change appears to be moving against the Conservatives and the oil industry.

I'm hoping that's the case. I'm also aware that you have to say you're voting UCP in a lot of places in Alberta, or you'll be under intense social pressure. I hope I'm pleasantly surprised.

I don't think that's a completely fair comparison. Oceangoing drilling is dangerous and hugely expensive. Many many lives have been lost on North Sea rigs (as well as entire rigs, costing hundreds of millions of dollars.)

> Taxes are the same here in Norway as is in Australia

Is that true? Norway has a 78% tax on profits from the oil companies.

I'm guessing that was about personal income taxes, which may or may not be ~similar - I haven't checked.

Okay. Comparisons of personal income tax in Norway usually come out very misleading, since personal income tax only accounts for around half of a person's total tax burden.

(For instance, there's a 14% employment tax, 25% VAT, car taxes that increase vehicle purchase cost by 100% and fuel cost by 200%, toll roads that are impossible to avoid during daily errands, 0.85% annual net worth tax, 31% capital gains tax, property taxes and municipal taxes, and that's without getting into extra taxes for luxury products or how corporate profits are taxed).

They are completely different situations, not even remotely comparable.

Everybody assumes that oil prices are going up. However, there are several large effects that could cause the price of oil to decline.

1. Economics predicts that the price of something will be the same as the price of its cheapest substitute. For a long time, fossil fuels were the substitute, keeping the price of renewables & nuclear down to unprofitable levels. However, renewables, storage and electric cars are all rapidly decreasing in cost, depressing their prices and the prices of their substitutes.

2. Carbon taxes or other similar schemes are looking more likely in the future. They shift the demand/supply curve, causing fewer barrels to be sold at higher prices, but the price doesn't go up enough to cover the full increase, leading to depressed prices before the tax.

3. Economics says that the price of a commodity is the same as the marginal cost of production. In other words, the highest cost producer of oil that meets current demand makes $0 in profit, all lower cost producers make >$0 profit. If demand is low, then that marginal cost is $10 Saudi oil. If demand is high, then that marginal cost is $100 Canadian oilsands oil. So if demand drops because of climate change mitigation and/or renewable substitution and/or electric vehicle substitution, there is supply of lower cost oil, meaning prices can drop.

4. We're not running out of oil, we never have been. As mentioned in #3, the price of oil is the marginal cost of production. Anything that costs more than that price isn't counted in reserves because it's uneconomical to extract. So by definition we always have almost no reserves and never will have.

There are trillions of barrels of oil in the Canadian and Venezuelan oil sands alone that aren't counted as reserves for this reason. We're less than 2 price doubling periods away from making this economical, keeping a fairly low ceiling on prices.

And of course technology marches on, continually decreasing the price of extracting that oil...

What's lost in your analysis is that oil extraction is becoming increasingly expensive. Magic tech isn't making it cheaper; it's making it viable at all.

Consider EROEI (energy returned on energy invested). This is how much energy it takes to extract a barrel of oil from the ground, whether by pumping or by melting in the case of tar sands and shale. In the 1950s, EROEI was about 100 - the energy of a barrel of oil could extract about a hundred barrels. The Canadian tar sands have EROEI of about 3.5. They weren't profitable until oil became expensive enough to make it worthwhile.

Once EROEI dips below 1, price is negative. It becomes impossible to extract the oil profitably. Some of those "trillions of barrels" you talk about are in that camp. They don't count as reserves, because they're useless.

Meanwhile, oil is going to keep getting more and more expensive and difficult to extract. Offshore deep-water drilling, tar sands, stuff like that, it's incredibly hard and often environmentally dangerous/destructive. And renewables get cheaper and cheaper, as there's a lot more room for improvement in technology and manufacturing scale.

Eventually - and I don't think that point is far away - it will be impossible to produce fossil fuels cheaper than the cost of solar/wind.

My "analysis" was purely one sided; I left it to others to argue the other side because I knew they could do it better than me. And lo, here you are. Thanks.

> Eventually - and I don't think that point is far away - it will be impossible to produce fossil fuels cheaper than the cost of solar/wind.

I hope and believe that you're right. But I don't think it will be because the price of oil is going up, but because the price of alternatives is going down.

> Once EROEI dips below 1, price is negative. It becomes impossible to extract the oil profitably

EROEI is not a constant, it changes with technology too.

And we'll still need oil for plastic, so it's theoretically possible that we'll use alternative energy to heat the tar to extract the oil to use it in plastic.

But woe is us if we ever get to that state. We'll have burnt so much oil that we'll be well past the climate change tipping point.

I think that even past 1 there's a value in a portable energy store.

On the other hand, there's nothing magical about petroleum that can't be synthesized, given enough energy (electricity from solar/wind works), and simple water/CO2/etc to provide the building blocks for long-chain hydrocarbons. It's even more straightforward to start from cellulose or plant sugars.

I agree that for things like aircraft, there's unlikely to ever be an electrical substitute for the energy density of organic fuel. But that could be done entirely from renewables if needed.

>Once EROEI dips below 1, price is negative. It becomes impossible to extract the oil profitably.

This is not strictly true: First, non-fuel use accounts for 5-10% of oil use.

Second: As long as oil offers higher-density (fuel energy, thrust-to-weight, &c.) mobile power generation than alternatives, it can be profitable. Id est: if it's cheaper to extract and refine a barrel of oil (perhaps with renewables) than to produce the equivalent biofuel, the oil could be produced profitably.

Brent crude, from the UK North Sea fields, is much lighter than Iraqi or Saudi crude. I'm guessing Norwegian crude is similar. Light crude is too "good" for fuel use; I believe it's used for plastics.

Eh. If it takes two barrels of oil to extract one barrel of oil, where do you get the energy for extraction? Then you're using solar/wind/nuclear to pump oil. At some point, it's cheaper to just synthesize.

Aircraft and shipping require hydrocarbon-level fuel energy densities by mass and/or volume. There are no, or exceedingly few, substitutes.

Petroleum consumption will, can, and has proceeded well beyond EROEI 1:1 parity within such uses -- see Germany's WW2 Fischer-Tropsch process.

The correct measure here is total economic return.

Fuel synthesis is negative EROEI.

Maybe. Cf. every mineral that's mined. Energy expended to extract a resource.

Not the same. You don't use up the iron you mine in the mining process. That's what EROEI < 1 is, unless you get the energy input from some other source.

And since anything that's in petroleum can be synthesized from simple molecules like water and CO2, given enough energy...

>Once EROEI dips below 1, price is negative. It becomes impossible to extract the oil profitably.

Actually even 1 or 2 wouldn't make much sense. It was close to what people had in medieval times without oil (1.5 energy or something close, from animals, mills, fire, etc).

Let’s not forget that oil is not just used as an energy source. It’s the basis of plastics, drugs, cosmetics and many more things, not all of which have substitutes.

There is a good book about this that discusses the problem you just mentioned [1]. Not only do we need to find a way to replace oil as energy source we also need to find a way to replace it in all the other consumables. Or at least find viable substitutes.

How this will happen is not very clear (to me)

[1] https://www.withouthotair.com/download.html

All the more reason to conserve oil for those purposes. It is too valuable to burn.

How much oil is used in manufacturing materials, though, rather than as energy? I suspect that's a small percentage.

About 12-13%, according to this: https://www.eia.gov/energyexplained/index.php?page=oil_home

And most of that is lubricants and plastics. I think we can all agree that reducing our use of plastics is generally a good thing overall - we might make the switch back to more easily recyclable materials, e.g. aluminum and glass, which, although energy intensive to recycle, are almost endlessly renewable.

Not sure what good substitutes for oil based lubricants would be.

The primary problem with petroleum is greenhouse gasses, so I'm far less concerned about its use in plastics than I am in its use for fuel.

I have low confidence in this answer, so I hope someone on the internet corrects me if I'm wrong.

Oil is refined into many different byproducts. Some of the byproducts are used in manufacturing, and other byproducts are used in energy generation.

Just curious, does drug manufacturing use up oil in significant quantities?

Also don't forget kerosine. Batteries are too heavy to lift.

> We're not running out of oil, we never have been

I mean, there are various ways to define what that means, but oil is getting increasingly expensive to get, alternatives are getting better, we may soon not have much oil left worth getting.

and of course we can bicker about what soon means.

> oil is getting increasingly expensive to get

Agreed. That is obviously a factor increasing oil prices, and may certainly more than balance the 4 factors I listed.

> alternatives are getting better

central to my argument

> we may soon not have much oil left worth getting

Oh I certainly hope so. I'm saying that we can't rely on oil prices going up substantially to ensure this. We need to invest in alternative energy sources and consumers and use carbon taxes to ensure it.

>We're not running out of oil, we never have been.

Actually we are consistently running out of oil, it being a finite resource.

You could say it's "enough for another 100 or 200 years" as opposed to those who say it's only enough for less, but you can't make it like we have infinite oil.

We chanced upon a source of relatively cheap energy that was created in geological time and takes millions of years to create. We didn't chance into some infinite tap.

>Anything that costs more than that price isn't counted in reserves because it's uneconomical to extract.

Beyond some point it would be so uneconomical to extract as to be meaningless -- or as to slow down the economy considerable, if it isn't for alternative energy sources (which also have their own problems if attempted at anything compared to oil use scale -- including storage, bad EROEI minus the subsidies, hidden costs, and unpredictable output, despite the solar cheerleading).

The Norwegians are using clean energy to produce oil. Wind, hydro, etc. are being used to power the pumps. Simlarly, Texas has huge investments in wind and solar and likewise the middle east is using solar installations to pump oil and gas. The economics for that are already such that that is cheaper. So, these costs are actually dropping: clean energy is being used to make dirty energy cheaper.

Climate change is very real on the North Pole and as a consequence, the US, Norway, Denmark/Greenland, and Russia are gaining access to new oil and gas fields that used to be inaccessible and are now being exploited. Particularly Russia is pumping out a lot of gas in that region and I'm sure Alaska is also doing well. So, there is indeed plenty of oil. But it matters whether you can sell it at 30$ or 100$ a barrel.

Another thing worth highlighting is that synthesizing carbo hydrates (aka. oil) from air is a feasible but energy intensive process. I.e. once clean energy prices drop far enough, that might actually become more lucrative than getting real oil/gas from the ground. Also a great way to store excess energy and you can do it anywhere. Like e.g. next to the refineries or pumps, thus cutting out transport as a cost factor.

P.S. There are still several factors pushing prices up, too.

It's really hard to imagine the scale at which we currently produce oil. In total we produce an average of 80.6 million barrels per day. This doesn't sound like a lot at first but consider that there are 159 liters of oil in a single barrel. When you work this out, it means that we are producing 1.7 liters of crude oil per person, for every man/woman/child on this Earth, per day - every day. Had to double check my math there, because that sounds so absurd. But it's correct! So to visualize that quantity imagine every single man, woman, and child on this entire Earth took a 1.7L beaker (about 5 cans of coke) full of oil, and emptied it out onto the ground. That's how much oil we produce, each and every day. Just stupefying!

The problem this reveals is that oil will only be valuable in the longrun if some technology is developed that requires just stupefyingly large quantities of oil. Otherwise, the supply is just far too high. And a catch is that even if this new technology is developed, it's difficult to imagine any usage where 12 billion liters of crude oil per day would not have a massive environmental impact, one way or the other. I would not go long on oil, unless you think it will continue to be used as a primary source of energy generation decades from now.

Those 1.7L don't event cover my commute and I'm using a 40mpg car, not some gas guzzling 20mpg pickup truck.

So it goes to show how many people in the world don't commute to work in the same way or don't even use up their 1.7L "allocation" of oil.

I see this attitude as reflecting the "terra nullius" origin of European colonization: Australia is completely empty and undeveloped (as long as we ignore the people who already live here of course!) so there are no consequences of our actions. Plus we're all far away from "civilisation", and nothing we do here interests people "back home" so presumably it doesn't matter what we do.

Add to that the unprecedented (truly unprecedented, world wide) growth of the economy (where "growth" is measured only against the things we choose to measure, i.e. GDP) thanks to being a mining colony of China and presto: we're great! A bunch of pollies were along for the ride while Chinese technocrats happened to channel a bunch of cash Australia's way, and decided that they were responsible for "success" they had nothing to do with. Why plan for the future?

I live now in the USA where the problems are really really bad. I still have hope that the lucky country will come to its senses. Australia has so much wealth to work with. Compare it to, say, Russia, also a primarily extractive economy: the two countries have roughly the same size of economy but Russia divides it over 5X the number of people, and has if anything an even less diversified, and far more corrupt economy.

But isn't Australia (the South at least) doing some serious work around renewable energy and in specific stationary energy storage?

https://electrek.co/2017/11/23/tesla-worlds-largest-li-ion-b...

https://electrek.co/2018/05/11/tesla-giant-battery-australia...

And another one:

https://www.teslarati.com/tesla-virtual-power-plant-south-au...

I'd like to think since the land of Oz has a very thin ozone it is great for solar. As the cost of industrial batteries come down, this seems like much more of a sensible future. In the US, battery + solar/wind is just now becoming cheaper than building new coal / natgas peaker plants. This will only continue as the economies of scale and tech improvements drive the cost further down for renewables.

I like the view that keeping the oil in the ground rather than burning it now is an investment. Then again, there is this view:

"The Stone Age didn't end for lack of stone, and the oil age will end long before the world runs out of oil."

  --- Ahmed Zaki Yamani,  former Minister of Oil for Saudi Arabia

We use vastly more stone today than in the paleolithic// neolithic.

The phrase is vague to the point of meaninglessness.

You assume that the ROI of oil will be more in the future. If Australia weren't a top materials producer the entire country would be poorer -now-. That oil money doesn't just evaporate, it reverberates through the entire economy and goes into other goods and services, which also grow. That economic growth will be better for the country, tenfold (and that's playing down the impact,) than just sitting on the oil and waiting for the price to go up...which it may never, due to dwindling demand and alternatives becoming cheaper.

I fail to see why oil reserves found within a nation's borders belong to them. Why is that oil Australia's do you think?

We the people of earth depend on the rainforests of South America. Does that rainforest belong to South Americans? If you think that, please state your reason.

I'm so sick of nationalism. Where are all the globalists?

Because that’s pretty much the definition of nation-state: control over a territory and what happens inside it. If you meant to ask why they should belong to the nation states, well, if they belonged to “humanity” someone would still be calling the shots, and there’s no guarantee it would be the Norwegians.

If we abolish nations and go for absolute globalism, who should extract the oil ?

Who should decide who gets to extract the oil ?

If there's a system to solve those two questions, why is that system better(as you imply it would be) than the current system ?

Here's a reason: some small populations like Norway and New Zealand are successfully going greener. This happens in part because our politicians are paying attention to their constituency.

It appears to me that many larger countries are not going green (in particular the US climate change denial) and part of the problem is that those at the "top" are very detached from those at the bottom.

Why would a single global political entity care more for the median person or the poor person? Care more for a forest, or a global oil company?

To close the loop, maybe Norway could also walk away from drilling for oil off South Australia: https://abc.net.au/news/2019-03-11/great-australian-bight-no...

That would have to be Australia's call, as it's Australian territory (I presume). Norway can only walk away from drilling on Norwegian territory, which it did (or will do, nothing has been voted on yet in the parliament). The actual drilling is done by oil companies, and those who wanted to drill in the affected areas in Norway had no intention of any kind of walking.

>and oil is necessary for processes that don't involve burning it into the atmosphere

Modestly unlikely. The need for negative emissions will probably result in producing hydrocarbons from captured atmospheric CO2, which will be expensive, but not as expensive as paying whatever giant carbon tax will be assessed on geological oil.

Yep. One day oil will be too valuable to burn.

> These resources are irreplaceable and belong to the whole nation.

I'm confused. (Libertarian here) Are mineral rights nationalized in Australia? How do they 'belong' to everyone there, as opposed to the person who owns the ground that those resources are in?

"In general mineral rights in Australia are reserved to the Crown"

https://www.austrade.gov.au/land-tenure/Land-tenure/mining-a...

Which seems as complex as you might expect for something based on similar UK laws:

http://www.bgs.ac.uk/mineralsUK/planning/legislation/mineral...

NB I've thought for a while that land 'ownership' is a slightly odd concept - not helped by being in Scotland where land ownership has had over a thousand years to get in a nice mess.

Would have a link or something to look up about Scotland's land rights being a mess? I realize I'm veering a little off topic here, but I'd be curious to learn more. I'd never heard that before

I can recommend this book if you are are really interested:

https://www.goodreads.com/book/show/14614429-the-poor-had-no...

This Guardian article gives you a flavour of some of the issues:

https://www.theguardian.com/uk-news/2013/aug/10/scotland-lan...

The land was seized at gunpoint within the past couple of centuries; does that affect your answer?

That's been all of world history for 1300 years, what difference does it make?

Are you cool with it happening now? Then maybe it's not right, and maybe it wasn't right before.

"right" doesn't enter into it. The people with guns have always made the rules and still do.

What do you propose with regards to that? The concept of historical reparation is in general quite complex, do you think it would be possible here?

The existing solution of the state exploiting mineral rights to non-Aboriginal land and [at least theoretically] distributing their proceeds across the entire population, including those whose access to the land was taken, is probably less suboptimal than regarding mineral rights as 'belonging' to the person who most recently acquired the land title.

effectively, yes, mineral rights are nationalised.

when you buy property in Australia, that does not include the mineral rights on that property, which are a whole separate thing. Farmers have got rich selling access to mine sites, but only the government can sell the mining rights (for the first sale anyway).

If the person who owns it is the government, then it belongs to the public.

A government of the people by the people. Such a wonderful ideal, one I wish more strived towards.

That's certainly what the government wants you to believe :)

Only in an idealized democracy - and democracies don't work that way.

Democracies work any way those who participate in them want them to.

I think you were emphasizing the participation part? And I agree, but curious to where do you draw the line on what constitutes participation?

Some argue simply paying taxes. Others say it is a list of things perhaps, called "civic duties". Finally, some more extreme believe you have to do it all: attend the town halls, keep up with the times, understand the various debate points, otherwise you are somehow disqualified from playing. (A side note, it has become impossible to keep up with all the ways government affects your life, and this is one of the exact reasons the founders were for limited government. They argued as the responsibilities and roles of government increase, it becomes impossible for the "commoner" to keep up and stay engaged, thus becoming a form of tyranny in of it's own.)

I think it's definitely a gray area, but the more participation, obviously, the better, while still somehow maintaining the ability to serve those who participate little just as equally. Otherwise you become a government of some people, not of all people.

See, this is the lame kind of pat answer that makes others have to point out that you are being idealistic.

The horror /s

It’s more healthy than the alternative.

I generally agree with libertarians in that people should not be overly taxed when they create a house or plant a crop. But in this case, the person who owns the land did not create the natural resources. So no, they should not be entitled to it. Also the current public is not entitled to it either. Future generations need to be considered as well.

There are actually far more practical reasons for public management of oil and gas resources. The reservoirs are huge and span more than a single owners private property. In order to harvest efficiently you may require coordination or non local maxima decisions to improve overall production. Otherwise you'll leave the majority of the resources in the ground with no way to get them out

Private entities manage to coordinate across the globe to build hugely complex products, from extraction of resources to manufacturing, assembling, distribution and retailing, and you think reaching an agreement between a few land owners is too much for it?

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