Tuesday, July 15, 2008
It's amazing how often major economic decision making, when discussed by politicians and the media, ignores or downplays the most crucial dimension in financial analysis -- timing.
Which is true. Except if you believe in the Peak Oil Theory, under which these stupid dictators have been busy for 50 years shipping us dirt cheap oil, and now that they are running out, we can tap (the rest) of our own sources at sky high prices. In this admittedly oversimplified (and probably incorrect) analysis, the perverse incentive is to leave it in the ground, even if your goal is economic maximization.
Especially since it's not like any country (including USA) invests the proceeds of the oil in something to benefit the future like infrastructure or education. Most countries would blow it on palaces for the rulers, or in our case, pork and entitlements.
My point is not to answer the question of when to drill for oil, because I frankly have no idea. I just don't understand why people can have 19 spreadsheets to figure out when and what Plasma TV to buy, but on important things like what to do with our country's natural resources or when, if ever, to address climate change, all rigor goes completely out the window.
And by the way, fuck it, lets pump it all out now.
"Should we open ANWR and the US coastline for more oil exploration?"You see this headline all the time. I guess the implication is that the decision is whether to do so right now. But without actively bringing time into the equation, it's difficult to see that the real question is:
"When should we open ANWR and the US coastline for exploration (including never)?"People are constantly whining about how we are unnecessarily shipping billions of dollars into the coffers of middle eastern tyrannies to pay for all the oil.
Which is true. Except if you believe in the Peak Oil Theory, under which these stupid dictators have been busy for 50 years shipping us dirt cheap oil, and now that they are running out, we can tap (the rest) of our own sources at sky high prices. In this admittedly oversimplified (and probably incorrect) analysis, the perverse incentive is to leave it in the ground, even if your goal is economic maximization.
Especially since it's not like any country (including USA) invests the proceeds of the oil in something to benefit the future like infrastructure or education. Most countries would blow it on palaces for the rulers, or in our case, pork and entitlements.
My point is not to answer the question of when to drill for oil, because I frankly have no idea. I just don't understand why people can have 19 spreadsheets to figure out when and what Plasma TV to buy, but on important things like what to do with our country's natural resources or when, if ever, to address climate change, all rigor goes completely out the window.
And by the way, fuck it, lets pump it all out now.
