The world is heading towards an age of scarcity. Thanks to economic and population growth, key resources needed to power our economies and to ensure our well-being and prosperity are increasingly under stress.
For decades, developed countries have focused their attention on oil and gas supplies their scarcest resources as supplies have dwindled and prices risen, stirring anxieties and perpetuating empty promises about making the leap to oil independence in the near future. In actuality, the age of dependence is not only here to stay, but will also intensify and increase in the near future.
Although the share of oil and gas is expected to decline as a percentage of total energy sources, oil and gas will remain the most significant for the years to come. Demand for oil is expected to jump from 85 million barrels per day (mb/d) to 106 mbd by 2030, while demand for gas will climb from 2916 billion cubic meters (bcm) to 4434 bcm by 2030. A large part of this demand will increasingly come from emerging Asian economies. However, given that the oil and gas markets are fungible, changes in these markets will affect both developed and developing countries alike. To make matter worse, the surge in demand will be met by fewer suppliers, as reserves around the world are increasingly drying up.
While our scarcity story begins with oil and gas, it does not end here. Food, water, and minerals have also become pressing issues. The food crisis of 2006-08 was a wakeup call to the age of food scarcity. Indeed, the future holds grim prospect for food supply. While average growth in food production before the 2006-2008 crisis stood at 2% per year, the FAO projects that between now and 2018 the world will have an average growth of only 1.7% a year. Meanwhile, the worlds population will continue to grow, placing greater demands on food, and in turn water supplies, as large amounts of water are needed to produce agricultural products. By 2030, the gap between demand and supply of water will reach 60%. Like oil and gas, demand for minerals, especially high-tech metals, has also increased significantly in recent years, while supply has lagged behind. The projected rise in demand, especially among emerging markets, will strain supply given the investments and technology required to extract these resources. This is especially true for high tech metals such as rare earth elements, which require extensive investments in exploration and mining before they can be extracted.
With all four key resources under stress, their interactions will make scarcity of each resource worse and dependence ever more challenging. For example, while energy prices can be mitigated by green technology, the extraction of minerals needed to develop such technology depends on soft oil prices. In response to high fossil fuels, especially oil, bieofuels production has become attractive. But, the feedstock for biofuels not only consumes a significant share of crops like corn, sugar cane, potato, but also drives up prices of other crops. Moreover, the drive for biofuels is taking place at a time when demand for food is increasing. Taken together growth in human consumption and biofuels feedstock is bound to push demand for irrigated land and water supply to a new height. Moreover, unless energy prices are high, farmers do no have the profit incentive to switch to biofuels crops. In other words, biofuels faces an interesting dilemma: it cannot compete with low oil prices.
Clearly, we need a comprehensive framework that can balance our needs for today with our requirements for tomorrow. As illustrated above, the interdependence between these resources requires that our actions taken to address, for instance, food scarcity, does not compromise progress in addressing other resource scarcities. Thus, as we enter this age of scarcity, we need to think in a comprehensive manner and to act with speed and decisiveness. Only by doing this we can secure these resources we so greatly need to sustain our economies, well-being and prosperity, today and in the years to come.
