RE: [MLUG - DISCUSSION] Unfolding Universe (discovery channel)

[Jonathan King <EMAIL:PROTECTED>]

OK, so I'm done with this for now.  We've come down to a difference in
deeply seated beliefs, and trying to change those could lead to violence.
:-)

On Mon, 10 Jun 2002, "(8?»" wrote:

[snip]

> OK, I agree with that.
>
> I would say that oil is a special commodity, and those rules don't
> apply.  It has no current alternative, and as I said before, every
> transaction in our economy has an oil element.

I still think oil is less special, because its price does respond to the
usual supply/demand situation like you'd expect.  In many situations,
there are alternative to oil (admittedly fewer for fossil fuels as a
class), and there is tons of room to for cuts on the demand side.
Meanwhile, I'm not sure why people never point out that every transaction
in our economy has an X element for values of X other than oil, although
there are other commodities you could plug in there (food, steel,
computing, etc.)

[snip]

> Your points are valid, but do not prove the absence of market
> manipulation.  You are assuming the existence of the mythical free
> market. Barriers to entry are present to preclude both producers and
> consumers from exploring alternatives, many of which are in the form
> of laws.

I do not assume the existence of anything we don't have.  Tarriffs and all
of the rest do change things, but they do not in most cases change the
fact that, constraint, restraint, or nothing, there is a market price that
probably is about as free these days as it ever has been.  Manipulated
markets (e.g., California electricity prices last year) usually look very
different from freer ones.

> >The point you make that sounds like "technology lock-in" (aka
> >increasing returns to scale) is also important, but what that can
> >usually only accomplish is change (delay) the switchover point.
> >So DVDs are much cheaper to make than videotapes, and a much higher
> >quality product, but you did see lots of people arguing that they
> >wouldn't take over the market "any time soon".  At which point
> >that's just exactly what they did. :-)  But we did have to get to
> >the point where DVD players were just as cheap as VCRs so that
> >enough of them got bought so that enough movies got shipped to the
> >new format so that more people bought DVD players and...
>
> Technology lock-in exactly. Another point is that the power structures
> locked into these technologies do not adopt the "new model" if it is
> so different that they see it as competition.

There is no doubt that almost all human institutions can be resistant to
change, but I still don't think this resistance is nearly as sinister as
the term "power structures" makes is seem.  Plus, resistance in the long
term really does seem to be pretty futile.

> Take this one step further, and realize that the "they" (energy power
> structure) is our government. They will be determined to maintain the
> "oil economy" at all costs.

And "they" will lose, not because there is some knight in shining armor,
but because somebody will sell something else that does a better job.  I
also suspect that "they" could find themselves in a much weaker position
after November, but that's a bit hard to say.

> An awesome book on this subject is: The Innovator's Dilemma - When New
> Technologies Cause Great Firms to Fail by Clayton M. Christensen, Harvard
> Business School Press (1997).

I remember that this came out, and I'll take another look, but on the face
of it, doesn't this really just suggest that disruptive technologies
*prevent* just the kind of cabal you've been talking about?

> >Nobody wants to compete, and the status quo is really the best
> >situation for oil companies.  But it would take a lot of stupidity
> >and hubris for them to completely miss the riskiness of their
> >situation in the long-run.
>
> If you read the book I mentioned above, you will see it as the rule,
> not the exception.

But then they lose, right?

> Another example is watching RIAA die in the richest possible
> environment. Where else could you have a business where production and
> distribution costs become negligible, yet they still won't compete in
> that space, because it isn't 'safe' yet. Meanwhile they seek to gut
> any possible competition through the judicial and legislative process.

But they will die, right?  In record time. :-)

> > > We are in a permanent "war-time" economy now.
> >
> >Um, no we aren't.  I know you're probably being sarcastic here (it's
> >*so* hard not to... :-)), but I don't think the current situation
> >has anything to say about the importance of the world's oil supply
> >in the big scheme of things.
>
> No, no sarcasm here. We are spending close to $400B on 'defense' in
> 2002.  Plus Uncle Dick is telling us 'the current war won't end within
> our lifetimes'. If that isn't permanent war....

But somebody else can be elected and say something else.  Plus, when I
look around, I do not see a war-time economy at all.  Really.  $400B on
defense is way over the top, but it's like 4% of GDP.  If you want to see
some real wartime figures, I know they can be found.

> > > The only way to influence supply, is through control. Oil production BTW,
> > > peaked in the US in the early 70's, world production is predicted to peak
> > > within the next 3-7 yrs. At that point in time, supply and demand curves
> > > will forever move away from one another, and prices will rise without end.
> >
> >Baloney.  Nothing that cannot go on forever will actually go on
> >forever.  Gotta run.
>
> Well, if you're gonna be that literal, of course not. I meant oil
> prices will continue to rise until oil is dethroned as 'the' fuel. I'm
> just not sure humanity can survive that struggle.

Others have commented on why and how oil production peaks at various times
(but it has to both with demand and supply).  I'm sorry if I got brusque
there right before I had to leave, but I did feel that was a weird thing
to say.  I'm not really sure where "continue to rise" comes from given the
real price of oil in recent history, and the "prices will rise without
end" part even as hyperbole seems wrong since price hikes are pretty
concretely linked to demand decreases.  I suppose it's not impossible that
something apocalyptic could happen as a result of oil supplies or a
technology gap in energy production, but I tend to assume that more people
will die as a result of things that are much less likely to change than
the primary source of energy for advanced economies.  Diseases come and
diseases go, but few are as deadly as fights over ideology.  Which, I
think, is where I came into this discussion...

jking




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