The World in 2050_ Four Forces Shaping Civilization's Northern Future - Laurence C. Smith [28]
The above flaws—ignoring recycling, and the tendency for proved reserves to increase over time with advancing prices, technology, and new discoveries—make R/P life-index calculations, like the ones tabled on the previous page, overly pessimistic. However, two other factors tend to make them overly rosy. The first is that governments or companies holding a resource sometimes find it in their best interest to be optimistic when assessing the size of their proved reserves. This is particularly true for oil and is a serious concern with Saudi Arabia, currently the world’s largest oil producer. 101 The second problem with life-index calculations is that they imply today’s rate of consumption will remain fixed into the future. As we saw in the previous chapter, enormous growth in the global economy and population is projected for developing countries. Resource consumption is expected to rise right along with them, thus making life-index projections too short. In light of these weaknesses, R/P life-index values are best used for illustrating the present-day situation, rather than for making projections into the future.
A more sophisticated approach is to link resource consumption to GDP or some other economic indicator, thus allowing it to rise with projected economic growth. Model studies that add this extra step all indicate serious depletion of in-ground reserves of certain key metals, notably silver, gold, indium, tin, lead, zinc, and possibly copper, by the year 2050.102 Pressure is also rising on some other exotic metals (besides indium) needed by the electronics and energy industries, notably gallium and germanium for electronics; tellurium for solar power; thorium for next-generation nuclear reactors; molybdenum and cobalt for catalysts; and niobium, tantalum, and tungsten for making hardened synthetic materials. Clearly, we are transitioning toward a world where some industrial metals will become either geologically rare and increasingly recycled, or abandoned altogether in favor of cheaper, man-made substitutes.103 So while physical mineral depletion won’t happen soon—and we will see it coming if it does—perhaps you might stash away a little silver and zinc after all. They could well bring you a tidy payback in forty years’ time.
What About Oil?
Much less ambiguous is the long-term outlook for conventional oil. Conventional means oil in the traditional sense: a low-viscosity liquid that is relatively easy to pump from the ground.104 Unlike metals, oil cannot be recycled because we burn about 70% of every barrel as transportation fuel. And unlike metal ores, which are diffused in varying grades throughout the Earth’s crust, conventional oil is a pure liquid and found only in a narrow range of geological settings. Therefore, after a new oil field is first developed, over the course of several decades its production will inevitably rise, peak at some maximum, and then decline. This sequence is normal and predictable and observed in all oil fields ever drilled on Earth.105
For over one hundred years the United States was the world’s dominant oil producer. Then, in October 1970. its domestic production peaked at just over ten million barrels per day—about the same as Saudi Arabia’s production today—before beginning to fall.
American oil companies launched an epic search to find new domestic reserves. Within ten years the United States was drilling four times as many wells as during the peak, but its production still dropped anyway—to 8.5 million barrels per day and falling. By December 2009 it was down to just 5.3 million barrels per day.106 So much for “drill, baby, drill” as the solution to energy supply problems.
This story is not unique to America. Azerbaijan’s Baku oil fields—once Russia’s biggest supplier and the target of Adolf Hitler’s eastern front invasion in World War II—are now mostly empty except for littered hulks of rusting junk. Venezuela’s enormous