Are we nearing the precipice of global resources, or will technology save us?
Sobering charts from Vince Matthews
by Allen Best
In about 1800, when the world population was roughly one billion people, Thomas Malthus predicted coming catastrophe as population outstripped the world’s capacity to feed itself.
If many catastrophes have occurred since then, none have been of Malthusian dimensions.
Paul Ehrlich was wrong, too. In “The Population Bomb,” first published in 1968, Ehrlich—a professor at Berkeley who still summers at Gothic, near Crested Butte—forecast catastrophe by 2000. That prediction was challenged by an economist, Julian Simon, and they agreed to a bet that was based on what would be the 1990 price of five metals: chromium, copper, nickel, tin and tungsten.
Ehrlich lost the bet. Prices dropped 50 percent even as the world population increased by 800 million. (See a new book: “The Bet: Paul Ehrlich, Julian Simon and Our Bet over the Earth’s Future,” by Paul Sabin)
More recently, in 2005, investment banker Matthew Simmons bet that oil prices, then $65, would be above $200 a barrel by 2010. It looked like he might win as oil hit $143 a barrel in 2008. But now, it’s settled back to a little less than $100. Simmons died and also lost the bet.
Vince Matthews, the former Colorado state geologist, makes no such predictions. But you can’t see and hear his PowerPoint lecture without being deeply impressed.
Chart after chart shows escalating demand during the last decade, rapid increases in prices, all pointing to some frantic sprint on the edge of resource scarcity as the world population gallops toward nine billion people even as China, India and other developing countries now aspire to the same lifestyles enjoyed by people in Western Europe and North America.
Technology has always rescued humanity. Farms have become more productive, miners more efficient, electronic circuitry now capable of amazing feats.
Yet there’s a nagging question. Could this instead be like that TV show Jeopardy. As the game progresses, the stakes heighten. The contestant who dawdles for the first 25 minutes can sprint to the treasure pot with two or three correctly answered questions about Civil War generals or silent-movie starlets.
Can you win all the battles but still lose the war? Can all the predictions about resource scarcity have been wrong so far—and still be right in the end?
In the talk that Matthews recently gave at the Geological Society of America’s 125th annual meeting in Denver (of which he was the conference chairman), he painted a dramatic picture of escalating metal prices and resource consumption.
Time and again, China is a key figure in rapidly growing demand for world resources. In 2002, China exported cement. In 2003, it started importing. Even in Denver, there were ripples as builders found it difficult to secure cement despite several plants in Colorado. The point: even when a country has reasonably good supplies of a resource, it is ultimately a world marketplace.
Fertilizer has become more scarce because of the rising demand for a core constituent, phosphate. With scarcities, prices for fertilizer rose and some farmers stopped applying artificial fertilizer for three years, facing sharp declines in production.
Again, the story is of rising consumption by China and other developing countries, not that of the United States. We are still among the world leaders, but our per-capita use has flattened.
The most riveting graph in Matthew’s 110 slides shows world oil consumption since the first well was bored in Titusville, Pa., in 1859. The knock-off-your socks statistic is this: 50 percent of all the oil consumed by the human race has been consumed since 1986.
But aren’t we having a boom in oil production and natural gas, too, thanks to advancing technology, especially hydraulic fracturing and horizontal drilling?
The United States will soon surpass Saudi Arabia in oil production. Some companies even want to export natural gas, although we remain a net importer. Others are converting transportation fleets to CNG (compressed natural gas) and switching power plants from coal.
Don’t be so quick about the celebration, says Matthews, who spent 20 years as a petroleum geologist developing both oil and gas fields in Colorado and in the Gulf of Mexico.
Led by Houston-based Art Berman, some geologists and analysts have pointed to a rapidly depleting production of the new oil and gas wells in the shale formations. In other words, because production of the wells drops off so rapidly, more wells must be drilled to keep the production flat, let alone growing.
It’s a stinging indictment. Many petroleum geologists dismiss it. When speaking at the Center of the American West’s FrackingSENSE series, Will Fleckenstein of the Colorado School of Mines was asked what he makes of Berman’s argument. Berman, he responded, has been “thoroughly discredited.”
Matthews took the exact opposite stance when he spoke the next day in Denver. He described decline rates of 16 percent in the early 1990s rising to 30 percent in 2007 and now at 48 percent.
“I don’t make predictions,” said Matthews, “but somehow, it just doesn’t seem sustainable to me.”
Instead of a game changer, this new bonanza seems to be a third-quarter run by the visiting team. Here is why: Of the world’s 63 producing countries, 53 are in decline. Only the boosts in Saudi Arabia and the countries that constitute the former Soviet Union have increased global production. The United States, despite the much-heralded boom in production in North Dakota and Texas, is still producing less oil than it did in 1970.
Demand has leveled off in the United States as tightening fuel-economy standards have improved efficiencies. But developing countries are ramping up demand. Indonesia was a major producer, but now imports. And China now operates strategically around the world to tie up resources, much as Great Britain, France and then the United States did in the Middle East during the 20th century.
As for natural gas, while the amount imported has declined from 16 percent to only 6 percent, it’s not the silver bullet for U.S. energy needs.
“We are,” said Matthews, “depleting our resources at a faster and faster rate.”
How about coal? There’s clearly lots of it. Even so, brisk appreciation in prices is the story. China, while the world’s largest producer, became a net importer beginning in 2006. The United States still has large amounts, but the most easily extracted seams, especially those near the surface in Wyoming’s Powder River Basin, are rapidly being mined.
Perhaps surprisingly, electrical production in nuclear reactors has been increasing in the United States, despite the fact that no new plant has been put into operation since 1995. China and India are building nuclear reactors at a rapid pace.
Can renewable energy save us? Perhaps, but again, Matthews points to mining as crucial. Consider wind power. A 3-megawatt wind turbine requires 9.9 tons of copper, which means 1,980 tons of rock that must be processed. Each wind turbine needs 3.7 million pounds of mineral components. Both the United States and China project major expansion of wind farms – and hence more demand for copper.
Will technology ride to the rescue yet again? The nine billion people of mid-century better hope it does.
After retiring to Leadville, Matthews took the position as interim executive director of the National Mining Hall of Fame and Museum. He can be reached at email@example.com. For the PowerPoint presentation, see: https://dl.dropboxusercontent.com/u/94528667/Global%20Resources%20Leadville%20Geology%2010.02.13.pptx