“Diminishing returns are opposed by increasing knowledge, both of the earth’s crust and of methods of extraction and use. The price of oil, like that of any mineral, is the uncertain fluctuating result of the conflict.”

– M. A. Adelman, quoted in Michael Lynch, “Morris A. Adelman, Petroleum Economist, Has Passed Away,” Forbes, May 9, 2014.

A giant of petroleum economics, MIT economist Morry Adelman, died last week at the age of 96.  (A short mention in the Boston Globe is here.)

Unlike the Malthusians and peak-oilers in particular, Adelman kept his eye on marginal costs and institutions (resource ownership, government policy) to understand that oil was not a fixed, depleting asset but, at least potentially, a super-abundant, expanding one. To grow and thrive, petroleum needed market incentives just like plants need water to grow and thrive.…

“The Nobels assert that, ‘The myth that tar sands development is inevitable and will find its way to market by rail if not pipeline is a red herring.’ But alternate delivery via rail is not a myth; it’s a massive and growing reality. Maybe before writing to Secy. Kerry, the Nobels should read the State Department’s Final Supplemental Environmental Impact Statement (FSEIS) on the KXL, especially Chapter 4: Market Analysis.”

It is the common tale of two presidents who both declared war on fossil fuels. In the 1970s, President Jimmy Carter’s petroleum price and allocation regulations, premised on the belief that we were running out of supply, put America in the gasoline lines. Thirty-five years later, depletion fears refuted, Carter champions a letter to President Obama urging rejection of the Keystone XL pipeline segment (the last of four legs) on easily refutable arguments, discussed below.…

[Editor note: Part I yesterday described Ken Green’s current responsibilities at the Fraser Institute and Canadian energy/environmental issues. Today’s post covers Green’s early interest, education,  and career in environmentalism.]

MR: When did you first become interested in environmental science?

KG: I was always interested in nature as a kid. I remember catching frogs at a nearby golf course when I was 5, and I grew up in California camping in the various state parks, where I was always interested in catching critters and playing with them. Lizards, horned toads, snakes, small rodents, whatever I could catch. I also loved science, and remember the name of my 6^th grade science teacher, Mr. Jahn, who made studying science fun.

I used to go out to the Mojave Desert a lot with my mother, who was a real character.…

[Ed. note: Julian Simon, born February 12, 1932, died four days before his 66th birthday. He would have been 82 years old today. MasterResource takes its name from Simon’s term for energy, and we publish on his oeuvre from time to time.]

Thirty-three years after its publication by Princeton University Press, The Ultimate Resource remains insightful and timely—if not timeless. Simon’s Ultimate Resource 2, published in 1996, greatly expanded upon the original, but the major themes were not changed due to the solid worldview that Simon had developed in the 1970s.]

Energy: The Master Resource

“Energy is the master resource, because energy enables us to convert one material into another. As natural scientists continue to learn more about the transformation of materials from one form to another with the aid of energy, energy will be even more important.”…