A free-market energy blog
Random header image... Refresh for more!

“Julian Simon and the Triumph of Energy Sustainability” Revisited: Part I

“Innovation does not appear to be a depleting resource but an expanding, open-ended one. Instead of encountering diminishing returns, new advances appear to be expanding the horizon of new possibilities.”

- Robert Bradley, Julian Simon and the Triumph of Energy Sustainability, p. 40.

A  decade ago, I worked for the American Legislative Exchange Council (ALEC) as Director of the Energy, Environment, Natural Resources, and Agriculture Task Force.  Energy was a critical part of this area for state legislatures, covering such issues as

  • Global warming issues such as the Kyoto Protocol, carbon pricing schemes (cap-and-trade, etc.) in light of the precautionary principle;
  • Oil and natural gas affordability for  domestic industry (U.S. manufacturers were going overseas for cheaper labor and fuel); and
  • Gasoline taxes

ALEC was a free-market resource for state legislators. My task force’s crucial energy work had been done by Ross Bell and Chris Doss before me, and Dan Simmons and Todd Wynn came after me. It is still active today on such hot-button issues as state mandates for politically favored renewable energies and net metering mandates.

A highlight of my tenure at ALEC was a book project, a rarity for us. It is with pride and a sense of celebration that I recall the publication of  Bradley’s Julian Simon and the Triumph of Energy Sustainability in 2000.

The 150-page primer originated from some conversations I had with Rob the year before. We lamented the lack of an effective, concise primer that countered the still-popular notions of increasing resource scarcity and other negative notions that too often became a rationale for government activism. We also missed the great Julian Simon, who had recently died.

Simon spent a lot of time on energy, particularly with what he called “the most counterintuitive case of all,” petroleum. Our project wanted to apply Simon’s worldview to all the other areas related to energy sustainability, including air pollution and new product development. The bottom line? That by virtually any measure, energy welfare was getting better for Americans. And it could get even better with less government intervention into free markets. 

An excellent introduction to the primer was provided by Fred Smith, head of the Competitive Enterprise Institute. Smith  explained how Simon’s intellectual honestly led him to reject his once-held Malthusian beliefs.

Today, some 14 years after publication, the book almost appears pessimistic given the revolution in oil and gas extraction technologies that has unfolded before our very eyes. But this is a book that has held up well, quite unlike the Malthusian tomes of the same vintage (or any other vintage!).

Thanksgiving week is a good time to share the good news about the free market’s offering of open-ended resource abundance. May human ingenuity continue to mark the master resource of energy, as well as all other welfare-enhancing areas of our daily lives.

Some of my favorite quotations follow.

Energy: The Master Resource

“Energy, in short, is the great enabler for all peoples around the world. It can also be expected to remain primary in future centuries as ocean and space colonization proceed.”

- Bradley, Julian Simon and the Triumph of Energy Sustainability, pp. 27-28.

Hydrocarbon Plenty

“Proved oil reserves today are estimated to be fifteen times greater than the original 1948 estimate despite interim production of eleven times this amount. World natural gas reserves in the last thirty years have increased almost five-fold despite interim production that has been 80 percent above the 1967 estimate. World coal reserves today are estimated to be over four times the amount calculated nearly a half-century ago.”

Ibid., p. 31.

“What to some may be the U.S. ‘depletion signal’ is partly economics and partly political. Many promising oil and natural gas areas in the world’s most mature hydrocarbon province have been placed off limits by either the states or the federal government, preventing economically justified activity that would increase domestic production, increase world supply, and incrementally lower world oil prices.”

Ibid., p. 34.

Technology Creating Supply

“In 1947 offshore drilling began at depths below twenty feet. In the 1960s drilling reached several hundred feet. The thousand-foot barrier was penetrated a decade later. This depth was doubled in the 1980s. Exponential growth has taken place since then with depths of over four thousand feet reached in the 1990s. Designs for drilling platforms over ten thousand feet are in the works.”

Ibid., p. 38.

“Numerous technological innovations impacting the natural resource industries have had a synergistic short-term effect and a cascading longer-term effect. Jointly applied technologies have produced a sum greater than the parts and induced future rounds of innovation.”

Ibid., p. 40.

Fossil Fuel Substitution

“Natural gas under present technologies can be converted into oil products, and oil and coal can be gasified. Agricultural oil can be processed into gas as well. These technological possibilities are limited by economics, but improving technology is improving the economics of such backstop energy technologies….

Increasing increments of intellectual talent and financial resources—both infinitely expansive—explain the growing abundance of energy, even in the top tiers of the pyramid where the primary energy sources are hypothetically “depletable.” ….

Even advanced economies today are energy poor relative to what they will be in the future, although they are much more energy-rich than they were even several decades and certainly a century ago.”

Ibid., pp. 45-46.

Ultimate Resource Theory

“Innovation does not appear to be a depleting resource but an expanding, open-ended one. Instead of encountering diminishing returns, new advances appear to be expanding the horizon of new possibilities.”

Ibid., p. 40.

“The technology boom of the last quarter century may be just a prelude for what lies ahead. Next-generation innovations will involve laser drilling, intelligent completions (“smart wells”) that can recover virtually all the oil in a reservoir, oil drilling robots, and microdrilling technology that could result in ‘rig-less’ exploration and production.”

Ibid., pp. 40-41.

Problems, Improvement

“In any energy period there can be problems—even shortages and price spikes. But drawing on the lessons of history, Simon noted that short-run problems and challenges drove the market’s adjustment process to leave society better off than had the problems not occurred.”

Ibid., p. 121.

“The energy market will always be a “work in progress.”….Significant challenges in today’s energy markets will propel the needed improvements of the future. Some problems concern infrastructure; others arise at the intersection of energy and the environment. Some relate to market technologies; others involve regulatory reform. None are insurmountable if history is any guide.”

Ibid., p. 121.

[Part II tomorrow with complete the quotations summary.]

1 comment

1 Brian Mannix { 12.04.13 at 11:52 am }

I remember that book! I did a review of it, which Heartland appears to have preserved here: http://news.heartland.org/newspaper-article/2001/03/01/what-would-julian-simon-have-said

Leave a Comment