He is reflecting on the implications of the BP oil spill in the Gulf. I think he makes the case extremely well that the implications will be enormous. The article is long --here are a few highlights
The 21st-century search for useful non-renewable resources is testing the limits of science; and both the brawn and the intricacy of machines that have been developed to feed our growing human needs for nonrenewable resources are truly impressive. Watching some of these machines in action, it is tempting to think that human ingenuity has no bounds. Moreover, since we are still fairly close to the top of the pyramid with regard to many nonrenewable resources, it is also natural to assume that constantly improving machines will enable us to dig very far down indeed, so as to continue supplying our burgeoning collective appetite for energy and minerals for many generations to come.
However, as we are about to see, the development of extractive technologies also involves tradeoffs and limits.
A little further:
Since each layer further down the resource pyramid requires more expensive extractive machinery, while yielding lower-quality or more expensively produced fuels or ores, one would expect that the market price for resources would continually be rising. But this has not been the case in most instances—until recently. During the 20th century, most commodity prices (including prices for metal ores and, often, fossil fuels) actually declined in inflation-adjusted terms. Why? More areas for exploration were continually being opened, while payoffs from the ability of new technology to access lower layers of the resource pyramid trumped both the extra cost of the technology itself and the declining resource quality (a factor that must be overcome with increasing investment in refining or ore upgrading).
Again
It is important to know whether commodity prices escalate linearly as petroleum and other non-renewable resources become scarcer. If they do, then the invisible hand of the market will solve many of the problems that scarcity brings: in addition to making substitutes more attractive, higher prices will motivate efforts to increase efficient usage of the resource. But a recent historic example calls such rosy scenarios for painless, market-led resource transitions into question. In the years and months leading up to July 2008, demand for oil was increasing, but global production remained stagnant. Traders bid the price up to a record $147 per barrel—and global financial mayhem followed. While a concurrent derivatives/real estate crash was responsible for much of the bloodshed, dramatic slumps in the auto, airline, trucking, and shipping industries seemed closely tied to the oil price spike. These (along with the general economic convulsion) resulted in declining fuel demand, which in turn caused petroleum prices to plummet nearly to $30 per barrel in December 2008. This then led to curtailed investment in oil exploration—which, in due course, will provoke another rapid price rise as supplies dwindle. The cycle will presumably begin again; and each time it recurs, it will likely have an even more devastating economic impact. Not all non-renewable resources will provoke similar scenarios as they deplete, as very few are so essential to the economy that scarcity or price spikes could trigger a major recession. However, price volatility does seem to be a typical sign of depletion-led resource scarcity.
He ends:
The only solution is to do proactively, and sooner, what we will end up doing anyway as a result of resource depletion and economic, environmental, and military ruin: end our dependence on the stuff. Everybody knows we must do this. Even a recent American president (an oil man, it should be noted) admitted that, "America is addicted to oil." Will we let this addiction destroy us, or will we overcome it? Good intentions are not enough. We must make this the central practical, fiscal priority of the nation.
If some of you have not been reading much about "Limits to Growth", and want some directed reading, ask for it.
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