The evidence clearly shows that we are not headed for a major energy crisis. There is plenty of energy.We have seen that although we use more and more fossil energy we have found even more. (no, we are discovering only 1 barrel for every 4 we use) Our reserves - even measured in years of consumption - of oil, coal and gas have increased (over what period?). Today we have oil for at least 40 years at present consumption (assuming we can bring it to market as fast as it is required, which is the whole point about about peak oil), at least 60 years' worth of gas , and 230 years' worth of coal (reserves of coal are shrinking).At $40 a barrel (less than one-third above the current world prices), shale oil can supply oil for the next 250 years at current consumption (because of the energy required to extract shale oil, it is not a matter of price but of energy in vs. energy out and shale oil has always been marginal. Using energy for such low returns rapidly depletes remaining supplies of fossil fuel energy). And all in all there is oil enough to cover our total energy consumption for the next 5,000 years (how?). There is uranium for the next 14,000 years (that includes all the uranium in sea water I presume). Our current energy costs make up less than 2 percent of the global GDP (only if you measure direct energy costs and ignore embedded costs) and , so even if we were to see large price increases it would still not have significant welfare impact (it would seem not) - in all likelihood the budget share for energy would still be falling.[He then talks about the promise of renewables]In the longer run, it is likely that we will change our energy needs from fossil fuels towards other and cheaper energy sources - maybe renwables, maybe fusion, maybe some as-of-now unimagined technology. Thus, just as the stone age did not end for the lack of stone, the oil age will eventually end but not for lack of oil. Rather, it will end because of the eventual availability of superior technology.
Wednesday, July 30, 2008
After an exhausting couple of days talking about economics and the future under various scenarios with Richard Douthwaite up in Westport, I was faced with the 4.5 hour drive from Castlebar home to West Cork. This was 6pm after having my windscreen repaired as the car had been broken into while partked at the Two Mile Inn in Limerick the day before...
Wondering how on earth I was going to keep awake I started listening to some TED talks and on came Bjorn Lomborg. Mr Lomborg's book, The Skeptical Environmentalist written in 2001 left me flummoxed as to how a seemingly intelligent person could treat environmental problems in isolation taking no regard for the interconnectedness of all things. Mr Lomborg makes a very strong case that all is well and getting better in almost every area of the environmental by taking a restricted view of the data and making statements about the future as though he had been there. You are left saying, yes but.......
Here is his conclusion in the energy chapter written in 2001.
Well that's okay then. We must be imagining all the current concern about increasing energy prices.
Still 7 years, his thinking must have matured?
His TED presentation goes something like this. We can't solve all the world's major problems at once so we need to prioritise. We (a select bunch of economists including 4 Nobel Laureates) have ranked these problems according to the solutions cost-effectiveness. Bottom of the list is Climate Change. He accurately predicts that his audience may be a bit surprised by this! The reasoning goes like this. It is going to cost $150bn a year to reduce climate change and all models show that it is only going to delay climate change for 6 years. With half the money we can solve all major basic problems in the world, so doesn't it make sense to do that instead? Even in the most pessimistic scenarios, the UN estimate that the average person in the developing world by 2100 will be about as rich as we are today. Much more likely they will be 2-4 times richer. So do we want to spend a lot of money helping, 100 years from now, a fairly rich Dutchman or do we want to help real poor people right now?
Fuming about this kept me going all the way home without a break!
Try it for yourself by downloading from here: http://www.ted.com/index.php/talks/bjorn_lomborg_sets_global_priorities.html