| HN Mirror

Demand and production of oil are relatively coupled throughout history and both have stayed relatively flat in the west (with substantial caveats, below). So over the past 30 years, both were driven primarily by developing economies (on the demand side) and new oil discovery/extraction techniques (on the supply side).

> Besides did it double because of increased demand... or because of "modern computing"

My answer is basically "yes". The rest of my argument contains a lot of inter-related claims, so I'm going to number them to make things easier to follow.

But my fundamental claim is that modern computing played a large role on both the supply side and the demand side in the oil industry over the past 30 years.

1. Effect of computing on supply: Computing helped provide the steady flow of cheap oil.

1a. Computing enabled more efficient and more accurate discovery, driving down the price of extracting oil.

1b. Computing enabled new drilling techniques, driving down the price of extracting oil.

1c. Computing improved the efficiency of both old and new drilling techniques, driving down the price of extracting oil.

1d. Computing enabled improvements in refining, driving down the price of refining oil.

1e. Computing enabled improvements in predicting demand, decreasing the risks of destablizing cycles of under-production followed by glut.

2. Effect of computing on demand in developed economies: Computing helped decrease d(demand)/dt for oil in developed economies.

2a. Fuel efficiency in vehicles -- both planes and cars -- was driven in part by modern computing. Multiple mechanisms explain this: improved design (esp in the case of cars), more efficient usage (esp in the case of planes and plants), and efficiencies directly enabled by computing (esp in cars).

3. Effect of computing on demand in developing economies: Computing increased the rate of development.

3a. Indireclty: computing helped keep the price of oil more stable and lower than it would've been without computing (see: 1 and 2). Predictable and relatively lower prices enabled a faster rate development, which itself drove more demand. This cycle would've happened in any case, but by keeping prices lower and more stable, computing increased the rate of economic development inb these countries.

3b. Directly: In some of the most rapidly developing economies, development was directly driven by offshoring of IT/computing and especially of manufacturing related to IT/computing.

To conclude:

1. computing increased the availability and consistency of oil supply, driving down both volatility and prices (note: is is the subtle point. In the case of oil there's a feedback loop between supply and demand, so we have to consider prices for equal levels of demand in the real world vs. the hypothetical no computing world. The claim is that, when we fix the level of demand, prices are significantly lower than they would've been without computing. The claim is not that absolute prices are lower; I think without computing, demand would be significantly lower because large swaths of the world would be significantly less developed),

2. computing decreased the rate of growth in demand for oil in developing economies, allowing growth in supply to enable more rapid development in other economies, and

3. computing increased demand for oil by both directly and indirectly driving development.

None of this is to discount the role of other innovations: the spread of public health practices, vaccinations, the most recent wave of globalization, relative peace, decolonization, and so on all played major roles as well. My point is only that, without computing, the state of oil production and consumption would be substantially different with absolutely massive implications for all of the non-western world, and perhaps for the west as well.