The doomsters have spoken. We’re facing “Peak Oil” — a point of maximum production, followed by an inexorable decline, when oil prices will skyrocket, and petrol and diesel cars will rust by the road-side.
In 1922, a US federal commission predicted that “production of oil cannot long maintain its present rate”, and 55 years later, President Jimmy Carter declared that world oil production would peak by 1985.
Back in the sixties, Professor Paul Ehrlich of Stanford University, no less, told us how it would be. By the seventies, he said, hundreds of millions would starve. Population control was the only answer. He predicted that “within ten years” all major life in the seas would be gone, and the coast uninhabitable for the stench of dead fish. By 1985, mankind would enter an age of scarcity, as resources were depleted. By 1980, average US life expectancy would be 42 years, because of pesticides (in fact, of course, as we now know, life expectancy is increasing at a record rate). By 1999, the population of the US would drop to 22 million. Oh, and by the way, we’d run out of oil.
But as I love to quote: “The Stone Age didn’t end because we ran out of stones”. It ended when we discovered better technologies. Like bronze and iron. A good rebuttal of all this nonsense comes from Matt Ridley’s “The Rational Optimist”. He points out that when resources run short, or become more expensive, we find more. Or we find alternatives. Or we find totally new technologies. In resource management, as in economics, the worst errors arise from assuming we have a static model, when the real world is dynamic.
Of course the amount of fossil fuels in the world is finite. No question. But it is also rather bigger than we imagine. “Contrary to what most people believe,” claims a recent study from the Harvard Kennedy School of Government, “oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption.”
Currently the American economy is being transformed by low-cost shale gas. In the process, US competitiveness is increasing dramatically. Jobs are “on-shoring”, coming back from Asia. America’s industrial renaissance poses a real threat to European competitiveness, as we agonise over our green credentials and ignore energy prices and security of supply.
In fact the USA could well be self-sufficient in energy by 2030, and may by then be the world’s biggest oil producer, ahead of Saudi Arabia. Where there’s shale gas, there is frequently oil as well. This is a geo-political game-changer. The US may be less enthusiastic about keeping the peace in the Middle East, and defending the straits of Hormuz, when it doesn’t need Saudi oil. Europe should take note.
But it’s not just the USA. Some estimates in the UK suggest we may have gas reserves for 1000 years — and there may be oil here as well. There is more gas, and perhaps oil, across Europe.
In the Eastern Mediterranean, major new oil and gas fields are being discovered. We may see some jockeying between Greece, Italy, Cyprus — and especially between Israel and the Palestinians — but either way, there’s a lot more oil and gas about than we realised.
All around the world, we’re seeing new resources coming on stream. We have fossil fuel availability for the foreseeable future.
There are also 1200 new coal-fired power stations in the global pipeline. So if you think that continuing carbon dioxide emissions will lead to a calamity for the human race, despair now. On the other hand, you may prefer to wake up and smell the coffee.