Writing a book about renewable energy has given me a chance to think a lot about non-renewable energy. The more I read and think about solar power and wind and biofuels, the more I find myself thinking in new ways about oil, coal, and gas. Because one of the major justifications for investing in renewable energy is the fact that fossil fuels will eventually be used up. (The other two major arguments/justifications are environmental (global warming) and national and global security.)
But it’s easy to oversimplify and misunderstand the finite nature of fossil fuels and the practical implications of their finiteness. The problem with oil being a finite resource isn’t that we’re about to run out of oil or that any time soon. Same goes for coal and gas. The real problem is that although there’s still a vast amount of oil in the ground, the amount that’s relatively easy to bring to the surface is growing smaller.
Here’s how Vaclac Smil puts it in his excellent book, Energy in World History:
“Fossil fuel reserves are that small part of the resource based whose extraction is clearly profitable: Their spatial distribution and recovery costs (at current prices and with existing techniques) are known in enough detail to justify their commercial exploitation. As we recover higher shares of originally available resources, the best measure of their availability is the cost of producing additional or marginal units of a mineral. … Exhaustion is not thus a matter of actual physical depletion but rather a burden of eventually insupportable cost increases. There are no sudden ends, only prolonged declines, slow exits, and gradual shifts onto new supply planes.”
Well put, no? Now, Smil goes on to say that because oil depletion will be a slow, gradual process, it’s not as crucial an issue as more pressing environmental concerns. But I’m not sure about that. Assuming that there are “new supply planes” onto which the world will shift, perhaps the eventual transition toward other, renewable energy sources will be relatively seamless. But it’s also possible that even gradual declines in cost effective oil reserves will drive up prices in ways that are more like a shock to the system.