Why is the global economy constrained by the energy cost of energy?
From Earth Island Journal, Spring 1997
Australia - A new report on world oil resources, World Oil Supply 1930-2050 (Campbell and Laherre, Petroconsultants Pty. Ltd., 1995), concludes that the planet's oil supplies will be exhausted much sooner than previously thought.
The report, written for oil industry insiders and priced at $32,000 per copy, concludes that world oil production and supply probably will peak as soon as the year 2000 and will decline to half the peak level by 2025. Large and permanent increases in oil prices are predicted after the year 2000.
Industry experts assumed in the past that oil resources would last 50 years, based on calculations that simply divided estimated reserves by the present annual use. But this method of prediction failed to account for an increase in Third World oil use.
If everyone on Earth were to consume petroleum at the per capita rate of industrialized countries, it would require a fivefold increase in current oil production to meet the demand. If, by 2060, the world's population reaches the expected 11 billion mark and all were to consume as much energy as the average Australian does now, annual worldwide oil production would need to be increased about 30 times.
It seems that the oil companies and oil exporting countries have been fibbing. It is in their interest to state that remaining resources are in good shape, because their business agreements limit them to pumping and selling a proportion of their remaining resources. In fact, the rate of oil discovery is falling sharply. The world consumes 23 billion barrels a year, but the oil industry finds only 7 billion barrels a year.
Economists argue that scarcity will result in price increases, making it more profitable to access poorer deposits. That seems plausible only if one thinks only about dollar costs. The fact is, as an oil field ages, increasing amounts of energy must be exerted to pump the oil out. The cost of this energy must be subtracted from the total value of the energy in the oil retrieved. According to a 1992 study, these two curves actually will intersect around the year 2005. Beyond that point, the energy required to find and extract a barrel of oil will exceed the energy contained in the barrel.
There is reason to believe that the oil industry is well aware of oil field depletion. No new supertankers have been built for 20 years, while interest in squeezing oil from shale deposits seems to be growing.
What, then, is the solution to our acute energy problem? There isn't one.
Natural gas resources are about as limited as petroleum and gas use recently has been growing at a rate of 9 percent per year.
Relying on nuclear energy to provide 11 billion people with First World living standards would require a system of 250,000 giant breeder reactors using around 1 million tons of plutonium.
The tremendous amount of energy necessary to build fusion reactors (if they ever could work on a commercial scale) would guarantee a far worse greenhouse problem than what we face already. Even then, fusion power could supply perhaps only 2030 years of energy for an affluent 11 billion people.
There is no question that we should convert to renewable energy sources as quickly as possible, but even "clean" energy is not capable of bringing the Western world's energy-intense way of life to all people.
Beyond 2005, the energy required to find and extract a barrel of oil will exceed the energy contained in the barrel.
There is not enough plant matter to fuel the world's transport fleet. To supply 11 billion people with the number of cars used by people in rich countries would demand 10 times as much fuel as used today. Because the wind does not blow all the time, wind-energy never will be able to contribute more than 5-30 percent of the world's present electricity demand.
And a popular proposal to meet Northern Europe's winter energy demands by utilizing solar collectors in the Sahara desert fails to acknowledge that about 95 percent of the collected energy would be lost in transmission and conversion.
A person living in a First World city requires the equivalent of about 4.5 hectares (11.1 acres) of productive land for food, water, housing and goods (as well as carbon sinks to soak up the carbon dioxide produced by their energy use). Applying this "ecological footprint" standard to Australia shows that Sydney needs an area of productive land 35 times as big as the city to sustain itself. For 11 billion people to live like people in Sydney, we'd need about 50 billion hectares (124 billion acres) of productive land—around six times all the productive land on the planet.
By the year 2060, if the world maintained a mere 3 percent annual economic growth rate and all the world's people were to benefit equally, world economic output would have to increase to 80 times its current rate.
These limits-to-growth themes have been debated in academic circles for more than 30 years, but they almost never appear in the mass media.
We must almost entirely scrap the prevailing model of a competitive, growth economy and adopt materially simple economies that stress cooperation and participatory control. Above all, we must move to a steady-state or zero-growth economy. There is now a global ecovillage movement pioneering the development of new settlements that are required for sustainability. Hopefully, the coming "mother of all oil shocks" finally will get all this on the public agenda.
Ted Trainer is the author of The Conserver Society and Towards a Sustainable Economy. Adapted from Real WORLD, 91 Nuns Moor Road, Newcastle upon Tyne, NE4 9BA. United Kingdom.
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