Energy issues

Lately I've had oil on my mind. As in petroleum. As oil prices have increased in the United States over the last six months or so, I've heard more on the radio and encountered more online about the notion of "peak oil" (Google for "peak oil").

Late last week, I encountered Tom Evslin's weblog post that suggests that nuclear power will probably be necessary to provide power for electrolysis so that there can be a non-petroleum-based fuel source for hydrogen-powered vehicles.

Then, Gary Becker and Richard Posner posted their entries on the topic of nuclear power. [Becker.] [Posner.] Prof. Becker proposes that the time has come to permit new construction of nuclear power plants; Judge Posner says he doesn't think that a complete case has yet been made to support such a change in policy.

"Peak oil," as I understand it, means that point in time at which oil production ceases to keep up with demand regardless of technological advances. The result would be steadily increasing prices, as demand for oil is increasing but inelastic. (In other words, our demand for oil is generally increasing, but we're bad at restraining that demand for oil because we can't easily make tradeoffs to other sources, nor can we easily give up transportation and electricity.)

I'm not in a position to evaluate the economic realities of petroleum supply and demand, though I do know that I pay more for gasoline, electricity, and heating gas than I paid in the past. I know that at some point petroleum supply will not keep up with demand, and I wonder whether we will then be ready to transition to other power sources. I suspect that we won't quite be ready when the time comes, that it will come in my lifetime, and that for a while, it will hurt. I don't yet think it'll be the disaster that some predict, in which the entire economy fails overnight for want of gasoline and electricity. But I expect it will hurt, probably badly.