When discussing our planet’s usage of fossil fuels, one question often comes up: will we ever actually run out of fossil fuels?
This is a valid concern. We know that fossil fuels are mined from the earth. They are finite resources, meaning they are not unlimited. We can’t make more oil or natural gas. So does that mean that we will run out?
Once we hit the end of a source, is that it?
Our usage of fossil fuels continues to increase. As the world’s population grows and life expectancy increases, it seems that we will continue to drain the fossil fuels of the world until our reserves are empty.
But there are two ways to really approach this issue that make sense. Let’s examine each of them.
Can we exhaust our natural resources?
First, it’s highly unlikely that we will ever be able to exhaust our natural resources. If you come across someone making that argument, they might be erring on the side of “alarmist”.
The truth is, any of the fossil fuels that are usually in the discussion, like oil and natural gas, probably won’t be running out for generations, if ever. Some resources are able to be recycled, and others can be recovered. So as our reserves dwindle down, they’ll just start becoming more expensive to produce.
Costs can go up… but not because we’re out of resources.
The reason we haven’t switched to recycling and recovering some of these resources is cost. It can be done - we just don’t do it yet. That’s why we keep extracting virgin resources from the ground.
Because they are options, then we could start recycling and recovering when resources start running low.
Look at steel and aluminum scrap. These days, it’s rare to see new steel and aluminum being produced. That’s because we’ve developed a cost-effective infrastructure to support recycling those materials.
As costs go up, so does scarcity.
Now, for the second way to look at this question: while we may not actually “run out” of these resources, the cost of producing and delivering these resources may get too high for the level in which we use them now.
In other words, we don’t want to be wasteful or negligent of natural resources because if we were to tap out our resources, then we wouldn’t be able to use those resources in the way we use them now. The cost of producing them skyrockets, and eventually the material is priced out of the market.
Some examples of cost-based scarcity.
Confused? Don’t be - you already know of some examples of this happening in other markets:
Think of gold. Gold is a natural resource. It is not created anywhere - it is mined out of the ground. Right now, there are literally millions of pounds of gold in the ocean in the form of gold ions. The world will never run out of gold with this much still available.
However, extracting gold ions is an expensive process. There may be millions of pounds of it, but it takes electrolysis to do it from gold ions. That means that you need to produce electricity to extract the gold. If electricity rates go up, then the cost of extracting gold continues to go up.
If we use up our current gold reserves and all we have left are the gold ions in the ocean - we still have millions of pounds of gold available to us. But extracting that gold and delivering it in the same way that we have enjoyed it for years - in jewelry, ornamentation, or even electronics - will become too expensive that we just won’t be able to use it anymore… even if we still have millions of pounds of it.
You see, mining natural resources - including fossil fuels - is more complicated than just looking at how much we have left in the earth.
Let’s look at another valuable resource: phosphorus or potassium.
Our oceans are loaded with these resources. The world will not ever run out of them. There is just too much of it available to us. But let’s assume that, somehow, we drain the world of phosphorus and potassium.
We have other methods of extracting these resources. We can recover phosphate from agricultural waste, runoff, and sewage. These are very effective methods of recovering the materials. However, they can get very expensive. And that doesn’t even include the cost of mining this resource from the ocean.
We will not run out of these resources.
So you see again, it’s not that we will run out of these resources. It’s more about the fact that the cost of providing these resources will skyrocket as we have to adjust the way we extract it.
So if your question is “will we ever run out of oil?” or “when will we run out of natural gas?”, you can rest easy. We will not run out of these resources.
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We will eventually, however, run out of the “easy” reserves that we’re using now. When that happens, we have to turn to the more expensive extraction and recovery methods. And when that happens, you probably won’t see vehicles and other appliances using these fossil fuels as a main fuel.
In the case of any resource, you will reach a point where there will be a major change in the cost of the act of extraction and providing that resource. That change will force the market to adjust to new solutions in order to keep costs down.
You could view fossil fuels as limitless. Indeed, you never have to wonder, “when will we use up fossil fuels?” It probably won’t happen.
But the bigger issue has to do with cost. As we move to different extraction methods over time, these changes could drive up costs in a major way.
Just because something is abundant does not mean that it is cheap. You can make the argument that we have limitless resources. You cannot, however, make the argument that it will always stay inexpensive as long as we have so much of it.
Energy might be limitless, but it is not costless. That’s a very important distinction to make.