I really don't understand the oil industry

When I was at school, between 1988 and 2002, they used to teach us that the world had about 30 years of oil left. It didn’t matter that the geography textbooks were ten or fifteen years old, because the thirty year estimate stayed pretty constant from one decade to the next. As I understand it, these estimates were based on how long it would take to use up currently proven reserves if current trends in usage stayed constant. Since more reserves got proven all the time, the time limit didn’t necessarily go down as oil got used up. The cynic in me suspects they deliberately went for a methodology that produced an alarmingly low figure because they wanted us to become enthusiastic about renewable energy. Perhaps it worked, although when you think about it the low figure is as much a reason to drill more holes in Alaska looking for oil as to make solar panels more efficient.

Regardless of where the figure came from and why it was pushed on children, the point was definitely that one day this stuff is going to run out. And nowadays we don’t think that’s true. If we burn all the oil we know about, then either we’ll need carbon capture technologies we don’t have yet, or climate change will make life as we know it impossible. We won’t let that happen, will we? Call me a wild-eyed optimist, but I don’t think we will. The key constraint on how much oil we’ll use is not how much of it there is. It’s how much we can use without ruining the climate.

Now, you might think this would have big economic consequences for the oil industry, and so it will. But we’re not seeing all the consequences you might naively expect. People are still looking for more oil, even though we don’t need any more oil. And you might expect that we wouldn’t bother getting oil from hard-to-get-at places anymore. There’s no point extracting oil expensively from Canada when there’s stuff just under the surface in Kuwait that’ll be left in the ground for the sake of the climate. (And it’s much more expensive to extract oil from Canada than from Kuwait. Like, more than four times as expensive.) If the international oil industry was centrally planned, the plan would be to use up the stuff that’s easiest to get at and leave the stuff that’s hard to get at in the ground. We certainly wouldn’t be blowing our carbon budget on shale gas that can’t be extracted without causing earthquakes in Oklahoma. Of course the international oil industry isn’t centrally planned, but market forces are supposed to be even more efficient than central planning, so they should be able to do at least as well as a central plan would. But they’re not. I don’t get it.

The good news is that something along these lines may finally be starting to happen. Apparently it’s surprising that oil prices are low and Saudi Arabia hasn’t slowed down its production, and Ben Walsh in the Huffington Post thinks it might be because they’d rather sell it now for $30 a barrel than leave it in the ground and then find that in fifteen years everyone’s got their own solar panels. What I don’t really get is that the tone of the article is more “hey, maybe this is what’s happening”, rather than “finally, this obviously massively overdue thing is happening”. I can only conclude that it isn’t actually overdue, and my whole understanding of the situation is wrongheaded. If you do understand it, enlighten me in the comments!

How to become top nation

I listen to Radio 5 Live quite a lot, so one of the things I know about my fellow citizens is that quite a lot of them don’t like immigration. David Cameron, who I’m on the record as disliking already, recently made a speech on the subject, because we’ve got an election coming up. I didn’t listen to it but read quite a lot of what claimed to be a transcript here. He didn’t seem to say anything remarkable. I think he said he liked good immigration but not mass immigration. It’s good to know that our leader is a lover of the good, but since I haven’t ruled out mass immigration as being just what this country needs, I'm sad to see he has.

Some people think we’ve got a distinctive culture worth preserving, and that preserving it is possible if but only if we seriously curb immigration. I’m not going to talk about that today. The other thing is that a lot of people think Britain is too crowded. They say it’s a small island. Well, it’s not that small: Great Britain is the ninth largest island in the world, and if we really do fill it up there are always Northern Ireland, Anglesey and so on. It is quite crowded though: while the UK is only about the 33^rd most densely populated country, many of those above it are pretty small. But this seems to me beside the point. Scotland and Wales aren’t very crowded, and there’s plenty of room for more urbanisation even in England. I’m from Wirral, and I think it’d be really cool if Wirral became as densely populated as Singapore, with skyscrapers towering over Greasby and Heswall. There’d be all the kinds of amazing things you get in cities like art galleries, lambananas and vibrant music scenes. When people asked me where I’m from they’d have heard of it, and when people asked each other where the Coral are from they wouldn't say Liverpool. Cities are amazing. What kind of country wouldn’t like another Barcelona?

One argument I sometimes hear is that if there were more people there wouldn’t be enough jobs to go round. I've never understood this. People do jobs, and people create jobs. They earn money and spend money. The Belgians aren’t rolling in cash because the money is shared among so many fewer people, and British people don’t eat five times more than Americans. That isn’t the way it works, and it’s unsurprising that that’s not the way it works.

America is the place to look for an example of what immigration can do. People came to America because it’s a great place to live, and that’s why its population is so big and how it got to be top nation. Canada is even bigger and has loads of natural resources too, but most of it is a ghastly place to live so people mostly only populated the nice bits and Canada didn’t get to be top nation. Japan’s a lot more powerful than it’d be if it was only as densely populated as France, and people take a lot more notice of Singapore than they do of Kiribati, although they're about the same size. People come to cities because they’re great, and this makes them even greater. People want to come to Britain because it’s great, and the more people come the greater it’ll be, until eventually we’re top nation and people are drawing cartoons of the US President as a poodle on our leader’s lap instead of the other way round. London didn’t get to be great by shutting everyone out once it reached the size of Bognor Regis. They spread the word that the streets were paved with gold, and now it’s one of the greatest cities in the world. More of the same, please.