Omaha's Plain Talking Billionaires on Climate - Oil - Public Transit
By EV World
EV World Editor: The following Q&A are excepts from the May 3, 2008 Berkshire Hathaway shareholding meeting held in Omaha, Nebraska. WB is Chairman Warren Buffett and CM is Vice-chairman Charlie Munger.
Q29: Doug Hicks, Akron Ohio. Oil will run out this century. Considering US policy is to do nothing until last second, will we face World War III? Will oil companies go to zero?
WB: Oil won't run out - it doesn't work this way. At some point the daily productive capacity will level off and then start declining gradually. There is the depletion aspect and the decline curves. We are producing 86m barrels per day or so, more than ever produced. We are closer, by my calculations, to almost our productive capacity, than we have ever been. I think our surplus capacity is less, and quite a bit less, than in past. Whatever that peak is, whether 5 or 10 yrs, the world will adjust, and we will think about it. Adjustments will cause demand to taper off. I don't know how much oil is there, but there are lots of barrels of oil in place. We never recover total potential. We may have better engineering recovery in future. It is nothing like an on and off switch. You may still have enormous political considerations to get access to avail oil since it so important. There is nothing you can do over short period of time to wean world off oil.
CM: If we get another 200 yrs of growth dispersed over the world while population goes up, all oil coal and uranium will run out so you will have to use the sun. I think there will be some pain in this process. I think it is stupid to use up hydrocarbons of world so quickly. Stupid when there are few and limited alternatives. What should we have done? We should have brought all the oil over from Middle East and put it in our ground. Are we doing it now? No. Government policy is behind in rationality. If we have prosperous civilization, we must use the sun.
WB: Charlie, what is your over/under for oil production in 25 yrs?
CM: Oil in twenty five years, down.
WB: If this is true, that is big number. China is doing 10m cars this year, so down in 25ys is significant.
Q30: Please name three policy decisions to better the country.
WB: Charlie will serve first term, so he'll answer first.
CM: That takes us so far afield. Three perfect solutions to problems of mankind, we are not up to it.
WB: I would do something about tax system. Super rich pay more, middle class pay a little less.
Q31: Arizona. Food shortages, trends in next decade?
CM: I said last year that policy of turning American corn into motor fuel was one of dumbest ideas in future of the world. I fly here with a head of academics – he agreed, it was stunningly stupid. It is probably on its way out.
Q53: Future of mass transit?
WB: Passenger traffic? [Yes.] The American public generally doesn't like mass transit. Americans' love affair with car, which translates into an aversion to mass transit, one person to a car seems to be popular method for moving around. We are unlikely to see expansion in mass transit. American public is genetically averse to mass transit. Seems to be human nature that people want to drive even if they have to pay $4 a gallon on gas and double on parking. I wouldn't be optimistic about something that has long trend in human nature and that it would reverse all of a sudden.
CM: You have a more optimistic view of it than I have.
Q54: Tom Nelson, North Oaks MN. If you were in charge of country, how would you handle climate crisis.
CM: I'm in awkward position of agreeing with Al Gore, we shouldn't be burning so many hydrocarbons. But his brain doesn't work the way mine does, and you'll have to judge for yourself.
WB: We'll have a vote later.
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