The market order encompasses the concept of sustainability, which has been defined (Brundtland Report) as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
In a sustainable energy market, the quantity, quality, and utility of energy improve over time. Sustainable energy becomes more available, affordable, usable, and reliable. Energy consumers do not borrow from the future; they subsidize their progeny by enabling the expansion of technology and upgraded infrastructure.
The catchphrase sustainable energy encompasses the goals of security and reliability, energy availability, and environmental progress. Critics of industrial modernism censure fossil fuels, beginning with coal and continuing with oil. Relatively cleaner-burning natural gas is preferred of the three, but sometimes only as the transition fuel to an envisioned post-hydrocarbon economy.
Market failure is alleged where private benefits from producing and using carbon-based energies create net social costs (more costs than benefits). It is the invisible hand in reverse, whereby self-interested action creates a so-called negative externality. But is this the case?
Statistics support the conclusion of increasing energy sustainability, not its opposite, whether measured in terms of air emissions or resource development. Regarding the latter, the natural science concept of mineral fixity—and thus depletion with every extraction—is contradicted by the business and social science reality of replenished supply and net reserve additions from entrepreneurship, or in this case, resourceship.
Feared mineral depletion and the false allure of renewables have colored energy economics and public policy from the beginning. W. S. Jevons pessimistically calculated the coming end of Britain’s coal abundance. Samuel Insull, a resource pessimist, feared the decline of coal supplies and saw natural gas as but a fleeting respite from the past and future of gasified coal.
In 1981, leaders of the natural gas industry voiced their pessimism about future supply and prices. “Domestic oil and gas will never be in an oversupply position,” said Jack Bowen of Transco. “Planning is going forward for the day when the market may require a versatile substitute fuel for natural gas,” stated Robert Herring of Houston Natural Gas.
Both gentlemen, heading the largest interstate and intrastate gas pipeline systems in America, respectively, would be proved wrong within a year.
“Peak gas” fears, not only running-out-of-oil concerns, are not new.
Expanding ‘Depletable’ Resources
The paradox of growing exhaustible or depleting minerals—such as oil, natural gas, and coal—can be explained in terms of improving knowledge and expanding capital. “Knowledge is truly the mother of all resources,” Erich Zimmermann concluded.
Julian Simon called human ingenuity the “ultimate resource,” a nondepletable, expansive resource. “Discoveries, like resources, may well be infinite: the more we discover, the more we are able to discover,” Simon said. This was the opposite of a “closed system,” Simon found, allowing “human beings … [to] create more than they destroy.”
 Rising energy-related emissions of carbon dioxide (CO2), a greenhouse (global warming) gas, is the exception to this trend. But CO2 is not a pollutant and has distinct environmental goods, not only environmental bads, to make it an externality of uncertain sign.
[NOTE: This excerpt is from the concluding chapter of Bradley’s new book, Edison to Enron: Energy Markets and Political Strategies (Wiley & Sons and Scrivener Publishing). Full documentation for this post can be found at Edison to Enron, pp. 491–493, and at http://politicalcapitalism.org/book2/pdf/Epilogue.pdf. Part II tomorrow will further examine the views of Erich Zimmermann and Julian Simon and revisit some of the false pronouncements of ‘peak oil’ and ‘peak gas’ advocates, such as James Schlesinger in the 1970s.]