Schor explained that labour-time reduction had been an issue twenty years ago (I guess she was thinking of people like André Gorz) but has slipped out of the policy debate during the boom years. Now, in the post-2008 world, governments are pushing the line that we all need to work harder, for more hours and for more of our lives. But that, argued Schor is exactly wrong. Working-time reduction offers the threefold benefit of few people being unemployed, of less ecological damage and of people having more time to spend on social activities (cue mention of The Big Society). Even if we could grow our way to full employment, we shouldn’t. Rather we should reorient away from overconsumption towards leading better quality lives. More time-stressed households are have more carbon-intensive lifestyles. She held up the Netherlands as a model of how to start moving in this direction. Apparently, the Dutch are the slackers of Europe generally and, some years ago, made new civil service contracts 80%. You have the freedom there to choose to be a five, four, three, two or one-day-a week employee. And she specifically referred to the one-day-a-week Professor (so maybe Ingrid can comment!). [UPDATE: (after gastro george’s comment below) – Schor didn’t envisage a scenario where people would be on shorter hours and less pay, but rather one in which pay is held static but productivity gains get channelled into shorter hours. So the reduction would be gradual. Since we currently have a situation (at least in the US and the UK) of static pay but productivity gains funding increased income for the 1 per cent, this gradual shift would be redistributive in an egalitarian direction.]

Skidelsky was next up. He began by talking about Keynes’s Economic Possibilities for our Grandchildren in which Keynes foresaw a radical reduction in working hours and asked why Keynes’s vision hadn’t come to pass. He offered a range of possible explanations (the joys of work, fear of leisure, increased inequality, pressures from employers on a cowed workforce, and pathological consumerism). The business of government should be human well-being in some all-things-considered sense (shades of Sen here) and government should act to enable people to negotiate shorter working hours and, perhaps, by introducing a universal basic income. Government should also act to reduce social pressures to consume via intervention in the advertising industry. He also floated ideas about a progressive consumption tax, but I didn’t get any clear sense of how this would work.

Finally: Tim Jackson. I took fewer notes during Jackson’s contribution, so I probably missed some detail. What was interesting, though was the way he challenged a key assumption behind Schor’s and Skidelsky’s talks. Whereas they had been very gung ho about the need to channel increasing productivity gains into shorter hours, he challenged much of the talk around productivity itself, especially in the service sector and the public sector. In this regard he cited a “recent study” which showed how nurses, subject to productivity pressures from managers in the NHS, had started to feel less empathy for their patients because of the stress they were under.

My brief, but unscientific reactions to the whole project. First, I’m sympathetic, I really am, to the idea that people should work and consume less and that we should attend more to real life quality. But this doesn’t seem very realistic in my own life for two reasons: first, even if my employer were sympathetic (unlikely) I feel very hard pressed now to produce the level of research output necessary for me to stay competitive with other academics (not just in the UK, but elsewhere). I suspect this generalizes to many people in professional jobs: we couldn’t achieve the kinds of things we want to in our careers on those kinds of hours. This isn’t necessarily a problem, so long as there isn’t compulsion. Some (many) people have shitty jobs with low intrinsic rewards: removing the burden of work for them would be an unqualified good thing. Second, it is all very well Juliet Schor telling us to transition to a low hours/lower consumption economy. I’m cool with consuming less. The problem is that I, and just about everyone else, has taken out huge mortgages and bank loans to pay (in part) for the consumption we’ve already had. Hard to reduce the hours unless (or until) the debt goes away. Third, there was distressingly little discussion of the politics of this. Whatever the real social and economic benefits, the French 35-hour week wasn’t a political success (perhaps because it was watered-down) and Sarkozy was able to campaign effectively on behalf of the “France qui se lève tôt”. Some kind of post-mortem on this experience would have been helpful, albeit that it took place in a different, pre-crisis, environment.

Eight academic economists have left Dublin in recent months or will leave shortly. That may seem like a small number, but there are only 200 or so academic economists in the country. They all have moved / will move to warmer places: Stirling (2.0K warmer on average than Dublin), Brighton (2.2K), Oxford (2.2K), Canberra (3.4), Melbourne (5.3K) and Lisbon (7.0K). Dublin economists thus disregard the opinion of the European Union that a climate change of 2.0K is dangerous.

Between 1998 and 2009, intra-union migration has been towards warmer places. The average migrant in the EU experienced a warming of 0.6K. The average masks a wide spread. About 10% of migrants stayed in roughly the same climate, 17% experienced a cooling of 2K or less, and 16% a cooling of more than 2K. 24% experienced a warming of less than 2K, and 33% a warming of more than 2K. 450,000 people opted to live in a climate that is more that 5K warmer than what they were used to.

Obviously, one cannot compare the individual impact of moving to a warmer climate with the impact of global warming, but at the same time it is clear that both Dublin economists specifically and intra-European migrants generally do not object to a warmer environment.

City climate data from World Guides. Country climate data from the Climate Research Unit. Migration data from EuroStat, for Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Austria, Poland, Romania, Slovenia, Slovakia, Finland, Sweden, United Kingdom.

Update: In comments, Richard Tol says that the piece was intended to be tongue in cheek. He has changed the tag on the original post to say this (although he has not noted this change anywhere on the post or in comments).

• Another opinion piece, in the New York Times, on Trichet, Draghi and the ECB

• Social scientists have known for a couple of decades that, contrary to its national myths, the US is a country with low intergenerational economic mobility, by international standards. Back in 2001, when I reviewed The Real Worlds of Welfare Capitalism by Bob Goodin and others, I mentioned that this was already well known. More recent evidence has shown that social mobility is not only low but declining. Yet until recently, popular discussion in the US seemed impervious to this evidence. Now suddenly, the issue is everywhere. Time Magazine had a front page story, there’s another in Salon and even the National Review is talking about it. Surely Occupy Wall Street has played a role here, but the lead time for a piece like that in Time would presumably predate #OWS. The experience of the Great Recession seems finally to be breaking down the power of zombie ideas.

While the proposal is far from perfect, there’s a lot to like about it. The price of $A23/tonne is comparable to that in the EU, and should be enough to promote a wide range of reductions in CO2 emissions. Importantly in the Australian context, it should (with the support of some addition funds to allow the closure of existing power stations) end the use of brown coal (lignite) as a fuel. Brown coal produces about 50 per cent more emissions per unit of energy than anthracite bituminous (thermal) black coal, and Australia has lots of it. There will also be an incentive to continue the shift away from black coal in electricity generation and towards a combination of gas and renewables. Equally important, in the long run, will be improvements in energy efficiency. This is where price-based measures really shine, as compared to purely regulatory interventions – there are all kinds of ways to save energy and it is hard to predict, in general, which will be best.[3]

The other side of the proposal is what to do with the revenue, and in this respect the current measure is a big improvement on the emissions trading scheme that failed to get through in 2009. That scheme gave greatly excessive compensation to large emitters in a way that encouraged them to stay in operation. While the business compensation in the current scheme is still excessive in economic terms, it’s a sensible compromise politically. More important is the use of the bulk of the proceeds to raise the income tax threshold from (around) $6000 to $20000, thereby taking a million or so people out of the income tax system[4]. That’s a measure that will be hard to reverse, given that the Opposition has pledged “in blood” to repeal the tax if it win the next election.

As long as the government can last out its full term, and as long as the global economy doesn’t collapse in the meantime, the implementation of the tax will show the claims of economic disaster arising from a carbon price up as the absurdities they are. That in turn might lead to a change in leadership on the other side of politics, which also changed leaders on this issue, and may be forced to reverse this change.

fn1. More precisely, an emissions permit scheme with a price fixed for three years.
fn2. They are of opposite genders. Australia is not yet European enough for men to exchange kisses, although hugs are socially acceptable in certain contexts.
fn3. There are some easy cases, such as low-energy lightbulbs – the previous conservative government introduced a phaseout of incandescent bulbs which is now taking effect.
fn4. It will be interesting to see if our rightwing commentariat takes up the WSJ “lucky duckies” line.

There’s some stuff that cuts the other way. When I said that Matt has to believe that inflation-adjusted income tracks real levels of well being, he doesn’t have to believe that all the way up the income scale. Given familiar facts about the diminishing marginal utility of income, it is probably the case that extra money does very little for the rich. But it really does make the lives of the poorest better off, other things being equal. The trouble is, that as far as I can see, other things aren’t equal and their inequality leads to all the bads in the preceding paragraph.

There’s a risk in the points I’ve made and one that has recently been exploited (at least rhetorically) by Britain’s Conservative-led government. That is to say, that, since there’s a disconnect between income and well-being, we should not worry about the former. This then gives the right-wing a license to cut programmes that tranfers to the worst off on the grounds that you can’t solve their problems with money, etc. Naturally, I don’t agree with that. My point is not that we shouldn’t care about the real incomes of the worst off, but rather that we shouldn’t pursue policies that have the effect of increasing their incomes but which also have side-effects involving inequality and natural and social deterioration that swamp the gains and actually make them worse off, all things considered.

One of the more intriguing sidelights to debates over climate change and energy policy is the idea of Peak Oil. On the face of it, the Peak Oil hypothesis is a straightforward claim. The amount of oil generated by any given field follows a bell-shaped curve, first rising as the field is developed and then declining as the oil becomes harder and harder to pump.

The curve is referred to as the Hubbert curve, after US geologist M King Hubbert[1] who used it to predict the peak of US oil output around 1970. Applying Hubbert’s analysis to the world as a whole yielded the prediction that the global peak in oil production should be happening around now.

On the evidence available, the predictions of the Peak Oil hypothesis don’t look too bad. Despite near-record prices for oil, the output of crude oil has remained broadly constant for the last seven years. Such an apparent plateau is exactly what the Hubbert curve would predict, bearing in mind that commercial production began 150 years ago.

The economic effects of the depletion of oil resources will be mixed. Clearly, since underlying demand is rising with population and income growth, the price of oil must rise to clear the market. That’s good for suppliers of oil, as well as competing energy sources, and bad for consumers. Overall because of the unpriced negative effects of burning oil, the most important of which is the release of carbon dioxide, a reduction in oil output is beneficial for the planet as a whole.

This is all straightforward: economists have been analysing markets for exhaustible resources ever since the pioneering work of Harold Hotelling in the 1930s. The observed outcomes fit Hotelling’s model pretty well – rising real prices are needed to sustain an optimal extraction path.

But discussions around Peak Oil are dominated, not by economic analysis, but by a range of more or less apocalyptic scenarios. In these scenarios, an end to ever-growing output of oil means an end to industrial civilisation as we know it.

There are a number of misunderstandings here. A lot of discussion seems to assume that Peak Oil means an immediate end to oil production, when the Hubbert curve implies a gradual decline over 100 years or more.

More importantly, though, the Peak Oil story is about production. But, if oil is essential to modern civilisation, what matters is not production but consumption.

The Oil Peak that actually mattered was the peak in consumption per person, which took place back in 1980 at 5.3 barrels per person per year. Since then, consumption per person has dropped to 4.4 barrels per person per year. Given the growth of demand in Asia, consumption per person in the countries that were already rich in 1980 has fallen much faster. Meanwhile living standards have risen substantially[2], unconstrained by declining consumption per person of oil, and of energy more generally.

Oddly enough, most people who worry about Peak Oil are also environmentalists concerned about climate change. From this viewpoint, which I share, Peak Oil looks like good news rather than bad. But the optimistic interpretation is trumped by the spurious idea that there is a 1-1 relationship between oil (or energy) and economic activity. This fallacious idea is held both by Peak Oil fans and by the rightwing doomsayers who suggest that reducing emissions of CO2 will destroy the economy.

A particularly interesting subgroup of Peak Oil fans are those who see nuclear energy as the only possible solution, a view that was mooted by Hubbert himself. This part of the discussion is dominated by a belief in something called ‘baseload power demand’ which must be met at all times if disaster is to be avoided. The idea that demand responds to prices and market structures seems entirely foreign to this discussion.

One of the few upsides of the disastrous Fukushima meltdown is that it has allowed a perfect test of this theory. Following the meltdown, Japan has taken 38 of its 54 reactors offline. It’s now midsummer there, and the blackouts predicted by the scaremongers have not occurred. Instead, the reduction in supply has been handled by (mostly voluntary) efficiency measures.

Energy is important, but it is no more ‘essential’ or ‘special’ than many other goods and services in a modern economy. If the supply is reduced, the market will respond to bring demand into line, especially if this response is facilitated by sensible government policy. No single source or technology, such as oil, nuclear or solar is essential, although none should be dismissed out of hand.

fn1. A fascinating guy, by the way. He was associated with the Technocracy movement, which briefly in the 1930s looked like a serious contender as an alternative form of government for the US. Wikipedia has lots on this.

fn2. In the rich world as a whole, and in most of Asia. Those in the bottom half of the US income distribution and in some very poor countries haven’t done so well, but that has nothing to do with oil.

I’ve been meaning to write this post for a while, but Stephen Lacey at Grist (via David Spratt on Twitter) has done much of the job for me, and better than I could have. The crucial point is that the cost of solar photovoltaic electricity has fallen dramatically and is almost certain to fall further. In particular reaching the point where it is the cheapest large-scale alternative to carbon-fuelled electricity generation, and competitive (at reasonable carbon prices and in favorable locations) with new coal-fired power.

This makes for some fundamental changes in the debate over climate change and mitigation, even as it reaffirms the central point that advocates of mitigation have made all along, namely that, with an appropriate policy response, the costs of drastic reductions in carbon emissions will be modest in relation to national or global income.

Until very recently, solar PV was just a promise, with a share in total electricity generation so small as to be negligible. As Lacey observes that changed in 2010, with 17GW of peak capacity installed. Allowing for availability, that corresponds to something like 4GW of coal or nuclear (standard plants are typically about 1GW). But that’s overly conservative because solar output is such a good match for peak daily demand.

The growth in solar PV has been driven by subsidy schemes like those in Australia. As in Australia, the decline in costs has produced massively more demand than expected, leading to succesive rounds of cuts. But while individual markets have bounced around, the market as a whole has grown massively, even as subsidies have been scaled back. At least so far, that’s true for Australia as well. As I said in the Fin a while back, this is one of the rare instances of an ‘infant industry’ outgrowing the need for subsidies.

Capacity for annual output of new solar modules is now approaching 50GW (peak), at which point solar PV would be one of the main sources of new generating capacity, comparable to wind and gas.

There is no obvious constraint on further growth. Until about 2005, the solar industry depended on offcuts from the semiconductor industry for silicon (the blip marked ‘silicon shortage’ on the graph represents the point where demand outgrew that source). And much of the ‘balance of system’ (installation, inverters and so on) still represents adaptations of devices developed for other industries, with the associated problems of supplies and inventories. But with recent growth, the whole supply chain will be optimised for solar.

At some point the share of solar PV will be large enough (say 30 per cent) that it will change the balance of supply and demand, ending the present situation where the excess supply of night-time power from coal must be sold at a discount. That will entail both changes in pricing structures, most obviously a premium for power supplied in the early evening or for storage technologies. But starting from a zero base, that’s quite a way off. For the moment, the main issue is cost

If the cost of solar PV continues to decline at rates similar to those we have seen in recent years, the whole debate over climate mitigation will be changed. Plausibly, a CO2 price of $50/tonne will be enough to drive a fairly rapid decarbonisation of the whole electricity sector. That means a smaller increase in prices than would otherwise have been expected, and therefore less of a role for adjustments in final demand.

Coming back to the claim of vindication made above, the sensible case for the claim that mitigation could be achieved at low cost was not to identify some particular technology as the anointed savior, but to argue that, with a carbon price (through a carbon tax, emissions trading scheme, or, less desirably, ad hoc measures that produce an effective price) and supporting policy instruments, some combination of options (renewables including solar, wind and geothermal, nuclear, CCS, energy efficiency, changes in demand patterns) would produce substantial reductions in emissions at relatively low-cost. At this stage, it looks as if solar PV and energy efficiency are the most promising candidates, along with wind, while most of the others look less hopeful than they did a few years ago. While this particular outcome could not have been predicted with any reliability, the general pattern could be predicted and was.

Earlier in this series Reasons to be cheerful (Part 1): Peak gasoline

When you see pictures of rubble like this week’s shots from Joplin, Mo., you should not wonder: Is this somehow related to the tornado outbreak three weeks ago in Tuscaloosa, Ala., or the enormous outbreak a couple of weeks before that (which, together, comprised the most active April for tornadoes in U.S. history). No, that doesn’t mean a thing. It is far better to think of these as isolated, unpredictable, discrete events. It is not advisable to try to connect them in your mind with, say, the fires burning across Texas — fires that have burned more of America at this point this year than any wildfires have in previous years. Texas, and adjoining parts of Oklahoma and New Mexico, are drier than they’ve ever been — the drought is worse than that of the Dust Bowl. But do not wonder if they’re somehow connected.

Well read the whole thing, as they say. (See also the stunning pictures from Joplin at The Big Picture . )

the European left has to find a more certain voice. It must argue passionately for a good capitalism that will drive growth, employment and living standards by a redoubled commitment to innovation and investment.

I’m not sure who this “European left” is, but, given the piece is by Hutton, I’m thinking party apparatchiks in soi-disant social democratic and “socialist” parties, often educated at ENA or having read PPE at Oxford. I’m not sure how many battalions that “left” has, or even whether we ought to call it left at all. Anyway, what struck me on reading Hutton’s remarks was that calls for the “left” to do anything of the kind are likely to founder on the fact that the only thing that unites the various lefts is hostility to a neoliberal right, and that many of us don’t want the kind of “good capitalism” that he’s offering. Moreover in policy terms, in power, the current constituted by Hutton’s “European left” don’t act all that differently from the neoliberal right anyway. In short, calls like Hutton’s are hopeless because the differences of policy and principle at the heart of the so-called left are now so deep that an alliance is all but unsustainable. That might look like a bad thing, but I’m not so sure. Assuming that what we care about is to change the way the world is, the elite, quasi-neoliberal “left” has a spectacular record of failure since the mid 1970s. This goes for the US as well, where Democratic adminstrations (featuring people such as Larry Summers in key roles) have done little or nothing for ordinary people. Given the failures of that current, there is less reason than ever for the rest of us to line up loyally behind them for fear of getting something worse. Some speculative musings, below the fold:

Haven’t things always been a bit like this, though? Well not really. Once it was possible for people on the left to pretend that differences among us were primarily about means. We all shared the same sort of egalitarian, science-fictiony, abundancy, holding hands, economic democracy vision of the far-off future, but some people were more committed to electoral persuasion than others. (I realise there was a great deal of dishonesty, self-deception, wishful thinking and delusion about that pretence, but it had some kind of reality.) Now the overt differences of aim and value between various currents calling themselves “left” are deep and irreconcilable. So what are those currents:

1. The technocratic quasi-neoliberal left as incarnated by the likes of Peter Mandelson. Pro-globalisation, pro-market, pro-growth: keep the masses happy by improving their living standards. It’s the economy, stupid. Prone to witter self-regardingly about “grown-up” politics. Fixated on electoral competition with the right, with winning elections the essential prerequisite to changing anything. Who is in this box? Well I guess New Labour in the UK, plus (in practice) the leaders of the main European social-democratic parties. In power, this group (or those who think like them) have achieved very little. They certainly haven’t done much to stem the rise of inequality, to protect working-class communities from the winds of globalisation, to end poverty, or, for that matter, to protect the environment. Their attitude to those to their left has been to call for discipline and silence, for fear of frightening the median voter, coupled with hostility, ridicule, character assassination. Their appeal to the left has always and only been that they are slightly less bad than the full-on right wing. (If they have a feature one can admire, it is their comparative lack of xenophobia and racism, however much moved by a desire for “free” labour markets.)

2. The “left” version of populist nationalism. Culturally conservative, worried by immigration (and willing to indulge popular anxieties), anxious about the effects of markets on working-class community. Maybe “blue Labour” in the UK is an example of this, though, of course, plenty of Labour politicians are willing to swing both “new” and “blue”, whistling a communitarian tune whilst relaxing planning laws for the supermarkets, which would be anathema to the core blue Labourites. British Labour leader Ed Miliband was plainly flirting with this current in his most recent speech. Like the first group, power is important for this current. But power isn’t everything, for two reasons: (a) being in government and not achieving improvement in social justice would be pointless for those members of this group who are not career politicians and (b) unlike the left-neoliberals there are things they can do outside of parliamentary politics: they can organize, resist, use the power of the trade unions (such as it is). The trouble for this group is that their core group of supporters, on whom they can rely at election time, has been getting smaller for decades and the solidaristic norms that used to be the conventional wisdom of their supporters are fraying, and will fray more as the material and institutional supports of the labour movement erode further (cf André Gorz, I suppose). The current UK government may be upsetting a lot of voters with its cuts policy, but, long-term, they are also chipping away at an important social support for this kind of politics: public sector employment.

3. The eco-left. Highly egalitarian. Deeply sceptical about the capacity of capitalism to provide real improvements in people’s lives through “growth”. Anxious about the way in which both the natural and the social environments that make life tolerable are being undermined by neoliberalism. Tending to communitarianism and anarchism. Not very coherently both localist/communitarian and cosmopolitan in outlook. Highly connected to the social movements that have in fact given us most of the left’s real policy gains in the past 40 years. Again, this group doesn’t need to win parliamentary elections to make a difference, since it can, to some extent, both organise resistance to government policy and implement alternative ways of living in the here and now. Obviously there are worries about thinking of this group coherent at all, since it takes in all kinds from the Zapatistas to Colin Ward-inspired anarchists, to UKUncut, the the Spanish street protesters, to Greens and maybe even some of the people who had washed up in the Lib Dems in the mistaken belief that it was to the left of Labour in the UK.

4. The old Leninist hard left. Naturally they fancy themselves as the people strand 3 need to give them organization and direction. I don’t think so. Washed up, marginal, authoritarian and unappealing.

I have a lot of sympathy with the eco-left strand. The trouble is, whilst having, in many ways the most attractive long-term vision, it is probably electoral suicide (for now) for any left-of-centre party to run on a platform that eschews wealth-creation and rising living standards. And in the anglo-american world at least, associated ideas for shorter hours and job sharing are seen as marginal, impractical and extreme. Still, I see this group growing ever larger over time, as the environmental crisis becomes deeper, and as promises based on growth become both harder to keep and harder to translate into real improvements in quality of life. As this group grows in strength, the 1+2 alliance will become less stable since the compromises with global capitalism required by the quasi-neoliberal left will not be met be any compensating benefits for the constituency of left populist nationalism. Their voters, the swing voters of the left I suppose, will either move towards the eco-left or will drift towards xenophobic right-wing nationalism. How all this plays out, though, is surely going to vary a lot from country to country, depending on whether it is possible to build a coalition that could win elections or, as the next best thing, one with whom deals would need to made in order to govern. But I can’t think that the old 1+2 social democratic formula can be a winner for the left any more.

It’s just been announced that the paper is to be retracted on the grounds that it contains extensive plagiarism, much but not all of it from Wikipedia. Wegman’s response, showing the wisdom of his research strategy, is to blame his graduate student, who was not, however credited as an author. USA Today, which has taken the lead in following the Wegman plagiarism story, asked an actual expert to look at the paper and her reaction was about the same as my amateur assessment (Wegman and Said are also newcomers to the field, which may explain their heavy reliance on Wikipedia as a reference source).

This kind of trouble seems to follow Wegman around, and to be contagious. Among those affected:

• George Mason University, which received a formal complaint about plagiarism over a year ago, and has yet to take any action. Amazingly, Wegman (or one of this graduate students) copied, without acknowledgement, the work of Raymond Bradley, one of the scientists he was attacking. As in the separate social networking case, USA Today asked experts about the case, and were told that this was an open-and-shut case of plagiarism.

• The editor of Computational Statistics and Data Analysis, Stanley Azen, who accepted the Wegman et al article a few days after its submission. Azen now says he would never do such a thing without having earlier sent the paper out for peer review. Sadly, all records of the review were lost in an office move. And, in accepting the article by email, Azen forgot to mention the rigorous review process, instead saying, in emails obtained under FOI by USA today “I personally reviewed your very interesting (and unique) manuscript.” In separate news, Azen’s pet dog has finally confessed to eating his homework in ninth grade.

• The journal WIREs Computational Statistics where Wegman and Said, along with co-author David Scott, were appointed as editors following their innovative work on climate science. There, Wegman and Said published an article on color design and theory, which, wouldn’t you know it, turned out to contain large slabs lifted from Wikipedia and other sources. The graduate student presumably responsible didn’t just cut and paste – there was extensive paraphrasing which often changed the meaning. The redoubtable blogger “Deep Climate” who’s done much of the work in documenting the extensive plagiarism that has plagued Wegman’s work has made some color innovations in the process, using color highlighting to document the various modes of unattributed borrowing that make up a typical Wegman piece. I should also mention John Mashey’s extensive work which has greatly helped our understanding of how delusions are manufactured and sold.

But there’s also some striking good news. Most important is the arrival of ‘peak gasoline’ in the US. US gasoline consumption peaked in 2006 and was about 8 per cent below the peak in 2010. Consumption per person has fallen more than 10 per cent.

There are a couple of ways to look at this. One is in the standard economics terms of supply and demand. Given that oil production reached a plateau some time ago, and that demand from China and other developing countries is growing fast, equilibrium can only be reached if prices rise enough to limit the growth in Chinese consumption and generating an offsetting reduction in consumption elsewhere (I’m assuming little or no supply response, which seems consistent with the evidence).

We have of course seen oil prices rise substantially. The effect on demand depends on the percentage change in fuel prices and on the elasticity (a measure of responsiveness) of demand. Because the US has very low taxes on gasoline and other fuels a given change in oil prices produces a much larger percentage change in fuel price than in other developed countries. The US gasoline price rose, in real terms, by around 40 per cent between 2000 and 2010, and have risen by another 30 per cent or so since then, for a total increase of about 70 per cent. So, the US is the place to look for big price effects.

The big question is the elasticity of demand, that is the percentage change in demand arising from a 1 per cent change in price. In the short run, this elasticity is quite low, reflecting the fact that fuel is a small part of the running costs of a car. The short run elasticity (measured over periods less than a year) is relatively easy to estimate and is about -0.25, that is, a 1 per cent price increase will reduce demand by 0.25 per cent, and a 40 per cent increase will reduce demand by 10 per cent. That’s roughly in line with the observed outcome. However, given that factors such as income growth tend to raise demand, the observed reduction is a bit more than would have been expected with constant prices.

The long run elasticity is much higher, since in the long run people can change their driving habits, reduce their stock of cars, and choose more fuel-efficient cars The meta analysis cited here suggests values around -0.6, suggesting that the price increases we’ve already seen should reduce demand in the long term by around 40 per cent, relative to the trend with constant real prices.

In my view, even the long-run estimates are too low. A sustained upward trend in prices will induce the development of energy-saving innovations (the reverse is true – when energy is cheap and getting cheaper, people invent new ways to use more of it). I suspect that the full long-run elasticity, including induced innovation, is near 1, meaning that if current real prices are sustained, consumption could fall as much as 70 per cent below the level that would be expected if prices had remained at the 2000 level.

The alternative is the ‘bottom-up’ approach of looking at changes in driving habits, the car fleet and so on, then working back to total demand.

• The number of vehicle miles driven has peaked. This is partly a response to higher prices, but I suspect there may also be an element of saturation (Americans already spent far more time behind the wheel than people in any other country) and the emergence of substitution opportunities through IT and telecommunications, such as Internet shopping replacing trips to the mall (the construction of new malls has just about ceased).

• Cars are becoming more fuel efficient. That’s partly a market response, reflected in the demise of the Hummer, and partly the result of regulation. The US is tightening its fuel economy standards, and has finally blocked the loophole under which SUVs like the Hummer were treated as “light trucks” and counted separately from cars. The 2009 regulations require a 40 per cent improvement in the average efficiency of new cars, relative to the existing fleet, by 2016. That will take a decade or so to feed through (but efficiency standards for post-2016 cars can be increased further in that time).

• Car sales have been below previous peaks for some years. That’s partly a response to the Global Financial Crisis and the subsequent recession, but there’s evidence that the US car fleet is past its peak size.

In all of this, the GFC has had an effect, which is mostly temporary. So, we should expect some recovery in demand as the general economy recovers, but the peak gasoline phenomenon is real.

Finally, what does peak US gasoline imply about Peak Oil, which I’ll interpret as the point at which the current plateau in oil production turns into a clear, though gradual decline?

• First, we won’t really notice it happening (except as it’s manifested as a further increase in oil prices). Rather, we’ll have to look back at the stats to identify when the decline began

• Second, the adjustment will be a combination of many different processes (less travel altogether, less of that by car, more fuel-efficient cars) rather than one big shift

• Third, given that oil accounts for something like a third of all CO2 emissions, the sooner Peak Oil arrives, the better.

• Finally, oil output per person peaked in 1979. For most purposes, it’s output per person that matters. And the evidence is that, over the last 30 years, output of goods and services per person has risen substantially even as output of oil per person has fallen. That seems pretty conclusive as far as apocalyptic versions of the Peak Oil hypothesis are concerned.

No nuclear renaissance

As the crisis in Japan continues to worsen, advocates of nuclear power have hastened to offer reassurance that their preferred power source is still a viable option in the race to replace carbon-based sources of energy. The earthquake and tsunami represent an extreme worst case, unlike to be observed in less seismically active areas than Japan.

So far at least, the worst case outcomes of a core meltdown and Chernobyl-style release of radioactivity have been avoided. Although some radioactive steam has been omitted, the total health risks remain far below those of coal-fired power, even disregarding CO2 emissions.

As Ziggy Switkowski observed yesterday, “We will learn from the tragic Japanese experience how to build more robust reactors, how to ensure multiple layers of protection work properly, how to better contain radioactive gases,”

All these points are valid, but, unfortunately, irrelevant. The attempt to restart the nuclear industry, sometimes optimistically called the ‘nuclear renaissance’ was already on the edge of failure before this crisis. Even with the best possible outcomes from the current crisis, nuclear power is off the agenda for a decade or more, at least in the developed world.

The nuclear renaissance was launched in the United States by George W Bush with the Nuclear Power 2010 program, unveiled in 2002. This was followed by the Energy Policy Act of 2005 which authorized $18.5 billion in loan guarantees. All of these initiatives were carried on and extended by the Obama Administration, which proposing to triple federal loan guarantees.

The initial reaction was highly positive, with dozens of proposals being announced. By the end of 2008, 26 proposals had been received by the Nuclear Regulatory Commission. But by the end of 2010, more than half of these had been abandoned, and ground had been broken on only two sites, with a total of four reactors. In October 2010, Constellation Energy pulled out of a joint venture with French firm EDF, saying that more loan guarantees, with less stringent conditions, were needed. Similar problems have emerged in France, Finland and other developed countries, where construction projects have encountered delays and massive cost over-runs, with the result that plans for expansion have been scaled back sharply.

Even assuming the best possible outcome from the Japanese crisis, the economic case for nuclear power, already fragile, has been severely, and probably fatally, damaged. At least eleven reactors have been taken off line. Three of the reactors at the Fukushima site have already been rendered permanently inoperable by the pumping of seawater into the storage pools and three others may follow. The evacuation of 200 000 people, at a time when the earthquake and tsunami have already stretched resources to the limit, will have massive costs, running into the billions unless the situation is resolved rapidly.

Doubtless, as Switkowski has argued, the failures in cooling and containment systems that gave rise to the present crisis can be overcome and reactor designs modified to improve safety. But safety doesn’t come cheap, and redesigns mean delay. With no prospect of any further increases in subsidies and loan guarantees, it seems likely that most of the proposals for new nuclear power plants in the US will be abandoned. And, if only for reasons of diversification and speed of construction, the lost Japanese reactors will probably be replaced by gas-fired plants, with some renewables.

But why are the economics of nuclear so bad? In part, it is simply a matter of technology. Nuclear power has turned out to be more expensive than its advocates have expected, while alternative sources of energy, particularly gas, have become cheaper. Even solar photovoltaics, long seen as impractical, are now cost competitive with nuclear on some calculations.

But the crucial problem for nuclear power has been fear. Fears about safety have meant that nuclear power plants have been held to much higher safety standards than alternatives like coal, which routinely spew pollutants of all kinds into the atmosphere.

More important than these fears, however, is the fear and ignorance displayed by those who have obstructed the most important single factor needed for nuclear power to become viable – a price on emissions of carbon dioxide. Some claim, like Lord Monckton, that climate science is a plot to restore the fortunes of global communism. Others like Cardinal Pell, who apparently believes that nitrogen is a greenhouse gas, say that, having ‘studied this stuff a lot’, they are qualified to overrule the experts.

Ironically, many opponents of climate science pose as defenders of nuclear power. In reality, they are its deadliest enemies.

At the time, I was suspicious that this might be some sort of satirical gag[1]. But now I see the proposal being discussed, and rejected, at the very serious Volokh blog (H/T Paul Krugman and Matt Yglesias).

So, based on my extensive agnotological studies, let me make some predictions about some of the scientific claims we are likely to see advanced (by the same people, but at different times), once the debate over Obama’s socialist plan hots up.

• Asteroids don’t exist
• The law of gravity means that an impact between an asteroid and the earth is physically impossible
• An asteroid would inevitably burn up in the atmosphere
• In a quest for grant funding, NASA has fiddled the data on asteroid orbits to overstate the risk of a collision
• Massive asteroids hit the earth all the time and nothing bad happens
• Asteroid strikes are natural so environmentalists are hypocritical in opposing them
• Al Gore is fat

The general point is that if some physical state of the world would require government action inconsistent with libertarian principles or conservative tribal taboos, then since libertarianism/conservatism is always right, logic dictates that the physical state in question must be impossible.

fn1. I’m susceptible enough that I believed DD when he said that Natalie Portman was starring in the movie version of Nassim Taleb’s book. I just went to see it, and, at the very least, the screenwriters took a lot of liberties with the text.