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.