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Ivan Raszl
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I'm an objectivist and I have a question that is not totally clear to me. Anyone seen the Zeigeist movies? What do you think about the idea that the current monetary system is killing our planet because there is no incentive in the capitalist system to protect non-renewable resources and nature in general.

You guys helped me with the issues of the ocean pollutions saying that if the oceans would owned by individuals there would be a good reason to protect them by those who own them and governments would protect these private properties as well. But this doesn't really work with non-renewable resources, does it? If somebody owns a land like Saudi Arabia it's in their interest to extract all the oil, sell it and let it burn. They are not really interested in keeping it in the ground for future generations.

Any guidance on how to think about these issues would be helpful!

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I'm an objectivist and I have a question that is not totally clear to me. Anyone seen the Zeigeist movies? What do you think about the idea that the current monetary system is killing our planet because there is no incentive in the capitalist system to protect non-renewable resources and nature in general.

I only know that that movie presents conspiracy theories. Nonsense!

First, a Capitalist system could never do such a thing.

Second, a Statist government could theoretically do much destruction. But given no environmental concerns even coming close to that presented in media today, it could not cause whatever is suggested in such movies.

Third, one government could not "kill" the planet. And there could not be any worldwide plan to do so.

Nothing is gained by watching movies or anything else that deals with such theories.

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If somebody owns a land like Saudi Arabia it's in their interest to extract all the oil, sell it and let it burn.
If the resource is truly limited, one could make more money by only putting a certain amount on the market each year. Not too little, not too much. For a minute, imagine that the Saudis and every other oil-producer somehow extracted and sold all their oil in a single year and put it on the market. Would this really be the way to maximize their profits? They might earn more in that one year, but it would not be enough to compensate for their loss of revenue in subsequent years.

If they did do this, wouldn't it make sense for someone to build huge warehousing facilities and buy up oil, that they could then sell next year at a large profit? And, if warehousing the oil makes sense to a third party, it makes even more sense for the original owner to "warehouse" it at a much lowest cost by not extracting it in the first place.

There's an important factor that a owner has to ask himself: how long will I own this? If the Saudi's think their monarchy is going to last for just another decade, it might make sense for them to exhaust their supplies over that decade. If you look at Russia, you'll see very speedy exploitation of reserves. I suspect those who control Russian assets realize that their tenure is not secure and that they have to take all they can as fast as they can.

In contrast, if a private owner holds the asset and if his tenure is secure, he can look to an extremely long-term profit-maximization. Even if he wants to get out of the oil business, it makes sense for him to work it as if it is run for maximum long-term profit. Then, whenever he wants to get out, he can capitalize the future stream of earnings, by selling to a new owner. Capitalism allows a stream of earnings to be exchanged for a lump-sum and vice-versa. In turn, this allows profit-maximization over an extremely long time-horizon.

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1. Our current economy is not a free market economy. So oil could certainly run out quickly and unexpectedly, so long as incentives are skewed by market manipulation. In a free market economy, as the sources of oil become more and more difficult to access and process, the price of oil will rise, making it less appealing, and making alternative resources cheaper in comparison. People will naturally transition away from oil as research and development make alternative resources cheaper.

2. In a mixed economy like this one, it is certainly possible.

3. Only so long as force is allowed to intervene in the market.

Edited by brian0918
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Thanks for the replies. Let me focus the questions more:



  1. Is there anything that will prevent us running out of oil in our current market based economy?
  2. Are we going to reach peak oil?
  3. If yes, is this not a grave danger that everyone will suffer from?

Far and away the best person you can look to on the issues of oil is Alex Epstein. Check out his many papers and work. He also is in some videos on arc-tv.com and I would also suggest you look at the articles available in The Objective Standard. In fact, I think Alex is currently in the process of writing a book specifically about oil.

Edited by CapitalistSwine
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Is there anything that will prevent us running out of oil in our current market based economy?

Yes, the price mechanism. if supplies fall short of current demand, a rise in price will bring demand back in line with supplies. Imagine gas at $10 a gallon. As bad as it would be, it would not be the end of the world by any stretch.

Are we going to reach peak oil?
That's a scientific question, but it is important to understand what exactly you mean by the question. For instance, there is lots of oil that is currently just too expensive to extract. What this means is that as the price of oil rises, the proven reserves also rise. The reason is that reserves are calculated by making assumptions about what is economically viable. So, one has this cycle where falling reserves can push up the price of oil, but that itself raises the amount of reserves. I think there's more oil in rocks in the U.S. than in Saudi Arabia, but it is not yet economical to mine it (also, environmentalists don't like it).

If yes, is this not a grave danger that everyone will suffer from?
The real danger is that voters will disallow the free-play of the marketplace, and will prevent the full exploitation of the earth's resources. For instance, it is quite possible that if gas goes significantly higher, voters in the U.S. will still not allow the mining of U.S. sources, and instead will insist on a combined sacrifice where they and their neighbors spend more -- either directly on gas or on more expensive substitutes. Edited by softwareNerd
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