Being a student at a very liberal university, in the past semester, I have been in at least three classes where December (I forget the exact date), 1987 is brought up. Why? It is, according to the professors, one of the most infamous dates in history. It’s when the Earth’s population exceeded its sustainability. This idea was the guiding premise behind my environmentalism classes last semester, and I never really thought to question it.
But the other day, a guest speaker came into one of my other classes, talking about this. He was talking about doomsday scenarios, and saying that he thinks it’s likely that in the future, we will reset the calendar with 1987 as year zero – the year the Earth could no longer sustain its population.
Now, I’m upset, because he had to go right to another class as soon as he finished his lecture, so we didn’t have much time to ask questions or respond. But the first question I would have had is, “How did you determine that this is so?”
I mean, has anyone else heard of this? Does it hold any validity? What standard are they using to determine that we’re “running out of resources?”
The first day in my economics class, my professor cautioned us against “those crazy people who think we are running out of oil.”
Does this whole panic simply stem from environmentalists’ refusal to learn basic economics?
Oakes already did the work in another forum (thank god), but to quote his quote:
Thomas Sowell addresses this point in his book, Basic Economics, starting on page 205:
QUOTE (”Basic Economics pg.205-206 (My Bold)”)
Present value profoundly affects the discovery of and use of natural resources. There may be enough oil underground to last for centuries, but its present value determines how much oil will repay what it costs anyone to discover it at any given time – and that may be no more than enough oil to last for a dozen or so years. A failure to understand this basic economic reality has led to numerous and widely publicized false predictions that we were “running out” of petroleum, coal, or some other natural resource.
In 1960, for example, a best-selling book said that the United States has only a 13-year supply of domestic petroleum at the existing rate of usage. At that time, the known petroleum reserves of the United States were not quite 32 billion barrels. At the end of the 13 years, the known petroleum reserves of the United States were more than 36 billion barrels. Yet the original statistics and the arithmetic based on them were accurate. Why then did the United States not run out of oil by 1973? Was it just dumb luck that more oil was discovered – or were there more fundamental economic reasons?
[snip]
How much of any given natural resource is known to exist depends on how much it costs to know. Oil exploration, for example, is very costly. This includes not only the costs of geological exploration but also the costs of drilling expensive dry holes before finally striking oil. As these costs mount up while more and more oil is being discovered, the growing abundance of known supplies of oil reduces its price through supply and demand. Eventually the point is reached where the cost per barrel of finding more oil in a given place exceeds the present value per barrel of oil you are likely to find there. At that point, it no longer pays to keep exploring. Depending on a number of circumstances, the total amount of oil discovered at that point may well be no more than the 13 years’ supply which led to dire predictions that we were running out. Only as the existing supplies of oil are being used up will rising prices lead to more huge investments in oil exploration.
[snip]
As more and more of the known reserves of oil get used up, the present value of the remaining oil begins to rise and once more exploration for additional oil becomes profitable. But, as of any given time, it never pays to discover more than a minute fraction of that oil. What does pay is for people to write hysterical predictions that we are running out of natural resources. It pays not only in book sales and television ratings, but also in political power and in personal notoriety.
In case you’re wondering what would happen if we began running out of a valuable resource in a capitalist society, Sowell answers that, too:
QUOTE (”Basic Economics pg.207 (My Bold)”)
In some ultimate sense, the total quantity of resources must of course be declining. However, a resource that is going to run out centuries after it becomes obsolete, or a thousand years after the sun grows cold, is not a serious problem. If it is going to run out within some time period that is a matter of practical relevance, then this rising present value of the resource whose exhaustion looms ahead will automatically force conservation, without either public hysteria or political exhortation.