We remember the Meadows report The Limit to Growth of 1972 in which a Malthusian alarm bell was pulled regarding the future of the planet.

One of its chapter was dealing with the finiteness of all resources. Where are we today, 43 years after the publication of this report?

In 1972 proved reserves were estimated as:

Years of reserve	By continuing production at current rate	Estimated yearly growth	Including the foreseen exponential growth	5 Times the proved reserves at the foreseen exponential growth
Coal	2300	4.1% p.a.	111	150
Oil	31	3.9% p.a.	20	50
Gas	38	4.7% p.a.	22	49

There was obviously an error for coal (230 years?)

According to the statistics of the US Department of Energy the production and the proved reserves at the rate of the current year evolved according to the following diagram:

Over the past thirty years the compounded annual growth rate (CAGR) of oil production was 4.3 % and that of gas 7.0 %. In 2011 coal reserves could last 116 years, and the production grew at 3.8 % per year during the last five years.

Since 1980 the growth of the world’s Gross Domestic Product (GDP) was 7.6 % per year (in constant 2005 US dollars, World Bank).

So it can be interpreted that the more we consume the more will be found; and that there is plenty of still unconfirmed reserves that will be exploitable with new extraction methods, such as fracking.

We may also think that energy efficiency will improve as economic growth is faster than consumption.

But we also know that the fossil reserves cannot be infinite, that the party will be over, one day.

In addition, a few event took place since this famous report was published:

• Oil crisis of 1973, connected) with the Arab-Israeli conflict, but also with the introduction of the floating exchange rates.
• Ceaseless Israeli-Palestinian conflict.
• Lebanese War between 1975 and 1990.
• Iranian Revolution in 1979 and the related second oil crisis.
• Disappearance of the Eastern bloc since 1990, Russia becoming a big exporter of gas and oil.
• First Gulf War in 1990-1991.
• Iraq War in 2003.
• Effects of Chavism in Venezuela, with mimicry in Ecuador, Bolivia and Argentina.
• Arab Spring since 2010, with more wilted flowers than rich harvests.
• Civil war in Syria, extending in all Mesopotamia.
• Revival of oil and gas production in the USA thanks to fracking.

There are thus no reasons to wonder about the volatility of oil prices throughout this period. The uncomfortable fact is that, in particular Europe, the industrial World depends on the supply of energy from unsecure partners.

Over the past five years the gas price in North America separated from prices paid in Europe and in Japan where it is now six times as expensive as across the Atlantic. In thirty years, coal’s price doubled. But these two fuels have not the same price volatility as oil because their production is not situated in politically unstable regions.

Even if Switzerland is one of the most energy efficient developed countries, we have to worry about our supply security. For all the quoted reasons it is thus reasonable to try to free ourselves from the dependence on our suppliers, above all for oil and from sheiks who, one day, will remain without provision.

The big question is to determine under which conditions this transformation has to be made. When energy prices decrease, returns on investment for any cost saving action are perceived as insufficient. And, even if we know that these prices will have a bullish fundamental trend, the projects are evaluated on such a short term, two to five years, that it lets believe that it is smarter to wait. This calculation is in itself merciless: wait for a further price rises so that cost saving will be greater. It is somehow similar as to wait to be rich to be able to offer myself a journey with a Rolls-Royce instead if my 2CV Citroën, which will allow me to save up more if I then travel with the street-car. I risk to wait a too long time.

It is thus necessary to find which framework conditions will allow fighting this waiting-game, without entering the infernal circle of a state-controlled economy, corrupted by subsidies and other perks, because even with the best willingness of the world it is not possible to fix market prices, quantities to be produced and to be consumed, and to impose profitability objectives. Failure would be guaranteed, what collectivists never want to know as they have a morbid attraction for such bad kind governance.

So, what should we do in a different way?

I put back my advices to the next episode which will not concern energy policy only.

Merci de compartir cet article