A contrary view on oil, population, and our future
Here is a guest posting from Gordon J. Johnson. I must say that I disagree with a fair bit of his view, but he's a serious guy and I though it would be educational to present his views (on the off-chance that I'm wrong).
Mr. Johnson is a retired Air Force officer, CPA and retired Budget Director of the University of Colorado at Boulder. He is a lifelong Republican interested in improved Social Security financing, gross tax simplification (like the Fair or Flat Tax proposals), immigration reform, and some improvements in for the Sarbanes Oxley bill.
Petroleum, Population & Immigration
by Gordon J. Johnson
World petroleum production and discovery has peaked or will peak over the next several years. Except for a temporary small increase when the Alaskan North Slope oil began to flow, U.S. petroleum production has been in decline since 1971. Over the 32 years since reaching that peak, U.S. production has declined by more than 41%. Predictions of peak production have been in existence since the 1950s. Experts estimate that the world reserves of 3 trillion barrels will be exhausted between 2040 and 2070. However, if reserves turn out to exceed 4 trillion barrels, that could be enough to last into the 2200s. However, the Saudis have been notably tight-lipped about their reserves suggesting that their ability to increase production may not be a reality. Even if reserves will not be exhausted until 2070, peak production will occur much sooner, probably within the next decade. The fear that the world production peak could be near is fully justified by the documented decline in U.S. domestic production. Can the rest of the world be far behind? When production goes into decline, the resulting upward spiral will make today’s prices look like a bargain.
Hubbert’s Law predicts that once you extract half the oil from a given field, production begins to decline. In spite of improvements in extraction techniques and efficiencies, this proved to be an astonishingly accurate prediction in the case of U.S. oil fields. Most experts believe that the major oil fields have already been discovered and are in production. Any new oil fields discovered in the future are likely to be smaller and more difficult or expensive to exploit, leading inevitably to a Hubbert decline.
Some believe that Russia, the Middle East and Venezuela can increase their production of petroleum. But none of these major producers are true friends of the U.S.. They have markets elsewhere, in China and India, so they could make things difficult for us at any time, even before the future decline in world production is fully felt. This puts our complex, petroleum-dependent society in significant jeopardy. Some suggest that the looming energy shortage may even return our society to the less complex conditions of the 19th century . Very little action has been taken so far to forestall that outcome.
Some believe that the price of oil over the next several years will return to $30-$40 per barrel. If we have reached or will reach shortly the world petroleum production peak, and there is little evidence to the contrary, $30-$40 per barrel petroleum is a pipe dream. More likely is a price between $100 and $230 per barrel and gasoline approaching $10 a gallon. In fact, if all the subsidies to the oil companies were removed and free-market forces were allowed to determine the price, we would already be paying somewhere between $5.60 and $15.14 per gallon.
In spite of past improvements in energy efficiency and petroleum extraction techniques, we still have natural gas shortages, rolling power outages, and, of course, high gasoline prices. We can build more refineries and import more natural gas but, in the final analysis, everyone has to recognize that petroleum, natural gas, water and other non-renewable natural resources are finite and will ultimately run out or, in the case of water here in the Southwest, be fully committed. More importantly, if we do nothing and simply wait for that to happen, we will not have the lead time needed to develop alternative energy sources. We need to begin to address this problem now and move as quickly as possible to energy self-sufficiency with a three-pronged attack.
The first action we need to take is to stabilize our population. According to the Census Bureau , http://www.census.gov/population/www/projections/natproj.html, our population is projected to grow from 275 million in 2000 to 404 million by 2050 and 571 million by 2100, 47% and 108% increases respectively. What will this mean in terms of the additional petroleum that will be demanded? At the 2004 rate of consumption of 20.7 million barrels per day (bpd), by 2100, population growth could double the U.S. demand to 41 million bpd. There would have to be several dramatic changes in total energy consumption in America to have even a remote chance of reducing the future the demand below that level. Population stabilization is one of these changes that need to be made. Population growth not only affects the demand for petroleum. It also has a major adverse impact on the available arable land and consequently the food supply.
“According to the U.S. Department of Agriculture, in the 1990s an average of three million acres per year of rural land was developed. . If that current rate continues to 2100, the nation will lose more than 300 million of its remaining 375 million acres of cropland, or 82% of it, …as the U.S. population grows from 275 million to 571 million.” . Today, the State of Colorado is at a critical juncture. Its finest ranches and croplands are vanishing rapidly. The equivalent of five family farms is lost every week. Since 1992, Colorado has lost 2.89 million acres of agricultural land.
Thus, there are two very significant negative factors working against the U.S. economy in the long-run, petroleum shortages and population growth. To paraphrase Britain’s World War II Prime Minister, Winston Churchill, “This is not the end, this may not even be the beginning of the end, however, it may well be the end of the beginning” (of the decline of the complex U.S. economy). Our voracious appetite for more than our fair share of the world’s natural resources will have to be curbed substantially to avoid significant economic problems in the not so distant future. Other nations of the world are beginning to demand their fair share of those resources. The three billion people in China and India are beginning to demand more of the world’s petroleum as they continue the rapid development and expansion of their economies. This is graphically illustrated by the traffic in Beijing, China which has polluted the atmosphere so badly that it is considered toxic. China has yet to achieve any great degree of population stabilization in spite of the draconian measures imposed a few years ago. However, the “one child per family” has often resulted in families opting for an abortion if the fetus is known to be female. This will ultimately cause a problem as the female population dwindles. India continues to struggle mightily to get the fertility rate of its women down to an acceptable 2.0. In the meantime, people in China and India want autos, television and air conditioning. All of these devices are significant consumers of energy.
There are several courses of action open to the United States to mitigate the disastrous effects of a petroleum crunch. First, we must invest heavily in alternative energy sources. If we consider the costs associated with the deleterious effect of coal on the environment and peoples’ health, wind power can be very competitive with coal in our economy. Although coal once revived the foundering British economy, it came at a steep cost of a pall of black smoke obscuring the skies of London and other major industrial cities. Unquestionably, this polluted air impaired the health of many of its citizens. The development of wind power, the hydrogenation or gasification of coal using the Fischer-Tropsch process, and the identification of other alternative energy sources in time may require very large investments like those involved in the Manhattan (atomic bomb) project during World War II. These investments must begin immediately.
Second, we must take steps to curb population growth. Since we cannot secure sufficient petroleum to serve today’s needs at a reasonable price, the addition of 296 million people over the remainder of this century will surely drive up the price beyond the reach of ordinary families and assure increasing shortages for everyone except the very rich. The rest of us will freeze to death in the dark and bicycle or ride a horse to work! In the more distant future, like the end of the next century, our population could easily grow to 1.5 billion. That is the current population of impoverished India. The Census Bureau’s High Series of projections, a sort of upper limit, suggests the possibility of a population of 1.2 billion by the year 2100. Although there are some lower projections, they are largely based on some very shaky assumptions as is the Middle Series that predicts the lower figure of 571 million by the year 2100. Every American citizen should be telling his or her congressman and senators to take whatever steps are necessary to stabilize our population. For example, tax exemptions for children should be limited to two per couple. Population stabilization will not be without consequences for our economy but the alternative will be even worse, causing a disastrous change in America that not even the illegal aliens will like. Concern about our ever-growing population is not about bigotry, racism or nativism. It is a concern that should be shared by all thinking Americans and all immigrants, both legal and illegal.
The fertility rate of American women is about 2.03, just enough to replace our population. Therefore, all of the projected population growth to 2050 and beyond is attributable entirely to visas, legal immigrants, illegal aliens and their progeny. Women of Mexican origin have nearly twice as many children as non-Hispanic white women. Roughly half of the growth between now and mid-century will be due to the Hispanics already here and those flooding through our porous borders. They like to make babies but do not comprehend that this will ultimately re-create the very conditions they left their homelands to escape and will ultimately condemn their children and their childrens’ children to a life not unlike the life their ancestors lived in Mexico. We need their urgent help if we are to have any chance of stabilizing our population. But Hispanics aren’t the only ones with a high fertility rate. Asians and Muslims also have rates well above that needed for replacement so we also need their help and the help of an Administration and a congress that believes in birth control and population stabilization.
Against the backdrop of the looming petroleum shortage and price increases, population stabilization is essential if we are to save our economy. This requires: (1) an immediate moratorium on all H1B visas, legal immigration; (2) the humane and compassionate repatriation of the illegal aliens who hold jobs Americans will take if offered a living wage and a hiring preference; and (3) absolute control of our borders. The politicians know this but worry more about their re-election chances. Without intense and sustained voter pressure, politicians will continue cater to the cheap labor and immigrant lobbies, fiddling while Rome is burning, as it were.
Third, we need a concerted effort to reduce energy consumption: sustained increases in the efficiency of energy consuming devices and structures and incentives for those who buy them; a large increase in required auto mileage per gallon up to the limit of economic feasibility; a surtax on all existing vehicles that exceed the new standards; an escalating charge for natural gas and heating oil usage over a certain standard, and other measures to encourage energy conservation. Eventually, we may need rationing or at least budgeting of our dwindling foreign and domestic petroleum resources. Given that we already consume more than our fair share, where do you think America will come out in any petroleum budgeting exercise?
Strong medicine? You bet! Can we do this? Absolutely! But congress needs to hear from everyone now and often. Legal immigrants and minority citizens who value the quality of life they have enjoyed in this country need to join in. Whatever we might be able to salvage of life in the United States will decline every day that we delay in taking concerted action. Our brethren citizens with high fertility rates need to step up to the plate to help stabilize our population. They need to let congress know that they, like all other citizens, want change now before it is too late. This crisis is real folks! It may not seem like it except when you stop at the gas pump but petroleum supplies are finite and will not be increasing. Meanwhile, the population juggernaut continues to roll. Everyone needs to pitch in to make sure the American economy, complex society, and way of life don’t go the way of the Dodo bird. Of course, this is going to be like trying to turn the Titanic before it hits the iceberg. But we must begin and we cannot tolerate complacency or inaction on the part of either the congress or the administration.
We all should be disturbed by the idea that our society is ignoring a problem of the magnitude of excessive population growth and its impact on demand for natural resources. It is noticeably absent from the politically- correct discussion of immigration reform. Why? We constantly worry and complain about traffic, pollution, crime, urban sprawl, the extinction of species, and unmet demands for water, natural gas, gasoline, power, other petroleum-based products and other natural resources. Yet, shortsightedness regarding the petroleum, population and immigration problems is endemic on Wall Street, in government, and in the media. Many continue to accept the Department of Energy’s illogical, shortsighted estimates. Lack of foresight and an almost childlike propensity not to worry about the future seem to be human characteristics that are timeless. But focusing on short-term objectives is one of the worst mistakes we can make.” Whether or not our society will survive the long term population crisis, and all it entails, depends on whether the Administration and the Congress make the correct decisions in time. The crucial element in the mindset of leaders is how well they perceive and respond to problems in a timely fashion.
As Tom Letheby put it in the 4/30/ 06 Denver Post, “We are left with yet another illustration of an all too common American mindset: short on vision, mired in denial and unable to comprehend nature’s limits.”
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