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How Much of the Worsening Energy Crisis Is Due to Depletion?

How Much of the Worsening Energy Crisis Is Due to Depletion?

If society attempts to maintain current levels of energy services throughout the transition, the result will be a spike in both energy usage and carbon emissions.

Coal and natural gas spot prices have recently soared to record levels internationally, while oil is trading at over $80 a barrel—the highest price in seven years. Newspaper columnists are asking whether people in Europe and Asia who can’t afford high fuel and electricity prices might freeze this winter. High natural gas prices are causing fertilizer prices to spike, which will inevitably raise costs to farmers, with eventual catastrophic impact on people who already have trouble paying for food.

The real energy transition will almost certainly be a shift from using a lot to using a lot less.

Political commentators are naturally searching for culprits (or scapegoats). For those on the business-friendly political right, the usual target is green energy policies that discourage fossil fuel investment. For those on the left, the culprit is insufficient investment in renewable energy.

But there’s another explanation for the high prices: depletion. I’m not suggesting we’re about to completely run out of coal, oil, or gas; there’s no immediate danger of that. However, the energy industry has historically targeted the highest-quality and easiest-accessed of these resources, which means that what’s left, in most cases, are fuels that will be costlier to extract and process—and also more polluting. The proximate causes of current price spikes may be transient market conditions (the see-sawing pandemic, Britain’s decision to leave the European Internal Energy Market, Russia’s reluctance to provide more gas to European buyers until a new pipeline is given final approval, and China’s choice to reduce coal imports from Australia). But behind the energy headlines is persistent, accelerating depletion.

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