The Energy Conversation is Overrated

In 2013 I talked about how the planet would easily accommodate food and water for 9 billion people in 2040. In this article, I argue that the current Malthusian scare about running out of fossil fuels is equally overblown and unimportant. I also argue that climate change is not at all an important economic or political concern.

1 – We will likely never exhaust our fossil fuel

Current, mainstream estimates state that we will run out of oil and natural gas in about 50 years, and we will run out of coal in about 100 years.

These estimates are incorrect. They ignore 4 key effects:

  1. New technologies
  2. New fossil fuel discoveries
  3. Supply and demand
    1. In the market for fossil fuels
    2. In the market for alternative energy sources including wind, solar, hydro, and nuclear

Peak oil was and is a lie. It was called in the 1970s, but new technology leading to better fossil fuel discovery, utilization, and efficient burning put United States output today at rates as high as it was during peak oil.

Notice that this 45 year gap is smaller than the alleged 50 year stockpile of existing fossil fuels. This means we could have another boom of fossil fuel discoveries and improved utilization before we run out, kicking the can down the road another 50 years. This is far from certain and dare I say unlikely, but it shouldn’t be a completely ignored possibility as is done with anyone putting the oil estimate at 50 years remaining.

How different was technology and the world 50 years ago? The internet didn’t exist, automobile fuel efficiency was a joke, and so on. Forecasts at such long range are difficult to do accurately.

Complicating the matter further is the fact that fuel consumption is endogenous. A 50 year time horizon is based on relatively constant usage, but supply and demand indicate usage will not be constant. As the supply dwindles the price of fuels will increasing. A higher price will drive down consumption and it will also create an incentive to use the existing supply more efficiently. This is not speculative. The Washington Post notes as much about the 2000s USA in Cars in the U.S. are more fuel-efficient than ever. Here’s how it happened.

The price of gas in the US grew extremely high from 2005 – 2015 and has recently dropped, but during that period we see the fuel economy of cars being spurred, for the very reasons outlined above. While the price of oil has recovered, the technological progress achieved in that time has not reversed. Fuel-efficient cars and even electric cars are taking over, and we see additional gains in the near future with such trends as Tesla’s affordable Model 3, self-driving cars, and even flying cars.

In addition to fuel-related technologies, alternatives such as wind and solar saw gains. Not only did the price endogenously create an incentive for technology, consumers also reduced consumption in the face of higher prices.

If you think the point I’m making is that 50-100 years underestimates the lifespan of our existing fossil fuels, you are both right and also missing the point. I don’t think we will ever exhaust our fossil fuels, including oil. Electric aviation is set to become a thing over the next decade. Aviation and motor transportation are the main uses of oil. Europe consumes finished gasoline about 33% as much as the US, and their consumption has been declining as well. USA consumes about 9.32 million barrels per day, so USA + Europe is about 12.5 million barrels per day, which is more than half of the world’s production of about 22.5 million barrels per day. Keep in mind that world production is increasing, not declining. About one-fifth of USA car sales in the are projected to be all-electric by 2025, and Europe will be no doubt close behind.

Soon we will be faced with way more finished gasoline than we need. There is no oil problem. Now, this does leave the coal problem, but we have more than 100 years to deal with that, and it is becoming less of a problem each day. Just like with gas, coal is being more efficiently used over time, it’s burning cleaner over time, and new coal deposits are discovered over time. In addition, alternative fuels such as wind, solar, and nuclear are being increasingly utilized to displace coal. From 1990 through 2014, energy from renewable sources grew faster than the total primary energy supply (TPES). In other words, the energy market is became increasingly based on renewable sources, particularly wind and solar.

This trend hasn’t slowed down. Renewables outpaced non-renewables in 2016 and Solar PV energy alone grew faster on net than coal. Don’t worry about the developing world either. Non-OECD countries consume around 75% of all renewables. Because of the use of wood as an energy source, for example, nearly half of all energy in Africa is renewable. China has also been called the undisputed leader of renewables.

2 – Climate change is not a problem to be solved

I’ve shown above that there is no energy crisis and I show here that there is no climate change crisis. Take a look:

  1. 97% of climate scientists do not think human action is the main cause of climate change. They simply think humans are a contributing factor. As of 2013, only about 2% of climate scientists thought that. Independent and even left-wing sources make note of this. The degree of human contribution, though, is current debate topic, and the IPCC 5th Report’s position of 100% causation is at the extreme.
  2. Through 2014, an average of published models intended to predict global warming had overestimated the rate of global warming by more than 100%. See the image below.
    1. Taking an average of selected, high-accuracy models, estimates are still about 5% over observation.
    2. Notice that the IPCC’s 4th report is more accurate than their 5th report. Indeed, the 4th report is the most accurate model noted according to CarbonBrief, although I’m not sure exactly how that accuracy was computed. An average of their middle two scenarios (B2/AB1) puts the estimated centennial warming at 2.6 degrees Celsius, but the 4th report was released in 2013 so the 8% error rate identified by CarbonBrief seems to be relative to historical data rather than future prediction.
    3. My own calculation, using NASA GISS data, puts the Lowess-smoothed average from 2000 to 2017 at 2.6 degrees Celsius (.95-.5/17).
    4. Also notice that CarbonBrief seems to overrate the accuracy of these models. The IPCC’s 1st report was issued in 1990, so why is CarbonBrief including data samples back to 1970? If you look at observed data after 1990, and until 2015, IPCC’s 1st report has an error rate of over 275% (.72/.26 = 2.77). This is far worse than the 30% error rate noted by CarbonBrief. Observed data is well outside the extremes of the IPCC-1 confidence interval.
  3. Grant alarmists their most extreme position and notice how non-problematic it is.
    1. In 2007 and again in 2011, a plurality (44%) of climate change scientists thought the effects of global warming would be moderate. Scientists generally thought the effects would be moderate rather than catastrophic.
    2. Even if we achieved such warming the results could be beneficial rather than catastrophic. Global warming could lead to net economic gains because it can improve crop yield and creates more inhabitable space than it eliminates. NASA echoes David Friedman here, saying, “Across the United States, the growing season is projected to continue to lengthen.”
    3. The Paris Agreement represents the main political ambition of energy regulation initiatives groups like UCSUSA. This agreement recommends action to prevent a 2 degree Celsius warming over the 21st century, but why that number? This seems to be a matter of politics not science. I also find it likely we will achieve that goal without any additional government action. Notice that IPCC estimates do not account for consumption and technology changes identified in section 1, and also note that some government action has already been taken at the time of writing, May 2018.
  4. As discussed in section 1, the market is naturally moving towards reduced carbon emissions and cleaner energies anyway.
  5. Take a gander at the assorted articles under the section entitled The Global Warming Myth on this page. Keep in mind, I don’t deny that the earth is heating up, and I don’t even deny that up to 100% of observed warming in the past century is anthropomorphically attributable. I simply deny that political action including regulation is a net-positive solution.

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One comment on “The Energy Conversation is Overrated
  1. Rachel says:

    Thanks so much for the post.Really thank you! Keep writing.

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