The lifeblood of the modern economy is fossil fuel, particularly oil. Prosperity depends on plenty of it, and the cheaper the better. There is plenty of oil right now, a glut on the world market, in fact. But it is no longer cheap, thanks to the Organization of Petroleum Exporting Countries (OPEC) oil cartel. And, if the experts are right, oil one day will become scarce and even more expensive because we live on a finite earth with finite resources, which we are exhausting at an ever increasing rate. Current estimates place the ultimately recoverable reserves of oil at about two trillion barrels. They may be less than that, maybe only 1.6 trillion barrels. Or they may be more than that, maybe as high as 3.7 trillion barrels by some estimates. But even if the latter figure turns out to be correct, the world economies have such a voracious and growing appetite for oil that demand will outstrip supply early in the next century. If reserves are lower, the day of reckoning will come even sooner, perhaps as early as 1985 if the growth in demand for oil doesn't slacken. So the question is not if we run out of oil, but when we run out of oil, what will we do? How can we make the transition to an economic system that can thrive without oil and within the limits of all the resources available on this finite spaceship called earth? Four hundred business, academic, and government leaders from throughout the United States and overseas gathered 35 miles north of Houston during the first week in October to ponder these questions. The occasion was the Alternatives to Growth Conference. The conference took place against the background of several critical developments in the area of energy: September 23: A report reveals that U.S. demand for petroleum products in the previous four-week period rose at a record rate, with oil imports providing more than 48 percent of the total. Imports of crude oil averaged nearly 6.5 million barrels a day, 36.2 percent of the nation's total petroleum demand of 17.86 million barrels daily. Imports of refined petroleum products accounted for another 2.12 million barrels a day. October 6: Members of the International Energy Agency, formed after the Arab oil embargo in 1974 by 19 major oil-importing nations, agree to limit oil imports to 26 million barrels a day by 1985, about 8 million barrels a day less than the imports anticipated if energy conservation plans were not implemented. IEA nations currently import 22 million barrels of oil per day, with the U.S. accounting for one-third of that figure.
"There is widespread agreement — close to 100% — that the kind of growth rate we saw in the past 25 years [roughly 5% per year] will not continue." — Herman Kahn, Hudson Institute
U.S. Energy Secretary James R. Schlesinger said that the 26-million-barrel-per-day goal depended on the United States reducing its oil imports to 6 million barrels a day. IEA members were critical of the United States for its failure to curb oil imports. While most member nations had increased their oil imports only a small amount between 1972 and 1976 (some had decreased their imports), U.S. imports of oil increased by 51 percent. Canadian Energy Minister Alastair Gillespie, chairman of the IEA, observed that if the U.S. doesn't set an example by adopting an energy program, other importing nations will abandon efforts to cut their oil imports. Mr. Schlesinger pledged that the U.S. could meet its goals to cut imports if President Carter's energy program is adopted. But... October 10: The U.S. Senate ends a two-week filibuster against a bill to deregulate the price of newly discovered natural gas sold across state lines. The gas, deregulation bill passes as the Senate continues its piece-by-piece dismantling of the key elements of President Carter's energy program.
Club of Rome Report
While politicians and diplomats wrangled over current energy problems, the 400 delegates to the Alternatives to Growth Conference pondered future energy, population, food, and economic problems: One of the sponsoring organizations for the conference was the Club of Rome, an informal association of 100 individuals in more than 30 countries. The Club of Rome is best known for The Limits of Growth, a controversial report published in 1972. Using a computer to project present growth trends, a team of scientists at the Massachusetts Institute of Technology concluded in the report that "if present growth trends in world population, industrialization, pollution, food production and resource depletion continue unchanged, the limits of growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity."
Man Versus Machine
This pessimistic projection made headlines around the world and touched off a great debate over mankind's future and the value of computer-based forecasting. That debate continued at the conference when Herman Kahn, much publicized head of the Hudson Institute and proponent of growth-as-usual, matched wits and statistics with a computer and its oracle, Dr. Barry Hughes of Case Western Reserve University (Cleveland, Ohio). The computer was programmed with a new analysis system known as the Assessment of Policies Tool (APT). This system was developed by Dr. Hughes in association with Dr. Mihajlo Mesarovic and Dr. Edward Peste! (who coauthored the second report of the Club of Rome, entitled Mankind at the Turning Point). Kahn defended the generally optimistic predictions of his 1976 book, The Next 200 Years. These included higher estimates of reserves of essential resources such as oil and projections of far greater food production than those made in the Club of Rome reports. Kahn maintained that world population and economic growth will eventually slow down naturally, resulting in a world of plenty for most societies. Hughes agreed with Kahn that a "doomsday" crash of civilization need not be inevitable. But he contended that the transition period in the next 50 years would be far more traumatic than Kahn predicts. As the computer flashed rapid-fire readouts on a movie screen, Dr. Hughes rebutted several of Kahn's specific conclusions. Kahn had stated in his book that "it doesn't seem Likely that oil prices will stay very high for more than five or ten years, and possibly much Less; they might easily return to something like three to seven dollars [per barrel] in the Persian Gulf long before the new coal infrastructure has been amortized." But the computer's evaluation of the future yielded just the opposite prediction. Assuming that prices are dictated by a free market, the computer concluded that oil prices will climb steadily throughout the end of the century to a level about 50 percent higher than current prices (in terms of 1975 dollars). After the turn of the century, prices will climb even faster as supplies are exhausted. By 2025, the projected price would be nearly $60 a barrel in terms of 1975 dollars. The computer also calculated that Kahn's projections for food production and per-capita income would require such vast sums of capital investment and transfer of wealth from developed to presently undeveloped nations as to be, in Hughes' judgment, unrealistic. Kahn would not recant: "According to my model, when Cortez stepped ashore with 500 men to face two million Aztecs, the Aztecs won.... There's only one model that will answer all questions equally well, and it's called God." Kahn argued that no one knows what the actual reserves of oil and other resources are, or what technologies might be devised in the future to solve what may now seem to be insurmountable problems. His faith remained unshaken in the unknown and man's ingenuity and resourcefulness — factors no computer can take into account. And there the debate remained deadlocked: faith against the known facts. After the conference had ended, President Carter renewed his call for Americans to consider the energy crisis the "moral equivalent of war." But most Americans have treated the situation as if it were the moral equivalent of peace. They are guzzling oil at a record rate. This year the United States is on its way to a record $30 billion deficit in its balance of payments, largely because of its unrestrained appetite for oil. Many European nations and Japan have had notable success in conserving energy and reducing the growth rate of oil consumption. But even these nations are still heavily dependent on oil.
If conferences (such as the one near Houston) and groups (such as the Club of Rome) have accomplished anything, it has been to make government leaders and the general public more aware of the space and resource limits of the earth. But it was abundantly clear from the conference and the headlines in the papers that little has been done to prepare anyone nation, let alone the world, to sustain itself within those limits. As Aurelio Peccei, founder of the Club of Rome, confessed: "We don't know how to translate our new awareness into action." Developed nations are still committed to high-growth policies. Undeveloped and developing nations want to go the route of the Western developed nations. They
"We don't know how to translate our new awareness into action.... It is much later than we think. But we can do more than we are doing.... We don't see the light at the end of the tunnel. We have a few tools, but the wisdom hasn't yet emerged." — Aurelio Pecci, founder Club of Rome
want a bigger piece of the pie, Western style, even though that style is fast becoming unsustainable and obsolete. Several Third World representatives at the conference demanded that developed nations help them with massive amounts of aid and capital investment. They insisted that it was their right to achieve economic parity with developed nations and that it was the duty of developed nations to help, even sacrifice, to make it possible. The world is running out of time, oil, food, and — one sensed from the conference — patience to deal with the problem of a world that is pressing on the natural limits of growth. If the conference was in any way a microcosm of the world, mankind has a long way to go in finding the wisdom and the consensus needed to meet the future with success. Dr. Peccei was asked what progress had been made toward an economy that could be sustained within the limits of the earth's resources since the publication of the Club of Rome's first report five years ago. He could point to no substantive progress. And now, in 1977, "It is much later than we think," he said. "But we can do much more than we are doing.... We don't see the light at the end of the tunnel. We have a few tools, but the wisdom hasn't emerged."