Energy Supply

I recently completed an exercise I suggest more people do themselves.  This exercise estimates the remaining resources in the global energy supply chain, and compares this amount with the current demand.  I referenced the following websites for primary information:

http://www.eia.doe.gov/emeu/international/reserves.html (existing global proven oil and natural gas reserves)

http://en.wikipedia.org/wiki/Coal (existing global proven coal reserves)

http://www.eia.doe.gov/emeu/international/electricityconsumption.html (existing global electricity consumption)

http://www.eia.doe.gov/emeu/aer/pecss_diagram.html (breakdown of energy use in the US)

Following an analysis based on equivalent energy, I came up with the following observations:

- There are nearly equal amounts of oil and natural gas reserves in the world, but nearly twice as much coal as both oil and natural gas combined.

- 86% of the world's reserves are divided between North America, the Middle East, Eurasia, and Asia/Oceana.  There are relatively few resources in Africa, Western Europe, and Central and South America.

- Oil accounts for the largest portion of energy use in the US, followed by Natural Gas, then Coal (85% of primary energy between those three).  The remaining 15% is supplied by nuclear power and the full collection of renewable energy sources.

- Shale Oil could expand the world's oil supply to over 3.5 times the current amount, primarily from sources in North America, although at significantly increased environmental and economic costs.

- At current consumption rates, all world oil reserves will be exhausted by 2047, and all natural gas reserves by 2067.  Coal would not run out until 2191.  Accounting for the shale oil listed in the previous point, oil would last until 2156.

The above points obviously leave out many dynamics of energy supply.  First, demand has never been stagnant.  In all periods of recorded history, energy use has increased.  This pattern would exacerbate the situation.  Also, as supplies run low, by basic economics, prices can be expected to rise.  Depending on the degree of the price increase, supply could potentially decrease.

I explored a couple policy actions to see what the results would be if implemented in the US.  Increasing CAFE standards to 35 mpg would eventually reduce oil use by about 15%.  Doubling renewable energy electricity generation, increasing lighting efficiency across the board, starting an aggressive industrial energy efficiency program, promoting and expanding public transit and intercity rail, and expanding building insulation programs would also contribute greatly to reducing national energy use.  Overall, all these measures combined (including the CAFE standard) would reduce national energy use by 35%.  Fossil fuels would be reduced by 46%.

While these types of numbers are encouraging, keep in mind that these are very aggressive policy proposals compared to anything that is currently in place.  These numbers also unfortunately point to another disheartening point.  Keeping the rest of the world's energy use constant only extends the "end date" for oil, natural gas, and coal by 3, 5, and 29 years, respectively.  Acting alone, we only move from running out of conventional oil sources by 2047 to running out by 2050.

These numbers point to a few key points, in my analysis.

- Energy policy needs to expand conservation measures much more aggressively in order to have a significant impact.  With or without these measures, I would guess that inertia in any progress will result in a dramatic, sustained rise in energy costs, focused in oil and natural gas costs, in 10-20 years (2020 to 2030).

- Any energy policy must be enacted in partnership with other countries, with the US as a leader in efficiency and conservation to tie in with our leading consumption of energy (at least 20% of the world's fossil fuels are consumed in the US).  No policies will have the desired effect without US participation, nor without global participation beyond the US.

In short, it is time that energy policy caught up with the approaching conflict of the realities of resources and demand.  Beyond policy, individuals and organizations that invest now in long-term projects (those that will last over 10 years) will see much greater benefits than traditional analysis might otherwise show, due to the likely unprecedented rise in price approaching in the near future.

This is a great opportunity to take bold actions that will greatly benefit quality of life and economic and environmental sustainability long into the future.