2023-01-01

Happy New Year

I don’t know who is reading this, but I had one Christmas card from someone who has notice that I am writing something, so there must be a non-zero chance that he, and others will read this. Thanks, Chris!

Oil

ever since. In periods of recessions, oil demand would be below trend for a year or 2, and then meet the trend again. After being below trend in 2008 and 2009, oil demand went back to trend in 2010, as if no great recession happened. Could it do the same again? 2/6 pic.twitter.com/dXJk1SkVwE

— Pierre Andurand 🇺🇦🌻🇫🇷🇪🇺 (@AndurandPierre) December 29, 2022

The oil price has crashed in the second half of 2022. It was going up uncontrollably until Russia invaded Ukraine, then it crashed, then it shot up again until June after which it has been downhill all the way.

The bear case is that oil is a fossil fuel which is being phased out in favour of wind and solar. I think that this is true, in the long run, but my view is that in the short run the demand for an easily transported highly energy-dense fuel driven by economic growth, particularly in newly industrializing countries, will outrun the drop in demand driven by the substitution effect of renewable energy.

Getting unbiased information on these matters is virtually impossible. Nobody does research without funding, and there is no funding from genuinely disinterested sources, or at least this seems to be the case to me. Greta Thunberg and Bjorn Lomborg sometimes seem more like cult leaders than dispassionate commentators. I try to filter out the bias, but it’s almost impossible. The reason that I tend to pay more attention to the renewables sceptics, like B F Randall, is that they make their case with charts and numbers and an appeal to physics and economics to argue that however important decarbonization is, the world as it is currently constituted, cannot afford it.

I was chatting the other day to someone who made the argument that probably the Pope is not a true believer. I’m inclined to believe this myself. I suspect the same might even go to figures like Al Gore and Greta. Once you are principally known for promoting one particular world-view, your sense of self-worth and identity becomes very bound up with that same world view. Many seminarians become apostates, but very few bishops.