I published an article in The Times this week about fossil
fuel reserves:
Booming demand and stagnant supply drove oil prices to $125 a
barrel last week. Is this a sign that fossil fuels are running out?
It is more likely a sign that the cheap-oil age is giving way to
the cheap-gas age. As the oil price heads north, the gas price is
drifting south.
In 1865 a young economist named W. S. Jevons published a book
titled The Coal Question in which he argued that
Britain's "present lavish use of cheap coal" could not continue as
coal would soon run out and continued prosperity was therefore
"physically impossible. We have to make the momentous choice
between brief greatness and longer continued mediocrity."
Gladstone, as Chancellor, found Jevons' "grave and ... urgent
facts" so persuasive that he proposed to Parliament, with the
support of John Stuart Mill, to retire the national debt while the
good times lasted.
In fact, coal output rose and the price fell for many decades.
Jevons' gloomy warning that "it is useless to think of substituting
any other kind of fuel for coal" was hilariously timed, six years
after the first oil wells were drilled in Pennsylvania.
"Experts" regularly rush to predict the exhaustion of fossil
fuels. "Already the output of [natural] gas has begun to wane.
Production of oil cannot long maintain its present rate," a US
presidential commission said in 1922. "We could use up all the
proven reserves of oil in the entire world by the end of the next
decade," Jimmy Carter said in 1976.
The world will use about 450 exajoules (billion billion joules)
of fossil fuel energy this year and has so far used less than
20,000 exajoules since the Industrial Revolution began. Total oil,
gas and coal resources in the Earth's crust are estimated at more
than 570,000 exajoules. So if energy use was a journey from St
Pancras to Istanbul by train, we have not yet reached the Channel
Tunnel. Resources can be finite yet effectively inexhaustible or,
like dodos and forests, infinitely renewable yet easily
exhausted.
Quantity is not really the point; price is. Most fossil
fuels are impossibly hard to extract at a reasonable price. More
than half the reserves consist of methane clathrates hydrated gas
found mostly on the seabed near the margins of the continents in
vast quantities. Nobody knows how to turn them into fuel except at
huge cost, although the Japanese are on the case. So the question
is not whether we run out of fossil fuels but whether we run out of
cheap fossil fuels.
With oil, the answer may be "yes". A huge amount of oil is still
untapped, but most of it is under deep water or in oil sands and is
costly to extract. But with gas, the answer is "no". Most free
methane is found in impermeable rocks such as shale, not in
permeable "traps" whence it is easiest to extract. Shale gas was
thought to be as inaccessible as clathrates, and when it began to
be exploited in the 1990s it looked as if it would still come in at
the top of the price range. Now technological improvements have
brought the price down so far that it undercuts conventional
gas.
In a report I have written for the Global Warming Policy
Foundation, published yesterday, I conclude that this "shale-gas
shock" will have far-reaching consequences. It will make gas prices
lower and less volatile relative to oil than ever before.
This will cause gas to take market share from coal, nuclear and
renewables in electricity generation, and from oil in transport.
London buses should follow Washington and Delhi in switching to gas
both to save money and to produce less smog.
Shale gas is good news for America and China (which probably has
even more of it than America), consumers (cheap fuel means higher
standards of living) and farmers (fertiliser is made from gas). It
is bad news for Russia and Iran (which hoped to corner the gas
market in coming decades), for coal (until now the cheapest fuel
for electricity) and for the nuclear and wind industries. The last
two had expected to be rescued from dependence on subsidies by
rising fossil fuel prices. They may now not be.
The losers are formidable enemies, so there is a movement, whose
fans range from Gazprom to Greenpeace, to strangle the shale-gas
industry at birth, by claiming that drilling for it contaminates
water with carcinogenic and even radioactive chemicals. This turns
out to be true only in the sense that coffee is carcinogenic,
bananas radioactive and dihydrogen monoxide (water) a chemical.
A Cornell biology professor argues that shale gas actually
generates more greenhouse gas emissions than coal - but he only
manages this by making unrealistic assumptions about gas leakage
and methane's greenhouse potential. In fact, a dash for gas (the
lowest-carbon fossil fuel) is a far more effective way of cutting
carbon emissions than unreliable renewables.
What will bring the fossil fuel era to an end is not exhaustion
of resources, but a cheaper competitor. That could well be - though
not for a long time - solar energy or cheaper nuclear power. Fossil
fuels will then be obsolete long before they are extinct.
