Nine Pounds of Gold and Peak Oil

What this NOAA article is saying is that it is not the absolute amount of a resource that matters — it is our ability to extract it economically. In the case of gold, it is highly unlikely that it will ever make sense to extract if from the sea. It is simply too dilute. So much for this “get rich quick” scheme.

With regard to gold, it really doesn’t matter how much the extraction process costs — the metal is not a fundamental necessity. But the same cannot be said of oil, natural gas and coal. It takes energy to find and develop new sources of energy. Eventually, there comes a point where the return is negative — it takes more energy to develop the new energy source than that source provides. We are reaching that point with fossil fuels. 

This point cannot be over-stressed. Whenever the topic of resource limitations comes up the initial reaction of most people is to consider the overall amount of that resource. For example, people may say, “There is plenty of oil in the ground so there is nothing to worry about.” But, as the example to do with the nine-pound gold bars shows, the key question is not “How much is available?” but “How much can be extracted economically?”

The answer to this question defines the topic of Peak Oil. 

Peak Oil does not mean that we run out of oil. Peak oil means that we run out of affordable oil.

One of the themes of these articles is that oil companies are in a position to provide much-needed leadership if we are to achieve Net Zero goals. However, these companies have a fiduciary responsibility to their shareholders. The fact that oil is becoming ever more expensive to find and extract is a further incentive for these companies to develop new business areas.