Underestimating the dangers of peak oil and climate change

By Kurt Cobb
8 October 2012 Many people dismiss the risks associated with oil depletion and climate change – even many who accept the two issues as problems. They judge those risks to be small or at least manageable. Since no one can know the future, we cannot be sure whether they are right or wrong. But even if they are right, should we be so sanguine? As we examine this question, keep in mind that we are talking about probabilities and the level of risk, not absolute knowledge which none of us can have about the future. One reason that so many people discount the risks of oil depletion and climate change is that their experience tells them to do so. We’ve had high oil prices and tight oil supplies before, and always new supplies and declining prices followed. For many we are just in another market cycle, and there’s nothing to be worried about. And, when it comes to climate change, well, we’ve had hot summers before and even if the climate is warming a bit, we’ll adapt. Both of these observations are subject to what’s called the problem of induction. In a nutshell, we believe that because a certain event has reliably repeated itself in the past or because certain conditions have prevailed for a long time, we can always expect more of the same in the future. If that were true, there would come a point in our lives when we would never be surprised. But as it turns out, humans are continually surprised, which shows you that the problem of induction lives on. The classic illustration is the statement: “All swans are white.” The statement may be based on thousands, even millions of observations. But, this would not prove that it is true. This is because we cannot possibly observe all swans for eternity. And, it takes only one swan which is not white to prove the statement false. As it turns out, Europeans only realized that this statement was false when they landed in Australia and saw black swans. So, just because high oil prices in the past have eventually led to low oil prices does not necessarily mean they will this time. Oil is a finite resource. At some point it will never be plentiful again. Has that point come? Is that even the question we should be asking? I’ll elaborate below. When it comes to climate, the globe’s warming temperature is an indisputable fact, something that even reluctant oil industry CEOs now accept. So the question for them and for us is whether we can adapt or whether we should try to stop the rise in global temperatures. Even last summer’s intense drought in the United States, dryness in the growing regions of South America and Russia, and wildly wet weather in Great Britain still seem not to have made climate change a priority. Food prices may well exceed their all-time highs of 2008. Yet, we humans are like the man plunging from a 100-story building who, when asked how things are going as he passes a 50th-floor window, replies: “Fine, so far.” This oft-cited illustration shows in a humorous way that we humans are frequently oblivious to dangers that are right in front of us, but which for some reason we cannot immediately sense or comprehend. We base our assessment of risk on the past (in this case the 50 floors from the top traveled so far). The result is that we assign a probability of harm that is too low. But even if the probability of severe peril from a future ongoing, permanent decline in oil supplies or from climate change is actually small, should we ignore that probability? Let me provide another illustration which may be familiar to many. Let’s say that you are offered a free trip to your favorite vacation destination. You are told that the plane arrives safely 95 percent of the time. The other 5 percent of the time it crashes. Pretty good odds, right? Of course, not. You would never board such a plane. You would decline the flight and gladly pay your own way on another safer flight, that is, if you still wanted to go. […]