Sheikh Yamani, Saudi Arabia’s former oil minister and a founding architect of OPEC, once said, “The stone age came to an end not for a lack of stones, and the oil age will end, but not for a lack of oil.” Humans stopped using stone because bronze and iron were superior materials. But will we really stop using oil when other energy technologies similarly provide superior benefits?
The threat of depleting the world’s scarce energy resources has maintained a powerful hold on popular thinking ever since the oil shocks of the 1970’s. Nor is our fear limited to oil. For example, the classic 1972 bestseller Limits to Growth predicted that the world would run out of gold in 1981, silver and mercury in 1985, and zinc in 1990. We have the benefit of hindsight today, but even now most discussions of the issue are predicated on the logic of Limits to Growth .
Moreover, the issue is not merely that we have not run out of natural resources. The American economist Julian Simon allegedly issued a challenge in 1980 to a group of environmentalists, saying that if scarcity were to be measured in terms of higher prices, they should invest in stocks of any raw metal. The environmentalists put their money on chromium, copper, nickel, tin, and tungsten, and picked a time frame of 10 years. By September 1990, each of the metals had dropped in price: chromium by 5%, tin by a whopping 74%.
The doom-mongers lost. More importantly, they could not have won even if they had invested in petroleum, foodstuffs, sugar, coffee, cotton, wool, minerals, or phosphates: all of these commodities had become cheaper.
Today, oil is the most important and valuable internationally traded commodity, and its significance to our civilization is underscored by the recurrent worry that we are running out of it. However, statistical estimates of its depletion hide much more than they reveal. A typical oilfield yields only 20% of the reservoir, with close to 63% remaining buried in the earth even when the most advanced technologies are used.
Moreover, economists contend that energy consumption per capita is declining, owing to more efficient use. Fuel efficiencies in the automotive sector have increased by more than 60% in the past three decades, while overall wealth produced per unit of energy has doubled during the same period.
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But, whereas metal prices have fallen, oil prices are reaching record highs. The reason is simple: metal usage has been substituted by many alternatives, but most still require petroleum products as inputs, and decades-long efforts to develop sufficient alternative energy sources have yielded little success.
So, if oil substitutes are not easily available, modern societies should focus on the sources of demand, most of which is attributable to the transport sector. Indeed, more than 80% of modern societies’ consumption of energy generated by oil, either in the form of electricity or fuel, is used to move commuters.
Is all of this oil consumption really necessary?
With the rising contribution of services to global GDP, now is the time to reassess the need for travel to work. Service-sector workers commute daily, only to be present in an environment that has no economic need for them, for they are facilitating information exchange far more than exchange of physical goods. Do we really need to bring together so many people for so little gain and at such a high cost?
The cost is not merely in terms of natural resources, which should be sustained and passed on to future generations, not exhausted by our own. The rise in the amount of time spent commuting is a drag on both national productivity and the quality of life in modern cities. A survey conducted in the Indian city of Mumbai revealed that railway commuters’ average daily journey was 22 kilometers, while rapid urbanization there and in much of the developing world is only likely to increase the length of commutes.
Likewise, passenger air transport is dominated by business travel. But, given the high-speed data transmission capacities of current telecommunications and information technology, it is now possible to reduce business travel significantly. Whereas the outsourcing phenomenon is attenuating the need for labor migration, domestic migration can be limited further by the use of home offices, which can eventually reduce stress on real estate, public transport networks, roads, and airports. Indeed, human travel in general should become increasingly limited to tourism and pleasure trips.
We now have the technological infrastructure to bring most job-related information to workers while allowing them to collaborate closely. This requires a lifestyle change – one that governments should begin encouraging employers and workers to embrace.
If they do, the age of oil will not end. But the age of worrying about it just might.
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In 2024, global geopolitics and national politics have undergone considerable upheaval, and the world economy has both significant weaknesses, including Europe and China, and notable bright spots, especially the US. In the coming year, the range of possible outcomes will broaden further.
offers his predictions for the new year while acknowledging that the range of possible outcomes is widening.
Sheikh Yamani, Saudi Arabia’s former oil minister and a founding architect of OPEC, once said, “The stone age came to an end not for a lack of stones, and the oil age will end, but not for a lack of oil.” Humans stopped using stone because bronze and iron were superior materials. But will we really stop using oil when other energy technologies similarly provide superior benefits?
The threat of depleting the world’s scarce energy resources has maintained a powerful hold on popular thinking ever since the oil shocks of the 1970’s. Nor is our fear limited to oil. For example, the classic 1972 bestseller Limits to Growth predicted that the world would run out of gold in 1981, silver and mercury in 1985, and zinc in 1990. We have the benefit of hindsight today, but even now most discussions of the issue are predicated on the logic of Limits to Growth .
Moreover, the issue is not merely that we have not run out of natural resources. The American economist Julian Simon allegedly issued a challenge in 1980 to a group of environmentalists, saying that if scarcity were to be measured in terms of higher prices, they should invest in stocks of any raw metal. The environmentalists put their money on chromium, copper, nickel, tin, and tungsten, and picked a time frame of 10 years. By September 1990, each of the metals had dropped in price: chromium by 5%, tin by a whopping 74%.
The doom-mongers lost. More importantly, they could not have won even if they had invested in petroleum, foodstuffs, sugar, coffee, cotton, wool, minerals, or phosphates: all of these commodities had become cheaper.
Today, oil is the most important and valuable internationally traded commodity, and its significance to our civilization is underscored by the recurrent worry that we are running out of it. However, statistical estimates of its depletion hide much more than they reveal. A typical oilfield yields only 20% of the reservoir, with close to 63% remaining buried in the earth even when the most advanced technologies are used.
Moreover, economists contend that energy consumption per capita is declining, owing to more efficient use. Fuel efficiencies in the automotive sector have increased by more than 60% in the past three decades, while overall wealth produced per unit of energy has doubled during the same period.
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At a time when democracy is under threat, there is an urgent need for incisive, informed analysis of the issues and questions driving the news – just what PS has always provided. Subscribe now and save $50 on a new subscription.
Subscribe Now
But, whereas metal prices have fallen, oil prices are reaching record highs. The reason is simple: metal usage has been substituted by many alternatives, but most still require petroleum products as inputs, and decades-long efforts to develop sufficient alternative energy sources have yielded little success.
So, if oil substitutes are not easily available, modern societies should focus on the sources of demand, most of which is attributable to the transport sector. Indeed, more than 80% of modern societies’ consumption of energy generated by oil, either in the form of electricity or fuel, is used to move commuters.
Is all of this oil consumption really necessary?
With the rising contribution of services to global GDP, now is the time to reassess the need for travel to work. Service-sector workers commute daily, only to be present in an environment that has no economic need for them, for they are facilitating information exchange far more than exchange of physical goods. Do we really need to bring together so many people for so little gain and at such a high cost?
The cost is not merely in terms of natural resources, which should be sustained and passed on to future generations, not exhausted by our own. The rise in the amount of time spent commuting is a drag on both national productivity and the quality of life in modern cities. A survey conducted in the Indian city of Mumbai revealed that railway commuters’ average daily journey was 22 kilometers, while rapid urbanization there and in much of the developing world is only likely to increase the length of commutes.
Likewise, passenger air transport is dominated by business travel. But, given the high-speed data transmission capacities of current telecommunications and information technology, it is now possible to reduce business travel significantly. Whereas the outsourcing phenomenon is attenuating the need for labor migration, domestic migration can be limited further by the use of home offices, which can eventually reduce stress on real estate, public transport networks, roads, and airports. Indeed, human travel in general should become increasingly limited to tourism and pleasure trips.
We now have the technological infrastructure to bring most job-related information to workers while allowing them to collaborate closely. This requires a lifestyle change – one that governments should begin encouraging employers and workers to embrace.
If they do, the age of oil will not end. But the age of worrying about it just might.