Human ingenuity and natural resources

Let’s not forget to celebrate the human resources — knowledge, ingenuity, know-how, creativity, entrepreneurship, and imagination

by Mark J. Perry 

On Earth Day “events are held worldwide to increase awareness and appreciation of the Earth’s natural environment.” As we observe Earth Day this year, it might be a good time to appreciate the fact that Americans get most of their plentiful, affordable energy directly from the Earth’s “natural environment” in the form of fossil fuels (coal, natural gas, and petroleum). It’s largely those energy sources that fuel our vehicles and airplanes; heat, cool, and light our homes and businesses; and power our nation’s factories and raise our standard of living. Shouldn’t that be part of “increasing our awareness and appreciation of Earth’s natural environment” — to celebrate Mother Earth’s bountiful natural resources in the form of abundant, low-cost fossil fuels?

The chart above illustrates the importance of the Earth’s hydrocarbon energy treasures to America — in the past, today, and in the future. Over almost a one-hundred year period from 1948 to 2040, fossil fuels have provided, and will continue to provide, the vast majority of our energy by far (based on Department of Energy data here, here and here). Last year, fossil fuels provided almost 84% of America’s energy, which was nearly unchanged from the 85% fossil fuel share twenty years ago in the early 1990s. Even more than a quarter of a century from now in 2040, the Department of Energy forecasts that fossil fuels will still be the dominant energy source, providing more than 80% of our energy needs. So, despite President Obama’s dismissal of oil and fossil fuels as “energy sources of the past,” the Department of Energy’s own forecasts tell a much different story of a hydrocarbon-based energy future where fossil fuels serve as the dominant energy source to power our vehicles, heat and light our homes, and fuel the US economy.

Further, President Obama says we should invest in “energy sources of the future” – renewables like solar and wind — instead of focusing on oil. But again, the Department of Energy data tell a much different story. Even after investing billions of dollars in governmenttaxpayer subsidies in renewable energy, renewables provided only 7.5% of America’s energy last year, which was actually less than renewables’ 9.3% share in 1948, more than 60 years ago – that’s not a lot of progress for the politically popular renewables. When it comes to solar and wind, those energy sources provided only 1.8% of America’s energy in 2012 – an almost insignificant amount. Even in 2040, more than a quarter century from now, solar and wind together will account for only 3.6% of America’s energy, according to the Department of Energy, and all renewables together will provide less than 11% of the nation’s energy.

To further appreciate the Earth’s natural environment on Earth Day, we should celebrate the revolutionary technologies of hydraulic fracturing and horizontal drilling that have allowed us to access previously inaccessible energy treasures trapped in tight shale rock miles below the Earth’s surface. It’s an important point that those shale resources have been part of the Earth’s “natural environment” for thousands of years, but have only become usable natural resources in the last five years, because of the human resourcefulness that led to breakthroughs in drilling techniques.

As Thomas Sowell pointed out in his book Knowledge and Decisions:

The cavemen had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today. Although we speak loosely of “production” man neither creates nor destroys matter, but only transforms it – and the knowledge of how to make these transformations is a key economic factor.

Therefore, the full awareness and appreciation of Earth’s natural environment really only makes sense as a greater appreciation of the human resourcefulness and human ingenuity that transform natural resources like sand into computer chips, and shale oil and gas into usable energy products. Mother Nature provides an almost infinite abundance of natural resources, but without any “instruction manuals” that tell us how to process those resources into useable products that improve our lives. Therefore, on Earth Day, let’s not forget to celebrate and appreciate the human resources — knowledge, ingenuity, know-how, creativity, entrepreneurship, and imagination, i.e. the “instruction manuals” – that transform otherwise unusable resources like shale hydrocarbons into energy treasures that will power our economy for generations to come.