The Problem of Exhaustible Resources

Are we likely to “run out” of oil? of iron ore? of other exhaustible resources? The debate is energetic, but, as I shall try to show, it is bound to be inconclusive and largely beside the point. It begs the real question: Which institutions are best suited to deal with the uncertainty about future discoveries of new reserves?

Positions on the exhaustion issue can, as a rule, be handily classified as Pessimistic or Optimistic. The Pessimists point to the obvious fact that the physical supply of these resources is shrinking. Once a barrel of oil is used—for fuel, synthetic fibers, whatever—it is no longer there. Even if the resource can be recycled, there is bound to be some loss in the process. Some amount is used up and disappears, forever.

SF

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Stephen F. Williams

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Are we likely to “run out” of oil? of iron ore? of other exhaustible resources? The debate is energetic, but, as I shall try to show, it is bound to be inconclusive and largely beside the point. It begs the real question: Which institutions are best suited to deal with the uncertainty about future discoveries of new reserves?

Positions on the exhaustion issue can, as a rule, be handily classified as Pessimistic or Optimistic. The Pessimists point to the obvious fact that the physical supply of these resources is shrinking. Once a barrel of oil is used—for fuel, synthetic fibers, whatever—it is no longer there. Even if the resource can be recycled, there is bound to be some loss in the process. Some amount is used up and disappears, forever.