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 the United States and Europe, immigration tends to divide people into opposing camps: those who claim that newcomers undermine economic opportunity and security for locals, and those who argue that welcoming migrants and refugees is a moral and economic imperative. How should one make sense of a debate that is often based on motivated reasoning, with emotion and underlying biases affecting the selection and interpretation of evidence?
To maintain its position as a global rule-maker and avoid becoming a rule-taker, the United States must use the coming year to promote clarity and confidence in the digital-asset market. The US faces three potential paths to maintaining its competitive edge in crypto: regulation, legislation, and designation.
urges policymakers to take decisive action and set new rules for the industry in 2024.
The World Trade Organization’s most recent ministerial conference concluded with a few positive outcomes demonstrating that meaningful change is possible, though there were some disappointments. A successful agenda of reforms will require more members – particularly emerging markets and developing economies – to take the lead.
writes that meaningful change will come only when members other than the US help steer the organization.
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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Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
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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.