Recently North America is seeing consistently lower prices for petrol as compared to a decade earlier. The credit for this is mostly attributed to the infrastructure build-out for natural gas: its extraction, processing and delivery. I.e. the ‘fracking’ news story. This lower cost has improved the living standard for people in North America. Does this improvement extend to the world?
The answer is somewhat yes. And somewhat no. It is yes in that there are natural gas reserves constantly being discovered all over the world. With today’s technology, these reserves can be extracted economically and the resource shipped for sale throughout the world. The answer is no in that there is still a finite amount of natural gas available. Only those people in the locales getting the resource will get a boost in their standard of living. And the boost will only endure for the lifetime of the resource. From the BP analysis the ratio of primary fuel reserves to production (R/P) is:
Oil R/P is 50.6 years
Natural Gas R/P is 52.5 years
Coal R/P is 153 years
These durations represent the time to effective resource depletion. They are important as even today, with all the focus on renewable energy, 85% of energy consumption is sourced from these three primary fossil fuels.
Now we don’t know what will become of the Earth over the next 50 years. Or the number of people that will want to live comfortably on the Earth. But projections aim at well over 11billion people. And we show few signs of reducing individual consumption. So, we can expect a rather abrupt correction when the energy resources get exhausted. Both locally and globally.