[Peakoil] Milton Friedman discovers a new source of energy

[Keith Thomas]

I found this quote today.  Perfection!! What a ....'genius'! Friedman 
discovered
  another source of energy---prices!! Surely that is worth a second Nobel
  Prize..for Physics!

  After he died, the American Enterprise Institute and other 
'double-think tanks' practically
  deified this jerk. When energy stocks rapidly decline I predict a
  literal witch-hunt for these 'academics'.
____________________________

  Nobel Laureate Milton Friedman:

  (part of an interview)

  Ravaioli: But there are many other environmental problems ...

  Nobel Laureate Friedman: Of course. Take oil, for example. Everyone
  says it's a limited resource: physically it may be, but economically
  we don't know. Economically there is more oil today than there was a
  hundred years ago. When it was still under the ground and no one knew
  it was there, it wasn't economically available. When resources are
  really limited prices go up, but the price of oil has gone down and
  down. Suppose oil became scarce: the price would go up, and people
  would start using other energy sources. In a proper price system the
  market can take care of the problem.

  Ravaioli: But we know that it takes millions of years to create an oil
  well, and we can't reproduce it. Relying on oil means living on our
  capital and not on the interest, which would be the sensible course.
  Don't you agree?

  Nobel Laureate Friedman: If we were living on the capital, the market
  price would go up. The price of truly limited resources will rise over
  time. The price of oil has not been rising, so we're not living on the
  capital. When that is no longer true, the price system will give a
  signal and the price of oil will go up. As always happens with a truly
  limited resource.

  Ravaioli: Of course the discovery of new oil wells has given the
  illusion of unlimited oil …

  Nobel Laureate Friedman: Why an illusion?

  Ravaioli: Because we know it's a limited resource.

  Nobel Laureate Friedman: Excuse me, it's not limited from an economic
  point of view. You have to separate the economic from the physical
  point of view. Many of the mistakes people make come from this. Like
  the stupid projections of the Club of Rome: they used a purely
  physical approach, without taking prices into account. There are many
  different sources of energy, some of which are too expensive to be
  exploited now. But if oil becomes scarce they will be exploited. But
  the market, which is fortunately capable of registering and using
  widely scattered knowledge and information from people all over the
  world, will take account of those changes. [ p. 33, ECONOMISTS AND THE
  ENVIRONMENT, Carla Ravaioli; Zed, 1995 ]
------------------------------------
Keith
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