Cornucopia or Malthusia - a reply to John Tierney

Five years ago John Tierney agreed on a bet with Matt Simmons that by this year the average price of crude oil would average $200 a barrel. The bet is now due, although, sadly, in the interim Matt has passed away. And Mr Tierney has just posted (h/t Leanan) his comment upon winning the bet. While recognizing the impact of the recession on oil prices, after their rise to $147 in the intervening years, he points out that this year crude averaged $80. This he feels justifies the position of the Cornucopian approach to life, rather than the Malthusian.

Would that he were right! In his article he cites oil from new fields coming ashore from fields off Africa and Brazil, and increased production from the oil sands of Canada and the United States, as promising a maintenance of this Cornucopian era into the future. And he uses a historic parallel to show how in an earlier time Julian Simon won a similar bet against Paul Ehrlich, John Holdren and John Harte over the price of a basket of 5 metals.

Admittedly he is currently in good company, since the EIA is not looking for the price of crude to rise above $100 a barrel for another six years, and the IEA recently posted in their December Oil Market Report that global production increased from both OPEC (up 45 kbd) and non-OPEC (up 355 kbd) sources in November. It sees that production will continue to increase through 2011, meeting an increase in demand to 88.8 mbd. 0.5 mbd of that will come from an increase in NGL from OPEC, rising to 5.8 mbd.

Art Berman has just explained some of his concerns with the optimistic projections of the EIA Annual Energy Outlook and I agree with his line of argument. But let me take a slightly different tack in disagreeing with the Cornucopian position.

And it is true that oil companies are now gearing up for a much greater level of investment in this next year than in the recent past. The WSJ quotes a Barclay’s Capital report that levels will reach $490 billion, up 11% on last year. It also notes that the price rises of 2008 led to a boom in deepwater rig construction, and the 25 built in 2010 will be joined by 35 next year. All of which allows the Journal to end with a quote that “Higher investment now will mean lower prices than they would otherwise be in the future.” (Well yes, but . . . . ) But the reality is that the levels of investment that will be required to sustain current levels of production are likely to exceed these numbers, and we are in a time when greater prospecting will likely only lead to a diminished return. Not that we don’t need that investment.

So how does one address this issue. Well Let’s just go back to that original bet by Simon against Ehrlich et al on the price of metals. The original bet was as follows:

Ehrlich and his colleagues picked five metals that they thought would undergo big price rises: chromium, copper, nickel, tin, and tungsten. Then, on paper, they bought $200 worth of each, for a total bet of $1,000, using the prices on September 29, 1980, as an index. They designated September 29, 1990, 10 years hence, as the payoff date. If the inflation-adjusted prices of the various metals rose in the interim, Simon would pay Ehrlich the combined difference; if the prices fell, Ehrlich et alia would pay Simon.

Then they sat back and waited.

Between 1980 and 1990, the world's population grew by more than 800 million, the largest increase in one decade in all of history. But by September 1990, without a single exception, the price of each of Ehrlich's selected metals had fallen, and in some cases had dropped through the floor. Chrome, which had sold for $3.90 a pound in 1980, was down to $3.70 in 1990. Tin, which was $8.72 a pound in 1980, was down to $3.88 a decade later.
Which is how it came to pass that in October 1990, Paul Ehrlich mailed Julian Simon a check for $576.07.

Just out of curiosity I went to Infomine and looked at the price of those metals over the past 10 years (though they only plot chromium and tungsten prices for five). The plots for the 5 metals follow, and to make the calculations simple I have rounded the metal values a little.

Chromium:

$200 in 2000 would have bought 66.7 lbs (it was $3), and in 2005 would have bought 160 lbs of chrome, which would now be worth $425 roughly. Over the 10-year interval however, buying $200 of chromium would have cost you $23, not counting inflation.

Copper:

However, when we look at copper, that $200 would have bought 250 lb of copper in 2000, and over the decade that purchase has gained $862, roughly.

Nickel:

A similar situation applies to nickel, where $200 would have bought about 66.7 lbs of nickel in 2000, and that investment would have gained $533 over the 10 years.

Tin:

The same is also true for tin, where $200 would have bought 91 lb of tin in 2000, and that would sell today for about $1,090; the investment thus making $890 over the decade.

Tungsten:

$200 would have bought 6.25 lb of tungsten in 2005, which would now be worth $265 roughly. It has been difficult to find the price of tungsten in 2000, although the price is reported to have trebled from that pre-2004, suggesting that it was around $14 back then. That would give a purchase of some 14 lb, which would now be worth around $600.

So the $1,000 investment from 2000 would now be worth (in 2010 dollars) $177+$1,062+$733+$1090+$600 = $3,663

Using the Inflation Calculator there has been 27% inflation since 2000, so that the $1,000 would now be worth $1,270. The price of the metals has thus roughly trebled over the time period.

I have not been able to find an accurate value for tungsten in 2000, though I know that the price went up significantly in 2003 when the only mine in the North Americas (the Cantung mine in Canada) closed. It is now re-opening. Most of the world’s tungsten now comes from China.

This reality suggests the underlying longer-term truth to the supply situation for materials that are extracted from the earth. There is only a finite amount there, and while it is possible, due to changing economic circumstance, that a Cornucopian viewpoint might for a while appear true, the growing demand for product, as countries, particularly those in Asia, aspire to Western levels of consumption, will rapidly emphasize the Malthusian long-term condition. (Although cherry-picking specific dates may allow one to transiently make the alternate case).

One has only to consider what is happening to gold and silver, not to mention the rare earth minerals.

Matt may have been a little early in his prediction on $200 oil, but I would be very surprised if we did not see a bit more than $100 within the year. The impact that a price rise above this level will have on the global economy makes it difficult to predict what will happen after that, but we could easily see $150 a barrel by 2015, if the economy can sustain it.

Saturday Pick Points

Normally this is the point every week where I wander around the Climate Change sites, just to see what is stirring them up. And the controversy continues over the statistics of the paper by Steig that I first mentioned back in January. There is a very well done dismemberment of the underlying statistics given at Watt’s Up With That this week. Basically part of the criticsm is based on the relatively obvious point that as you move two weather stations further apart, then the likelihood of them both having the same weather at the same time becomes less, particularly at greater distances. (For example the snow storm that will hit the East Coast Sunday night and Monday hit Missouri Saturday and was somewhat milder – we got 2 inches, Maine will get 12 inches. On the other hand Waynesville and Salem in Missouri both reportedly got the same amount). However when you look at the statistics that were used in the paper the likelihood of the weather being the same stays the same regardless of their distance apart. And it even stays the same when you consider satellite data. Which sadly implies that the results as quoted in Nature and given national prominence are in error and in fact where a more realistic model is used the continent returns to a largely cooling phase and the furor the paper raised is shown to be based on a false premise. (Not of course that this finding will get much mention in the MSM). Though the controversy may well continue, since the new story is that the speed of the glaciers is accelerating. There is very little data from down in the Antarctic and so it will be interesting if this particular study gets picked up.*
*Since this deals with a topic that I actually teach to students, I will have a small technical note at the end.


Speaking of furors the little tempest over the article that George Will wrote on Climate Change in the Washington Post two weeks ago continues to churn. I talked a little about temperature fluctuations last week, explaining the trends as to why it might have seemed that the world was cooling in 1975. The other major issue was:

As global levels of sea ice declined last year, many experts said this was evidence of man-made global warming. Since September, however, the increase in sea ice has been the fastest change, either up or down, since 1979, when satellite record-keeping began. According to the University of Illinois' Arctic Climate Research Center, global sea ice levels now equal those of 1979.

It is important to note (though it is rarely mentioned in the row) that satellite records have only been available since 1979, and that is why that particular date was chosen.

Well there were the usual diatribes, with ad hominem attributes – “Is George Will the Most Ignorant National Columnist” is a good example, and the controversy ran for a week, so that George Will’s column a week later also dealt with the subject. It pointed out that, within a reasonable scale of accuracy, what he had said was correct. Which, of course, led to a second set of diatribes . After another week of comments the Post Ombudman wrote a column this weekend. Basically it said that the facts that George Will used were accurate, but that since there had been a big change in the relative volumes of ice (the Arctic had lost a lot which growth of ice in the Antarctic had almost offset) this should have been brought out in the article. And just to emphasize this, Real Climate, in writing "the article that Will should have written", notes

The source of the original quote was a Daily Tech blog post published in early January. While that post itself was heavily criticized as being misleading, it did use data from a reliable scientific source which was technically accurate at the time. My error was in assuming that scientific 'facts' don't change over a month or two and thus it was not necessary to revisit the source of the original data before writing my column. What was true in January would still be true in February, right? Wrong.

Of course that does not mention that the sensor doing the measurement went wonky. Now it turns out that the folks gathering the data have given a very rational explanation at WUWT about all this, and why they are now catching on to to demands of the internet, but still.

Well that has not quieted the complaints, though it is interesting to note from the ombudsman’s column

Although I didn't render a judgment, my response was understandably seen as an institutional defense and prompted an orchestrated e-mail campaign in which thousands demanded that The Post correct Will's "falsehoods." Like they say when the pro football rookie gets clobbered: "Welcome to the NFL."

The messages, often identical in wording, were soon countered by waves of e-mails defending Will and attacking what many labeled "global warming alarmists" trying to muzzle him.

It is the “often identical in wording” which shows the footprints of the thought police. Sadly it is almost impossible to have a reasoned debate on this issue, since any attempt to bring up the topic either gets this treatment (as I noted earlier) or is ignored, as the testimony by Professer Happer before the Senate Environment and Public Works Committee Senator Barbara Boxer, Chair has largely been.

Similarly John Tierney wrote about Climate Change in the New York Times noting that scientists are tending more to Apocalyptic statements, and urging instead that they behave as honest brokers. Since the scientists who get quoted most often are those who are promising that the conditions are getting worse rather than better and this does help to sell newspapers and air time, he has a point. Needless to say he is not popular with those that advocate AGW. showing their desire to keep the debate at a sophisticated level they have opening statements such as

Tierney is easily the worst science writer at any major media outlet in the country. Pretty much every energy or climate piece he writes is riddled with errors and far-right ideology, including this one.

. And then you get the latest, after Tierney’s recent column

The backlash from George Will's disinformation rightly grows each day that the Washington Post stands behind his lies (see here). Media Matters has samples of widespread outrage in the country here, and a new report [PDF] from CAPAF challenges the WP to issue a correction.

Now it is time for outrage over John Tierney, who not only makes stuff up just like Will, but is actually on the New York Times staff as their 'science' columnist. When we last saw Tierney, he was spreading lies and disinformation about science adviser nominee John Holdren (see here).

Today, the NYT not only let him print more egregiously made up stuff to smear Holdren (and Energy Secretary Steven Chu). But they actually published an article "Politics in the Guise of Pure Science" (see here) under the heading "FINDINGS" about Chu, Holdren, climate science, and climate solutions with precisely one source -- Roger Pielke, Jr. That would be like publishing an article critical of Obama's handling of the financial crisis and only citing Bernie Madoff.

Sigh! At the risk of being repetitive, the Senate Committee took testimony this past week, from Chris Field (pdf) and (among others) Professor Happer as cited. They hold strongly different views, yet are the two positions debated in the press, or in Congress as they should be, or are we still being subjected to the “ad hominem “ types of attack that seems to be the fall-back position of what, sadly I am beginning to truly think are those setting out to be thought police for this nation. The Bernie Madoff case illustrates the need for open debate and making this whole debate more open, and more based on science. What Joseph Romm and his ilk seem bent on doing is to have us instead behave as Bernie Madoff sycophants and not ask questions.

The abuse that I have seen showered on articles that raise technical and scientific questions is clearly an attempt to shout them down. It has been my experience and that of others. With the numbers of identically worded letters going to the WP Ombudsman it is clear that these are orchestrated campaigns.

To end with a slight technical comment, that I will expand into a Tech Note one of these days. For my sins I am one of the few people I believe that has videotaped a landslide from in front and beneath it, and got away with it. I have used that video in a class I teach on the movement of geotechnical material and the forces that drive that movement. As part of the class the first homework assignment begins "Take a can of your favorite beverage, drink it. Now fill it full of water and place it on a flat surface. Slowly tilt the surface and note the angle at which the can slides. Now poke a small hole in the bottom of the can and repeat." The class has been doing this and reporting the results for decades, they vary quite considerably, depending on the nature of the surface, its roughness and a number of other factors (and in the course of those decades the favorite beverage has undergone a number of changes). The assignment is not original, but it has shown that there are a number of factors that govern block movement - about which more anon.