Economic Nonsense: 8. The world is running out of scarce resources


Curiously, the opposite is true: so-called 'scarce' resources are actually becoming more plentiful.  Our technical ability to extract resources, including things like copper, zinc, chromium and manganese, is increasing faster than the rate at which we are using up existing 'reserves.'  We use the term 'reserves' to denote the supply which can be extracted economically with current technology.  For most of these resources our reserves are increasing. We can measure the relative availability of these resources by looking at their price.  For many of them it has been going down over several decades, indicating a relative excess of the supply of them over the demand for them.  Julian Simon won a famous public wager with Paul Erlich, predicting lower prices for an agreed basket of resources, and Erlich duly paid up when he lost.

If any resource does become genuinely scarce, the price rises, and this signals to people that they should use less of it, turning to substitutes where they have become more economic to develop.  It also tells people to produce more of the scarce resource, with the higher price making previously marginal sources now more economic to develop.  The price mechanism thus acts to counter their scarcity by reducing demand and augmenting supply.

Oil and gas were long thought to be exceptions to this trend, but even here technology has given us access to new supplies.  Hydraulic fracturing (fracking) has made available sources of oil and gas from places less volatile politically than those we previously depended upon.  Prices have tumbled, and cheap shale gas is enabling us to shut down coal-fired power stations and switch to much cleaner gas-powered ones.  Some estimates put the supply of shale gas as sufficient to supply projected needs for the next 200 years.  Long before then, however, photovoltaic technology will have allowed solar power to overtake gas in its cheapness.  Contrary to what doomsayers claim, we are running out of neither resources nor energy.