Kevin Drum is concerned that projected drops in Mexican oil production are a leading indicator that the "Peak Oil" theory is coming true. I would argue that, in fact, it is a trailing indicator of what happens when you let governments run producing assets. Drum says:
The issue here isn't that Cantarell is declining. That began a couple
of years ago and had been widely anticipated. What's news is that, just
as many peak oil theorists have been warning, when big fields start to
decline they decline faster than anyone expects. So far, Cantarell
appears to be evidence that they're right.
Actually, fields in the US do not tend to decline "all of a sudden" like that. Why? Because unlike about any other place in the world, oil fields in the US are owned by private companies with capital to make long-term investments that are not subject to the vagaries of political opportunism and populism. There are a lot of things you can do to an aging oil field, particularly with $60 prices to justify the effort, to increase or maintain production. In accordance with the laws of diminishing returns, all of them require increasing amounts of capital and intelligent management.
Unfortunately, state owned oil companies like Pemex (whose assets, by the way, were stolen years ago from US owners) are run terribly, like every other state-owned company in the world. And, when politicians in Mexico are faced with a choice between making capital available for long-term investment in the fields or dropping it into yet another silly government program or transfer payment scheme, they do the latter. And when politicians have a choice between running an employment meritocracy or creating a huge bureaucracy of jobs for life for their cronies they choose the latter.
I am not arguing that US politicians are any different from their Mexican counterparts, because they are not -- they make these same stupid choices in the same stupid ways. The only difference is that we have been smart enough, Mr. Drum's and Nancy Pelosi's heartfelt wishes notwithstanding, not to put politicians in charge of the oil fields.
[April 17, 1870] As the US Population reaches toward the astronomical
total of 40 million persons, we are reaching the limits of the number
of people this earth can support. If one were to extrapolate current
population growth rates, this country in a hundred years could have
over 250 million people in it! Now of course, that figure is
impossible - the farmland of this country couldn't possibly support
even half this number. But it is interesting to consider the
Take the issue of transportation. Currently there are over 11
million horses in this country, the feeding and care of which
constitute a significant part of our economy. A population of 250
million would imply the need for nearly 70 million horses in this
country, and this is even before one considers the fact that "horse
intensity", or the average number of horses per family, has been
increasing steadily over the last several decades. It is not
unreasonable, therefore, to assume that so many people might need 100
million horses to fulfill all their transportation needs. There is
just no way this admittedly bountiful nation could support 100 million
horses. The disposal of their manure alone would create an
environmental problem of unprecedented magnitude.
Or, take the case of illuminant. As the population grows, the
demand for illuminant should grow at least as quickly. However, whale
catches and therefore whale oil supply has leveled off of late, such
that many are talking about the "peak whale" phenomena, which refers to
the theory that whale oil production may have already passed its peak.
250 million people would use up the entire supply of the world's whales
four or five times over, leaving none for poorer nations of the world.