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Jason Crawford's avatar

This is a good point about what we can and can't infer from prices, and thanks for the pointer to the Hotelling paper.

But isn't it exactly an example of human ingenuity that “as geological exploration and mining techniques have improved, the known supplies of exhaustible resources have gone up”?

I haven't yet read SA, but can the price data given there be interpreted as an *illustration* of technological and economic advance, rather than as the primary proof of it?

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diz's avatar

Have spent a career in the oil and gas business and would say what's missing here is we don't know what "X" is. If you had estimated it based on known information and production techniques in 1974 you would likely have wildly underestimated X. It's worth noting that while the amount of "X in place" may be finite, the amount of "recoverable X" is a function of human ingenuity etc. The amount of "economically recoverable X" is a function of human ingenuity, the price of X, the price of substitutes for X, etc.

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