as a whole will adjust over time to the recent runup in world
oil prices. It is possible that prices for oil (and other energy
sources) would have to fall well back from current levels, to the
$4 to $6 per barrel range, in order for historical growth rates to
continue. In that case, unless the producers were subsidized, our
supply research suggests that marginal supplies needed to meet the
3.4 percent growth rate might be uneconomic.
At the same
time, we must recognize the possibility that energy growth could
resume at historical rates in a few years, even at higher prices,
if unexpected developments take place in the rest of the economy.
Although the Historical Growth energy requirements
calculations in Appendix A include generous allowances for
presently unknown applications for energy, it is always possible
that new processes or products may be developed that are even more
energy-intensive than we have projected, and that offer economic or
consumption benefits which are so compelling that the higher prices
will not dampen demand.
One factor
that will contribute to high growth in the face of rising prices is
the greater emphasis on electricity and synthetic fossil fuels, for
which energy extraction and conversion losses are especially
large.
Where
will the energy come from?
Planners
preparing for historical growth in energy consumption face this
fundamental question: where will the energy come from?
In answering
this question, it seems simple and obvious to begin with estimates
of available energy resources. Yet in fact there is nothing simple
about resource estimates. They depend as much upon economic and
technical developments as they do upon geological facts, which
themselves are uncertain. Appendix D discusses the factors that
must be taken into account in estimating reserves and resources,
and defines those terms.
As Table 2
shows, oil and gas appear to be more limited than other resources,
raising the possibility that in a few decades our oil and gas may
"run out." From an economic point of view, we would never actually
exhaust such a resource entirely; as we draw on lower and lower
grade resources, their increasing prices would make other resources
more attractive.
The resource
estimates and other Project research