SUPPLY-EXHAUSTION OF PETROLEUM
There is fundamental difference between exhaustion of petroleum and the
much hailed economic concept of supply and demand, which states that there
comes into existence a supply of a product which is derived from the willingness
to pay for that product. In the initial phase of petroleum consumption this
concept of supply and demand holds deceptively true, that is, as the supply
increases above the demand, price tends to diminish and consumption is encouraged
to augment, and conversely, as the demand increases through willingness to
pay a higher price so does the supply increase. This is the normal economic
rationale to which we are so accustomed that it appears as inherent law.
The difference between this law and the exhaustion of a non-renewable resource
with augmenting difficulty of procurement, does not technically manifest
until that resource has been in practicality half-exhausted: the mathematical
function of potential quantitative usage follows that of the bell curve.
The rate of exhaustion can be accelerated until the halfway point has been
reached, the peak of the bell. Thereafter, the increasing difficulty of extraction
combines with the limited supply remaining to compel a diminishment in rate
of exhaustion. There becomes a moment in which the usage of a non-renewable
resource which demands an increasing effort to acquire can no longer be used
at an increasing rate of exhaustion, no longer be used at a continuing rate
of exhaustion, but can be used only at a continuously declining rate of exhaustion.
The precise mechanics of this curve of supply-exhaustion can be debated, claiming that technologies will improve, allowing an ever more efficient extraction of the resource, and thus a greater ultimately recovered quantity under the curve. But the fundamental observation cannot be disputed. Simple reality of the limits of supply will gradually turn to force a continually decreasing rate of exhaustion. Such a moment is categorically different from the concept that conceives the total number of years before petroleum reserves will be completely exhausted at expected increasing rates of usage. This halfway is more realistically important that the last barrel, and far more imminent.
Demand for petroleum does not quickly diminish in response to rise in price, so dependant are economic systems upon the evolved manner of transportation and energy usage. The experiences of the Arab oil embargoes demonstrate what might occur were a rising price scenario to be entrusted for the sole resolution of genuinely diminishing supply. Inflation immediately became the tool of compensation, interest rates became extravagantly punitive in an attempt to make money worth more than purchase of goods, and massive over lending resulted, phenomena from which we have not yet entirely recovered. Much of the present recovery, incomplete at a world level, is based upon an inflation adjusted petroleum price below the pre-embargo levels. It might be claimed that such a chaotic experience could not reoccur, the lessons being heavily upon us. But what else can the response of an economic system be when the motive force of the economy takes a continuously increasing proportion of the total social effort, if not a chaos of one expression or another.
Virtually every conjecture made of the extension of present capitalist trends into the far reaches of the world, and every complacent acceptance that only the augmentations of money measured economic growth will guide humankind toward the equity of life potential which is now so obviously nonexistent, conceives a future with a substantial increase in the present rate of petroleum consumption, with a far greater number of automobiles, to level off at some later date, always some later date, and then gradually become substituted by biomass fuels or coal derivatives. The wisdom of the moment is to trust in a yet unknown future technology that will promise the continuation of present momentums in an insignificantly different form, anything to maintain the social structures as they are now defined. A world with fewer vehicles to provide private individual transportation is inconceivable, and the idea threatens the very nature of most developed nations, particularly the United States, as well as the aspirations of the underdeveloped nations.
There is an old parable of a man preparing to clean his pond of growing lilies, which double in quantity every day. If the man decides to clean his pond when the pond is half covered he has at that point in time but one day before the pond will be entirely covered. To clarify the extension of this parable to that of petroleum, assuming the theoretical total practical exhaustion of petroleum to be desirable and possible, the number of years in which the cumulative petroleum exhaustion doubles is the number of years the world will have to conclude transformation of its economy to that of the non-usage of petroleum once the halfway point of supply-exhaustion is reached, were it possible to deplete the supply as fast as a bank account! Using the ascension rate in production from 1937 to 1988 of a ten fold increase, which includes the warning and price ascension of the oil embargoes, such a length of time is presently about 15 years.
It is hard for us to concede in our thinking, so have we come to imagine that we have learned to dominate nature, that the forces of nature could drive us with a compulsion far greater than any ideology, from a fact as simple as that there is a limited, singular supply of petroleum which cannot be increased by the practical efforts of man by so much as a single drop. Can we imagine this fact as leading to revolutionary changes in the structure of civilization, the relation of man to man in work, even unto the point of leaving great cities as deserted monuments, the eventual loss and redefinition of every person's social status as presently defined by possessable wealth? Can it be that nature yet contains forcefulness within its seeming passivity that might drive us unwillingly unto a social transformation by means of journey through chaos, with absolutely no regard for the difficulty of transformation?
We are complacently waiting either for the technological break-through which will essentially convert water into petroleum, or for the market forces of supply-exhaustion to gain their strength of expression, until they shall become a force upon the earth as never before in economic history. Present government efforts are to procure a petroleum price that promotes the money expressed economic growth rates that are everywhere applauded as true measures of progress. We continue as we may, until that moment comes when demand must decrease in a mirror-image of its rise and there is no other instrument to manage that decrease but an exponentially rising price, and no preparation or planning toward the changing. Then we will confront the task of redesigning the entire infrastructure of civilization with an ever more difficult access to those traditional sources of labor replacing energy.
Harsh times approach. It is the lack of preparation that fills me with
concern and anxiety, for we assume that we shall gather wood and slay game
when the the wind is white with winter.
--Morningthunder