Introduce Mining Schedules, Oil First

Phaseout Profit Theory works for all flavors of fossil fuel. But oil should come first actually implementing it.

There are several reasons for that.

For one, oil will run out substantially faster than coal, since there is much more coal left than oil.

Also, people have already tried to set up caps on oil supply with OPEC and the Texas Railroad Commission.

And cheap oil is more damaging than cheap coal to the environment. Cars don’t run on coal. Cheap gasoline delays the transition to electrical vehicles.

Finally, right about now would be excellent timing to get oil prices up again, since they have gone down substantially lately. Oil producers around the globe are feeling the pain from those price reductions, which should make them interested in finding a remedy.

The international community just decided in Paris to limit global warming to 2 degrees Celsius, and aim for 1.5 if possible.

That means that the majority of oil can’t be burned. That in turn means that the end of oil does not come when the last barrel of the proven reserves is burned. It comes with the last barrel of 2 degrees compatible oil.

The amount of bitcoins that can ever be mined is fixed at 21 million.

The amount of oil that can ever be mined used to be fixed at whatever the proven reserves are. It is now whatever is compatible with a 2 degree world. That amount is substantially less than the proven reserves.

With Bitcoin, there is a clear mining schedule. The amount of bitcoins created is reduced by half every four years.

With oil, there is no clear mining schedule.

That should change.

The first step needed is to identify a maximum number of barrels compatible with a 2 degree world.

The next step would be to adopt a mining schedule spreading production of those reserves over the next century (after which renewable energy will need to take over all of oil’s present contributions).

And the third step would be to figure out how to enforce that mining schedule.

One obvious way to do that would be to have a blockchain-based limited supply of “oil production rights” handed out by the UNFCC. Base them on a clearly defined maximum number, as with Bitcoin. Give people a schedule for releasing them, declining in number each year.

And then put those certificates on the market by auctioning them off. Then enact regulation everywhere prohibiting selling oil without such a certificate.

This would solve the global warming problem for oil. It would also substantially increase oil prices, since the days of pretending that the reserves are infinite would be over.

I would be surprised if oil companies and oil producing states object strongly. They stand to make a lot of money from such an exercise.


Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003,

One thought on “Introduce Mining Schedules, Oil First

  1. Pingback: OPEC Oil Outlook

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