Despite the new green revolution, which points to lofty targets to curb carbon-emissions and a future greatly underpinned by renewable energy sources, a Saudi oil-leader has said that when the situation of what can be provided by renewables is evaluated objectively, they can provide only a minute share of the total energy requirement. He told the Royal Academy of Engineering last week that oil, gas and coal would remain the energy sources of choice, and that there were plenty of them left.
Addallah Jum'ah recently stepped-down as CEO of Saudi Aram-co, which is the state-owned oil company, and his statements will prove a red rag to a bull, unsurprisingly for environmentalists, but also economists and oil analysts - many who have worked for years in the oil industry - who have good reasons to believe we are close to the peak of oil production, and in any case that oil will run short within the near future rather than that we have hundreds of years left, which Mr Jum'ah's estimate of a remaining 15 trillion barrels would seem to indicate.
It is true that the sum-total of renewable energy (geothermal, wind, solar etc.) accounts for only 1% of total energy used throughout the world. However, Jum'ah thinks that while renewable energy production will grow at a greater rate than oil production, it will remain small. He said: "The volume of new energy supplied by renewables will still be only half of the additional energy provided by oil or by gas and only a fourth of the new energy expected to come from coal."
The reality of economic growth - the basis of capitalism - depends on all kinds of resources, not only of energy but of metals and other finite materials. Without them we cannot climb out of the present or future recessions, or sustain a viable global economy, and there is a great danger to be had in overestimating resources. The investment banking industry massively overstated its assets, thus fooling Western economies into the degree of slack left in the system. There appears to be little resource surplus left, leaving one to speculate that we are experiencing the painful death-knell of capitalism.
If the same happens with the oil industry as did the banking sector, we will suddenly find ourselves in deep trouble. Jum'ah's figure of 15 trillion barrels of oil left is apparently derived by including all sources - not just conventional crude, but unconventional oil such as from tar sands, and presumably to arrive at such a huge figure, shale and coal liquefaction. None of the unconventional sources of oil are likely to be cheap, and it is the dearth of cheap oil that will do its damage to the world economies and bring an end to capitalism.
"Greens told no alternative to fossil fuels," By Domenic O'Connel and Jonathon Leake. http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6543964.ece