Or, perhaps, the markets will warn us in enough time.
Prof. Hamilton goes on to also discuss the n-year scenario where the drop in oil production he is talking about occurs n-years in the future. He notes that we should see an increase in the price of oil as the date of the peak draws closer and closer. Further, that as the price rises in increases the incentives to look for alternatives. I’ve blogged about this before and have been meet with obstinate refusal to believe this. There seems to be some sort of complete refusal to think that people want to get rich. Which is exactly what we are talking about. The increasing incentives are basically the opportunity to get rich. Imagine the price of gasoline is $120/barrel and you come up with a way to get 200 mpg with a revolutionary hybrid engine. You’d probably become very, very rich…or at least the company you worked for would stand to make lots and lots of money for their shareholders. But the people who don’t think that the market has any chance of finding a solution think that corporations and the people investing in them, working for them and the scientist they employ are all stupid and will not look for opportunities to make lots and lots of money. Basically people will pass by a ginormous pile of cash and not give it a second thought. Why this is, I don’t know.
Consider just one line of counter-argument: can the markets react in time for the energy infrastructure to wean from its dependence on plentiful, cheap, oil?