The conventional wisdom tells us that the world is fast running out of nonrenewable resources and precious little is being done about it. Textbooks such as The United States and Its People tell impressionable schoolchildren that “some scientists estimate that the world’s known supplies of oil, tin, copper, and aluminum will be used up within your lifetime.” Concepts and Challenges in Earth Science asserts that once “nonrenewable resources are used up, their supplies are gone” (just try arguing with logic like that!). And a science text, Biology, An Everyday Experience, connects the dots to draw the obvious conclusion: “Governments must help save our fossil fuel supply by passing laws limiting their use.”
Happily, the textbooks—and the conventional wisdom—are dead wrong. Exhaustion of natural resources continues to elude us, and proven reserves of most resources continue to expand with new discoveries and improved extraction techniques. Translation: Today’s amazingly low gasoline prices—substantially cheaper in real terms than at any time since the late 1940s—are not an anomaly. We simply aren’t running out of resources.
Worried? Join “The Club”
The obsession with resource depletion has its recent roots in the Club of Rome’s, The Limits to Growth, published in 1972 and based on research paid for by the Hannover-based Volkswagen Foundation. The Club of Rome, which still exists, is a self-appointed group of government and business leaders, and high international civil servants who have set themselves the task of pondering the “predicament of mankind.”
Based on a computer model developed at MIT, Limits projected that billions of people would die in a catastrophic collapse in the next century as pollution rose, food production faltered, and minerals ran out. Limits suggested that, at exponential growth rates, known reserves of gold would be depleted by 1981, mercury by 1985, tin by 1987, zinc by 1990, petroleum by 1992, and copper, lead, and natural gas by 1993. The end was indeed nigh.
In 1976, MacArthur Foundation Fellow and Heinz Award in Environment laureate, Paul Ehrlich, chimed in with his book, The End of Affluence, stating that “before 1985 mankind will enter a genuine age of scarcity. . . in which the accessible supplies of many key minerals will be facing depletion.” It was a heady time for the Cassandras. In 1980, the Carter Administration would issue its gloomy Global 2000 report, which projected that the price of oil in 1995 would be $40 per barrel in 1979 dollars. In 1989, Ehrlich told the audience of NBC’s Today, that “We are literally using up in a few generations the biological and mineral wealth of the Earth that took millions and millions of years to create.”
Use It And Lose It
By the late 1980s, when raw materials had inconveniently failed to run out, the “depletionists” laid off a bit on the doomsday scenarios and started speaking in terms of “sustainable development.” A 1987 UN report (Our Common Future) defined “sustainable development” as that which “meets the needs of the present without compromising the ability of future generations to meet their own needs.” That seems reasonable enough, except that the definition assumes that humanity is “using up” resources that should be “saved” for future generations (more on this later, but suffice it to say, future generations may be a lot less interested in primitive raw materials than we might think). Sustainable development is actually a far more encompassing concept than old-fashioned depletion ever was, since its definition includes not only nonrenewable resources, but also renewable resources like forests, soil, fresh water, and clean air.
All of which became evident in 1992, when part of the original Club of Rome team, with support from the Pew Scholars program, published Beyond the Limits (billed as the “Sequel to the international bestseller, The Limits to Growth”). The authors acknowledged reserves of iron, aluminum and titanium “can be considered essentially unlimited.” However, they asserted, “The other minerals are, like the fossil fuels, scarce and precious, formed by geological processes of tremendous force over millions of years, nonrenewable, and steadily depleting. . .. Even if there were no further growth, present rates of material use would be unsustainable in the long term.”
Many of America’s leading foundations signed onto the sustainability bandwagon, essentially endorsing the notion that the world is running out of oil and other resources:
In 1991, The John D. and Catherine T. MacArthur Foundation, The Pew Charitable Trusts, and The Rockefeller Foundation created the Energy Foundation, whose mission is “to assist in the nation’s transition to a sustainable energy future by promoting energy efficiency and renewable energy.” Its annual budget is $11.7 million.
A priority of the Turner Foundation, Inc., created by media mogul Ted Turner, is “to reduce the overall consumption of fossil fuel-based and nuclear-generated energy by promoting energy efficiency and greater use of solar energy and other renewables.”
The Rockefeller Foundation’s Global Environment division “seeks to catalyze the transition to a new energy paradigm in both developed and developing countries by reducing dependence on fossil fuel, and replacing fossil fuel sources with renewable-energy sources and increased energy efficiency.”
The W. Alton Jones Foundation’s Sustainable World Program supports efforts aimed at “solving humanity’s energy needs in environmentally sustainable ways.”
The Geraldine R. Dodge Foundation’s trendy “Public Issues” area concentrates “on issues of sustainability which affect quality of life now and in the future.”
Is The Cupboard Really Bare?
Foundation-funded hysteria aside, it is reasonable to ask whether we are not in fact running out of nonrenewable resources.
Here are the facts. At current rates of production, according to the U.S. Geological Survey, known reserve bases of gold will last 31 years; mercury, 80 years; tin, 60 years; zinc, 55 years; petroleum, 44 years; copper, 56 years; lead, 41 years; and natural gas, 65 years. The World Bank calculates that between 1970 and 1996 the average real price of all metals and minerals fell by more than 50 percent. Lower prices mean that resources are becoming more abundant, not scarcer.
This good news for humanity was bad news for Paul Ehrlich. In 1980, so confident was Ehrlich of his predictions of imminent depletion that he made a bet with University of Maryland economist Julian Simon that the prices of natural resources would rise over the next ten years. Ehrlich himself chose a basket of five metals—chrome, copper, nickel, tin, and tungsten—with a total price of $1,000. If the real price of the metals were higher than $1,000 in 1990 than in 1980, Simon would pay Ehrlich the difference. If the price fell, Ehrlich would pay Simon. Ten years later, Ehrlich, without comment, sent Simon a check for $576. In other words, the real prices of these metals had fallen by more than 50 percent in just ten years.
But will we run out of tin in 60 years or copper in 56 years? No. “We do not fear that we are running out of the supply of milk because the grocery store holds only a three-days’ supply,” notes Cato Institute economist Stephen Moore. “Similarly, we should not expect to run out of copper simply because copper mining companies calculate that they only have a certain number of years of reserves. When they use up those reserves, they will have a renewed incentive to locate new sources of supply.”
In any event, the whole depletion debate misses a key insight. People use resources as a means to an end, not as an end in themselves. People don’t want oil, they want to cool and heat their homes; they don’t want copper telephone lines, they want to communicate quickly and easily with friends, family, and businesses; they don’t want paper, they want a convenient and cheap way to store written information. If oil, copper, and paper become scarce, humanity will turn to other sources of energy, other methods of communication, and other ways to store information. Viewed in this light, running out of oil (or copper, or paper) starts to look a lot less frightening.
Human innovations—through sequential scientific and technological revolutions—have “each transformed the meaning of resources and increased the carrying capacity of the Earth,” explains Brown University demographer Robert Kates. History has clearly confirmed that “no exhaustible resource is essential or irreplaceable,” adds economist Gale Johnson. Economist Dwight Lee also points out that, “The relevant resource base is defined by knowledge, rather than by physical deposits of existing resources.” In other words, even the richest deposit of copper ore is just a bunch of rocks without the know-how to mine, mill, refine, shape, ship, and market it.
Astonishingly enough, after decades of doomsday predictions, experts like these are finally making some headway in getting their message out. In 1992, even the Worldwatch Institute bowed to the mounting evidence and issued a report, Mining the Earth, which admitted that “recent trends in price and availability suggest that for most minerals we are a long way from running out.”
In the 1970s, Americans were urged to shift to renewable energy sources because the world was about to run out of oil. Now humanity is supposed to adopt renewable energy sources because the burning of fossil fuels is causing global warming—essentially depleting the absorptive capacity of the atmosphere. Setting global warming aside, do we have to save precious supplies of fossil fuels for future generations?
Well, we already know that at current rates of consumption, proven reserves of petroleum should last 44 years (or 65 years for natural gas reserves). But as the Cato Institute’s Peter VanDoren and Jerry Taylor show in a chapter in the forthcoming Earth Report 2000, estimates of total petroleum reserves at current rates of consumption range from 231 years of conventional production to 800 years of unconventional production. In fact, oil is so abundant that U.S. gasoline prices in 1998 are substantially lower after adjusting for inflation than at any time since the late 1940s. In October 1998, the average price of gas was $1.10 per gallon, including state and federal taxes, while in 1949 gasoline cost 26.8 cents a gallon ($1.66 in 1998 dollars).
Despite the abundance of cheap energy, both Worldwatch and the Rocky Mountain Institute are pushing for a massive shift of the world economy from fossil fuels to renewable or “soft” sources of energy. Over the last 25 years, more than $30 to $40 billion in subsidies have been spent in the United States on developing renewable energy, according to Enron Corp. energy economist Robert Bradley. Yet all told, such sources—wind, solar, geothermal, and biomass—still comprise only 1.5 percent of the energy market.
A Watt Saved. . .
Energy conservation programs have done little better. The Rocky Mountain Institute’s Amory Lovins coined the termed “negawatts” to describe the potential of conservation as a resource—a watt saved is a watt earned. Lovins maintains that energy conservation pays for itself in huge savings to companies and consumers. Experience shows that he has wildly overestimated the savings in both energy and money.
The nation’s utilities and the federal government have spent more than $25 billion on electricity conservation programs (known as “demand- side management,” or DSM), according to Enron’s Bradley.
Two particularly rigorous studies looked at these conservation programs, and found little to cheer about. The first, by the Illinois Commerce Commission, found no energy conservation program that showed benefits greater than costs (in fact, most programs demonstrated benefits that were 25 percent of costs). The other, by the Department of Energy’s Energy Information Administration, examined the total costs and benefits of DSM programs nationwide and found that subsidized energy conservation was twice as expensive as generated power. In other words, energy conservation of the type advocated by the Rocky Mountain Institute and Lovins wastes far more resources than they save.
Advocates say that sustainable development is development that does not “compromise the ability of future generations to meet their own needs.” But, as VanDoren and Taylor point out, we may not have as much to offer the future as we think.
Let us assume that your ancestors used whale oil to light their homes at some point in the early 19th century. Ignoring for the moment the wish to preserve whales as a species preservation measure, what conservation measures would you have wanted your own poor ancestors (relative to you) to have taken 150 years ago so that you, who are enormously rich (relative to them), could use whale oil today to light your homes? Similarly, our descendants in the year 2148 will look back with bemusement at our religious struggles over the need to save petroleum for their use.
Nattering Nabobs of Environmentalism
Some years ago, Hudson Institute founder Herman Kahn detailed the harm that depletionist ideology was having on culture and economy:
Two out of three Americans polled in recent years believe that their grandchildren will not live as well as they do, i.e., they tend to believe the vision of the future that is taught in our school system. Almost every child is told that we are running out of resources; that we are robbing future generations when we use these scarce, irreplaceable, or nonrenewable resources in silly, frivolous and wasteful ways; [and] that we are callously polluting the environment beyond control.
It would be hard to describe a more unhealthy, immoral, and disastrous educational context, every element of which is either largely incorrect, misleading, overstated, or just plain wrong. What the school system describes, and what so many Americans believe, is a prescription for low morale, higher prices and greater (and unnecessary) regulations.
Leading foundations bear a good share of the responsibility for fostering this wrong-headed conventional wisdom of a resource-depleted future. Yet it wasn’t always this way. In the 1950s and 1960s, the Rockefeller Foundation was a major supporter of the work of Nobel Peace Prize laureate, Norman Borlaug. It was Borlaug who launched the Green Revolution, thus making him directly responsible for saving the lives of more people than any person in history [for more on the Green Revolution, see Feeding Our Faces, by Dennis Avery, next page]. It is now past time for America’s foundations to reclaim their heritage of supporting those like Borlaug who advocate progress and turn from those who counsel despair.
Ronald Bailey is an independent writer living in Dogwood Valley, Virginia. He is editing Earth Report 2000: The True State of the Planet Revisited, which will be published by McGraw-Hill next spring.