The 6 Myths About Oil
By Alex Epstein

Why are the “experts,” so often wrong, and what can be expected for the future?

One reason is that the “experts” routinely neglect or underestimate the capacity of the human mind to discover better methods of locating and extracting oil. In industry parlance, they falsely equate “proven reserves”—the amount of oil that is known to exist and be extractable in the present—with future production: the amount of oil that will be known and be extractable in the future.

This is a fallacious tactic. As a rule, in the future companies will have the knowledge and economic incentive to discover and harness oil that they do not have the knowledge and incentive to discover today. Oil companies locate new oil supplies as and when it makes sense to do so given their production projections and given market supply and demand. They have no way of knowing the total amount of oil that exists in the earth, and no need go to the expense of finding and validating any given new deposit until it is profitable to do so.

Over time, as demand increases and/or previous reservoirs becoming exhausted, the industry locates new oil and discovers new and better ways to extract it. For example, oil companies can now discover deposits thousands of feet below the ocean floor using 3-D magnetic imaging; they can extract many times the oil from a reservoir that they once could, using methods such as horizontal drilling or high-pressure gas and water injection; today’s “easy oil” was yesterday’s “impossible” oil.

Update 1/18/2011:
Follow-up thoughts on “The 6 Myths About Oil”
by Alex Epstein

Inflation and Recovery

Inflation is Not "Recovery"

In fact, housing price declines should be seen as the recovery. Housing price declines reflect liquidations of a massive misallocation of capital that took place during the preceeding boom, viz., investment in the expansion of housing. Only when this misallocated capital gets liquidated, can a true recovery take place. To the extent the government props up housing prices through inflation of the money supply, subsidies to homeowners and the like, actual recovery will be delayed and we will once again divert critical capital to a superinflated supply of housing that no one actually needs or desires.

GOP Needs Both the Moral and the Practical Arguments

GOP Shifts on Fannie, Freddie Overhaul
Republicans Say Quickly Privatizing Mortgage Giants Would Squeeze Access to Home Loans and Depress Sales, Prices

And this is why we need Republican leadership that understands both economics and morality. There is no question doing things like phasing out welfare, Social Security and Medicare, privatizing Freddie and Fannie, and abolishing the Fed, the FCC, and the SEC is going to cause pain. But doing it slowly is only to draw out the pain, not lessen it. And pain or not, doing all of the above and more is the only moral action available to us.

It is no more my responsibility to make life easier for welfare recipients than it is right to force other people to "guarantee" my savings via the FDIC. We are each responsible for our own lives, and our own choices. The current system is one based on mutual slavery to slavery. We must get the government out of our lives, and allow ourselves to succeed, fail, and eventually recover based on our own effort.

Independence is a virtue!

Abolish the FCC

Kill Off The FCC

"The FCC has been around for a while—it was established by the Communications Act of 1934. So it won't be abolished overnight. But its elimination is a worthy goal. Republicans, who at one time had a shutdown agenda, will control the House beginning in January. They should make the call and get the process started."

Also:

Time to Shut Down the FCC

Let the Market, Not the FCC 'Regulate' the Internet