the maestro's agassed! aghast, get it? :D

October 15, 2004 7:21 PM

Greenspan on oil (speaking to the the National Italian American Foundation, which De Niro would never do :) "We will begin the transition to the next major sources of energy perhaps before midcentury as production from conventional oil reservoirs, according to central tendency scenarios of the Energy Information Administration, is projected to peak." And just to make it political, here's a chart relating presidential approval ratings to gas prices!
posted by kliuless (9 comments total)

Greenspan is the master of the parse, which is why markets pour over everything he says looking for the slightest subtlety. Reexamine what that single sentence said and it is a wealth of hidden information.

"We will (very authoritative word) begin the transition (of the entire economy?) to the next major sources (emphasis on means, not conservation) of energy (plural) perhaps (+will?) before midcentury (between *right* now and 2050) as production from conventional (as opposed to what?) oil reservoirs, according to central tendency scenarios (and what are those?) of the Energy Information Administration (statistical branch of the DOE), is projected to peak (we will wait until oil becomes non-viable before beginning the xsition?)."

You see how easy it is to project onto what Greenspan says. But how accurate are these projections to what he actually means? What the heck did he just say?
posted by kablam at 9:27 PM on October 15, 2004

"If history is any guide, oil will eventually be overtaken by less-costly alternatives well before conventional oil reserves run out. Indeed, oil displaced coal despite still vast untapped reserves of coal, and coal displaced wood without denuding our forest lands."
posted by stbalbach at 10:22 PM on October 15, 2004

I heard snippets of this today and was going to look for the whole speech. Thanks for posting it.

from conventional (as opposed to what?) oil reservoirs

He states pretty clearly, "I exclude from these calculations the reported vast reserves of so-called unconventional oils such as Canadian tar sands and Venezuelan heavy oil."

Tar (oil) sands are also known as oil shales.


I was curious about that chart so I ran the numbers. A 10 cent increase in gas prices drops Bush's approval rating about 4.5 points with a correlation coefficient of 0.63.
posted by euphorb at 11:31 PM on October 15, 2004

If Greenspan uses forecasts from the USGS, the EIA or the IEA, then we're doomed...

From the report "The Countdown for the Peak of Oil Production has Begun – but what are the Views of the Most Important International Energy Agencies" :

The projections presented by USGS, EIA and IEA regarding the future availability of oil give reason to grave concerns because the comforting messages of these studies unfortunately are not based on valid arguments. These studies ignore future limitations in the supply of oil which are meanwhile apparent, and by doing this they send misleading political signals.

This article describes how, as it were, a “building” has been erected by well-known institutions:

• The supporting ground floor has been built by the USGS 2000 study: it describes, how much oil the world has at its disposal - it just needs to be found.
• On this the EIA has built a first floor which describes the future production potential. The result is that in fact any conceivable future growth of production will be possible – with growth rates exceeding everything that could be observed in the past.
• On top of this the IEA constructs a second floor: the predicted growth in oil demand for the next decades will not be restricted by any limits of supply.

However, if only one brick removed from the ground floor, the whole edifice collapses like a card house.

posted by samelborp at 4:01 AM on October 16, 2004

"...central tendency scenarios" ? - that suggests to me that Greenspan has fallen into the Fallacy of the Middle Ground :

"This fallacy is committed when it is assumed that the middle position between two extremes must be correct simply because it is the middle position. this sort of "reasoning" has the following form:

1. Position A and B are two extreme positions.
2. C is a position that rests in the middle between A and B.
3. Therefore C is the correct position.

This line of "reasoning" is fallacious because it does not follow that a position is correct just because it lies in the middle of two extremes....This fallacy draws its power from the fact that a moderate or middle position is often the correct one."

kablam - I liked your deconstruction.

Per Samelborp's comment, I have to assume that 1) Greenspan would not have ascended to his position if he were an idiot and thus 2) He's burying the ugly truth beneath layers of vagueness and opaque sugar coating because an admission of the truth would both shake markets worldwide and also undercut the reelection prospects of George W. Bush.

In other words, Greenspan is lying for practical but - at base - partisan reasons.

Markets will have to readjust sooner or later, but Greenspan doesn't want a readjustment right now.

Greenspan has showed this sort of deep duplicity in the recent past - as when he urged homebuyers to refinance their mortgages with ARM's (variable rate mortgages) despite universal predictions at the time which held (and still do) that interest rates were (and are) rising and so homeowners who so refinanced would see their home mortage payments increase.

At the time, speculation was that Greenspan wanted to encourage homeowners to refinance - against their best interests - simply to keep the sputtering non-job creation "recovery" coughing along.

If John Kerry is elected, the question is : will Greenspan suddenly shift to telling the truth - and so drive down markets and undercut the recovery ?

I suspect he will.
posted by troutfishing at 6:57 AM on October 16, 2004

There will be any number of other problems to deal with before that, I think, trout. I don't know if we can consider Greenspan to be partisan by burying the truth in this way; he's basically stewarding the entire financial system of the planet and will want to maintain the status quo as best he can no matter who's in the White House.

Remember everyone, the US Dollar is the currency which the entire world uses to pay for oil. Everyone who buys oil has to pay with US Dollars - up until very very recently when some nations and even OPEC have begun to consider switching to the Euro.

Our financial system is thus completely dependent and supported by oil transactions. If nations start switching to the Euro - like Iraq tried to, Iran is talking about, and Russia is offering to price in - the very basis for the value of the dollar will be undermined, which will deeply affect every part of the world banking system. And that is something that I guarantee you gives Greenspan nightmares.

Ha ha ha... transition to new major power sources... ha ha ha ha ha ha!! This world needs a physics lesson, and it will be schooled soon. "Old Macdonald had an oil field, EROEI..."
posted by zoogleplex at 10:41 AM on October 16, 2004

This question may be hopelessly naive, but why did Greenspan choose to address this talk to the National Italian-American Foundation? Is that just how it works inside the Beltway - invite a famous person to talk, he picks the topic and you can be pretty sure it'll be interesting?
posted by ikkyu2 at 8:55 PM on October 16, 2004

It's neutral ground, his speech wont be seen as sending an inappropriate message. If he had given the speech at a large oil firm, or a Jewish society, or a Republican organization.. it would all be taken in diffrent ways.
posted by stbalbach at 5:33 AM on October 17, 2004

Stbalbach, that's a reasonable explanation. But... Greenspan's a government official so if he wants to send a message to the public why won't he just hold a press conference and then answer questions at the end? I guess transparency and accountability aren't that important.
posted by billsaysthis at 10:31 AM on October 17, 2004