Supply and demand versus peak resources

5-4-17 peak oil.jpg

I am going to start by admitting I got sucked into the peak oil worries about a decade ago. I even bought my father a book about it one Christmas so we could discuss how screwed everyone was. Needless to say, here we are 10 years later with no shortage of oil in sight.

Much of what I missed in my rationale is discussed in a recent post on Reason.com. It’s worth a read, but the main points are:

  • If supply really does dwindle, this will force up prices, leading to development of alternative materials.
  • The producers/miners/refiners of those materials have little incentive to look for beyond 30-40 years of reserves. As time goes on, and they need to find more, they search more thoroughly.
  • Technology is continually advancing, making reserve predictions low, due to all the material now available with the new techniques.
  • Materials that are very important today, will not necessarily be very important in the future. Whale blubber, anyone?

I saw variations of this meme going around on Earth Day:

5-4-17 finite world.jpg

Yes, theoretically, the Earth can run out of finite resources, but long before that happens, the market will force a switch to other resources, improvements in technology, and sourcing from other celestial bodies (moons, planets, asteroids, etc.). Don’t fall for the “peak everything!” prophets like I did.

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About Chris Fountain

Start small, but think BIG.
This entry was posted in Finances & Economics, Free Market and tagged , , , , , . Bookmark the permalink.

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