The Coming Age of Energy Abundance
The idea that human beings are a mortal threat to a sacred and fragile natural world have led people to believe all kinds of things that are simply not true. One particularly unfortunate and related assumption is that we are running out of energy, thereby making our modern way of life unsustainable.
All future energy trends reveal a completely opposite reality: the entire world is poised to enter an era of energy efficiency and abundance. While the conventional thinking has moved far away from the apocalyptic scenarios imagined by Malthusians like Paul Ehrlich and the Club of Rome in the 1970s, the demographic and economic consensus is still far too pessimistic.
Recent reports by the International Energy Agency and other sources demonstrate that all energy sources have experienced remarkable progress.
Oil and gas
The amount of known oil and gas reserves in the United States increased by a third from 2011 until 2013. Please read that sentence again. An industry that has been around for more than a century was able to claim a bonanza of new findings in merely two years. We now have more gas and oil reserves than ever before. Furthermore, it has never been easier to extract these reserves.
According to the International Energy Agency, the United States will be the largest oil producer in the world by 2020. By 2030, the U.S. will become a net oil exporter. The United States will become self-sufficient in energy by 2035. After that, one could expect for the United States to export oil and gas to a developing China. The economic and geopolitical implications will be both profound and positive.
Operating issues caused nuclear power plants to go offline so often in the 1980s that the plants worked at around 55% capacity. Today, these same plants operate at over 90% of capacity. Noted energy expert Daniel Yergin declared in his recent book The Quest “that (this) improvement in operating efficiently is so significant in its impact that it can almost be seen as a new source in electric power itself.”
If the coming increases in oil and gas production do not completely fulfill our energy requirements going forward, nuclear energy can and will finish the job.
Wind, solar, geothermal, hydro, biomass, clean coal, wave and tidal power have all experienced vast improvements in efficiency, cleanliness and value in the past decade. Wind remains the most economical and practical alternative source at the moment. But technological developments have a way of surprising everybody and any of the several different sources of alternative energy may ultimately triumph after an additional few decades of innovation.
If one were to extrapolate 50 to 100 years into the future, nuclear fusion becomes another possibility, which will insure cheap and inexhaustible energy for humanity, forever. Nuclear fusion could be as significant in human history as the discovery of fire. Even if this idealized scenario does not materialize, all the available evidence demonstrates that we as human beings have an ever-increasing ability to improve our condition.
Action Investment Point: Invest in the coming energy boom in the United States in the coming decades. Invest in and expect energy abundance throughout the world after that.
Scott Gillette’s conversion to supply-side economics began in in the 1990s when he concluded that poverty alleviation both here in the United States and abroad requires a dynamic and growing economy that encourages production. This conversion deepened when he learned how Robert Mundell predicted the oil shocks of the 1970s, even while Keynesian economists cannot explain why this phenomenon occurred even today.
Scott went to work at Polyconomics from 1999 to 2001, which was the firm founded by Jude Wanniski, who coined the term supply-side economics. While there, Scott organized Jude’s lessons about supply-side economics into a distinct website page called Supply-Side University. Jude’s informal course can be enjoyed here.
Scott also served as a Research Analyst at Polyconomics, and examined numerous economies in both Latin America and Asia. Scott focused specifically on China, and promoted the view that China’s ongoing reforms at the time, while uneven, were conducive to long-term growth.
In the past five years, Scott spent extensive time in China, the Middle East and India as a consultant for Bretton Woods Research and for a book project. Scott’s book about his travels, If These Shoes Could Talk, will be published in 2013.
Scott received his undergraduate degree from Rutgers University and his master’s degree in Comparative Politics at Arizona State University. He currently resides in Freehold, New Jersey.