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I never cease to be amazed at the lunacy of energy speculations by economists and the like. Paul Krugman and his ilk make this whole thing far more complicated than it actually is. Unprofitable energy source 'X', clean or dirty, will never be exploited to any appreciable extent until costs of petroleum increase enough to make 'X' competitive. When the government taxes the oil economy to subsidize energy source 'X', it doesn't make 'X' any more profitable. It just makes the oil economy less profitable. Jobs are not "created" by this charade, so much as the profitable economy funds government redistribution, and the illusion of jobs and growth that can be boasted about for re-election's sake. One can make an argument for subsidy for sustainability/environment benefit, but as long as profitability drives 99% of the equation, we are chasing money down the drain.

The oil sands are a perfect example. They are being developed because of rising oil costs. Rapid development leads to labor shortages and increasing costs of their development. They will stall until more labor enters the market. Oil costs will rise still more; oil sands production will proceed. Nobel prize-winning economists act like this is much more complicated than basic profit maximization and supply and demand. In the end, nobody who matters, least of all Obama or the Chinese government, gives a rat's ass about climate change. It is a growth-driven race to see who can use the remaining fossil fuels the fastest. What we are chasing, though, is vanishingly small profit margins, as the cost of inputs rise. Oil sands being competitive means that industry in general is uncompetitive.


Great blog entry. Have a nice weekend Dave.


I'm thinking McKibben's question to the audiences was, "Hands up who believes my shit?"

Brian M

"The memo estimates that operating and capital costs to extract a barrel of oil from the tar-like sands have both more than doubled over the past decade.

It blames a chronic shortage of workers and resulting sky-high labour costs as the main cause of increased operating expenses."

Hmmm. Let's see. In 2002 (probably 2000 data), the US paid $9.85/mbtu (million BTU) for energy. In 2012, the US is paying $18.73/mbtu. Well, look at that. The average price for energy doubled over the last decade. Considering that energy is an input (the ultimate input) to everything we do, could that, rather than labor, be an issue in the rising cost of production? Naahhhhh!

Apparently the idea of receding horizons is lost on these people.

And Jesus wept.

Bill McDonald

Isn't it interesting how no one checked this stuff out before all the big hullabaloo and all the self serving and televised arrests prior to the election? And Obama's so called "soul searching" before allowing part of the pipeline to be built.

It is all starting to look more and more like a scam.


Why do I smell a tarsands bailout coming?


What is your take on this article, if you have time to look at it?


Dave Cohen


That article is insane gibberish.

-- Dave

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