Friday, June 06, 2008

The most important blog experience of our time

The title's a Schizopolis reference.

The link's to a post by "Fabius Maximus" about the newly explicit statement by the Saudis that they're going to be limiting oil production in order to have oil for later. This seems prudent, but of course it's a little hard on a growing oil-based economy. Still, go Saudi Arabia. I'm almost never on the Saudis side, but it does seem like a good policy.

Really, it just amused me that the author referred to another of his blog posts as "perhaps the most important of the 177 posts on this site." He gave me a choice to read it, "[o]r just wait. Your newspapers will discuss it, eventually."


nephos said...

According to, well, uh, me, maintaining the economy at zero growth requires growing the global energy supply at 2.1% per year. If its 0% growth then inflation must be 100%.

So, yes, Virginia, the world is indeed coming to an end. Anyone with any brains should move to Saudi Arabia...

Rionn Fears Malechem said...

Moving to Saudia Arabia, specifically Jeddah, is still on the table. Have you checked out opportunities at KAUST?
Why is 0 % growth an annual cost doubling?

nephos said...

So the gist is that if we cannot grow the energy supply then effectively we are reduced to a subsistence economy, consuming only enough energy each year as is required to offset natural decay, leaving none to grow future consumption capacity. In the model, the real value of production exists only in adding to this capacity to consume energy; failure to add to this capacity means zero real productivity, i.e. zero real GDP. There is of course always nominal productivity - we still consume energy to do stuff - but for a subsistence economy this must be completely offset by natural decay in consumption capacity. Sources of decay could come either from climate change or reduced capacity to access dwindling energy reserves. 100% offset translates to 100% inflation because nominal GDP is positive but real GDP is zero.

So yeah, Saudi Arabia is a good bet for energy accessibility, though closer to home, Utah is a fairly safe long-term option too. And both are religious states!