Check out the WSJ's Econoblog "Drilling for Broke? Experts Debate 'Peak Oil.'"
The WSJ intro:
Are we nearing a peak in global oil production?
Soaring demand for oil in the U.S. and in booming economies like China and India has led to increased watchfulness about inventory levels among traders. At the same time, oil companies are scrambling to find new sources for crude, while investors ask more questions about firms' proven reserves.
Amid all this, oil prices have been racing to nominal highs. Benchmark crude soared to a new intraday record of $62.30 a barrel on Monday after the death of Saudi Arabia's King Fahd and settled at a new closing high of $61.89 on the New York Mercantile Exchange Tuesday as gasoline futures prices soared.
WSJ.com asked economist blogger James Hamilton of the University of California at San Diego and Robert Kaufmann of Boston University's Center for Energy & Environmental Studies to take a closer look at the notion of "peak oil" and explore the economic ramifications of a drop in oil production.
Don't miss the link to env-econ (click on the "creation" link in James' second post). Also, don't miss that both contributors support an energy tax:
Robert says: Sound policy should establish an economic environment that increases the economic returns and reduces the risk to long-term research and development on alternative energies. Specifically, policy should impose a large energy tax that is phased in over a long period, perhaps 20 years. Furthermore, increases in the energy tax should be "offset" by reducing other taxes, such as payroll or corporate taxes. Economic studies show that such an approach can generate a "win-win" solution -- reduce energy use (and the environmental damages not paid by users), stimulate research and development on alternative energies, and speed economic growth. Phasing in an energy tax would send a signal to entrepreneurs that there will be a market for alternative energies. The tax does not pick technologies -- that will be left to the market, which is smarter than any Democrat, Republican, or even myself!
James says: I am also very sympathetic to the idea of using taxes in this way.
I'm not so sure that an energy tax will "speed economic growth." Where did that come from? But I like the idea. In fact, I invented it [that part about "I invented it" is an attempt at humor].
