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Kennedy School Review

Topic / Environment and Energy

A Low-Carbon Future Is a Choice, Not Market Inevitability


We usually find gas in new places with old ideas. Sometimes, also, we find gas in an old place with a new idea, but we seldom find much gas in an old place with an old idea. Several times in the past we have thought that we were running out of gas, whereas actually we were only running out of ideas.

— Parke A. Dickey, Geology professor, September 1958

LET’S GET ONE THING STRAIGHT: We are never running out of carbon. Not tomorrow. Not in ten years or even in your lifetime. Ignore the environmentalists’ claims of an imminent carbon dry spell. They’re wrong. Carbon, or carbon-based fuels, will be around for decades to come.

Accepting that sentence seems to require reversing both conventional wisdom and everyday experience. Hubbert’s Peak, the idea that worldwide oil production will peak and decline, has crossed the Rubicon from academic musing into pop culture, cropping up in radio talk shows, in the press, and on television. A quick Amazon keyword search yields over four thousand returns for “peak oil,” with such uplifting titles as “The Party’s Over: Oil, War, and the Fate of Industrial Societies” and “The End of Oil: On the Edge of a Perilous New World.” It’s hard to think that so many authors, editors, and publishers are wrong.

Accepting infinite carbon also seems to fly in the face of everyday experience. Even adjusted for inflation, since 1976 the national average gasoline prices at the pump have increased from roughly $2.40 to $3.40. For those of us old enough to remember (a group that includes essentially all of Congress), since the 1973 oil crisis virtually every president has prodded us with persistent reminders about the importance of energy independence and the perils of foreign oil, sometimes ad nauseam; indeed, recently President Barack Obama praised domestic oil production in a weekly address. So how am I here proclaiming, George Wallace–style, carbon fuel now, carbon fuel tomorrow, carbon fuel forever?

My answer is that we are too focused on the wrong issue. While our traditional sources of oil and gas are indeed drying up at dizzying rates, there are still plenty of other sources we can turn to. Our ability to keep running our lives on carbon doesn’t have to fundamentally change if we don’t want it to. We need to decide where we want to prioritize and fund technological innovation; discovering new inventions and techniques to find and extract hydrocarbons, or developing better technologies to power our future in new different ways. Scarcity won’t force us to decide, because, well, hydrocarbons aren’t scarce.

Part of the fault for the perceived scarcity can reasonably be placed at the feet of national energy supply forecasts, which typically don’t take into account technological game-changers because they’re hard to predict. Think of a major airplane crash. You know one’s going to happen, but good luck trying to get the place and date right. In the U.S. energy market, the group tasked with forecasting through that uncertainty is the U.S. Energy Information Administration (EIA). Its mission is to “collect, analyze, and disseminate independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment.” However, the group’s fifteen-year energy forecast, which predicts what energy mix will be available, tells the reader up front: “The Annual Energy Outlook 2013 Reference case projection is a business-as-usual trend estimate, given known technology and technological and demographic trends.” Although some alternative cases are included, game-changers are ignored. For a period that’s seen the rise of the Internet, the War on Terror, the election of the first non-White president of the United States, the iPhone, Netflix, Facebook, and the Great Recession, the last fifteen years make that assumption pretty hard to swallow.

It’s not hard to see how you can be in a final countdown–style mindset when your own government’s leading document designed to inform policy makers treats the future as the perpetual reincarnation of the present. Yes, trusting in the invention of new technologies to exploit known but currently uneconomical resources isn’t something that can be quantified easily for a report, but neither does ignoring that reality help us understand what our options for the future really are.

So where is all of this fuel coming from?

To find it, we need to update how we think about the earth and its resources. Most of us have the wrong mental picture of what’s under our feet, helped along by those pancake-stack diagrams of rocks that are probably the only thing you remember from eighth grade earth science. The earth is not a cookie jar from which we can lift the lid and pull out barrels of crude. Rather, it’s a sponge; the harder we squeeze, the more we can get. Plus, there are always new nooks and crannies to explore. That makes it much harder for us to know how much we have, or where it is, or if it’s feasible to recover.



On the squeezing half of the equation, we’ve been getting better at increasing yield from known reservoirs via “enhanced recovery” techniques such as water and carbon dioxide flooding. Those basically boil down to injecting stuff into a reservoir to push the last bits of oil out. CO2-enhanced recovery might even sequester some of the CO2 permanently, so there’s the world’s most tarnished silver lining for you. However, the real story is in the nooks and crannies. The harder we look, the more sources of usable oil and gas we find. As easily accessible resources diminish, we extended our search to the ocean basins at ever greater depths. The payzone for the ill-fated Deepwater Horizon was 10,685 meters below mean sea level, just a hair shy of the Marianas Trench, the deepest point of the ocean (10,971 meters). To keep perspective, the first commercial oil well in the United States, the Drake Well in Pennsylvania, was just over 21 m deep, and people thought Edwin Drake was crazy for even trying.

Then there are unconventional sources of carbon fuels. There’s been no bigger story here than shale gas. The EIA predicts shale gas could increase the United States’ predicted reserves of natural gas by 50 percent. Add to shale gas other unconventional sources that we haven’t seriously touched yet—like tar sands, shale oil, tight gas, coal-bed-produced methane, and natural gas hydrates— and you start to see abundance instead of calamity. While onshore conventional oil and gas are on the way out, there are more than enough other sources to make up for the decline. Shale gas also took the bite out of Hubbert’s Peak, which predicted max production for the United States to occur around 1978. Contrary to these predictions, since 2005, production has risen sharply to a new all-time high of more than 25 billion cubic feet of gas.

Let’s break down the idea of the fracking “revolution”—a buzz term that isn’t doing anyone any favors. In effect, none of the boom can be attributed to new discoveries: the first shale gas–producing well was tapped in 1821, when Abraham Lincoln was twelve years old. We haven’t developed these sources fully because we’ve had more easily accessible and cheaper options, or hadn’t yet developed the technology to do so. Successful extraction of shale gas was the product of a long, deliberate, logical, and methodical investment over a period of several decades in both extractive technology and geological expertise, enabled in large part by government research and mapping. Fracking isn’t a mushroom that sprung up in the night: it’s an oak tree that’s stretched upward for a long time, nurtured by incremental improvements along the way. As in every industry, there were breakthrough moments, but they came as part of a concerted campaign that has long directed countless engineers and geologists toward one goal: find a way to extract shale gas.

Hydrocarbons are big business; a big complex business that operates using a lot of very expensive, cutting-edge, and rather boring technology. In various forms (through the United States Geological Survey, the Department of Energy, and a whole string of national labs), the federal government had been laying the backbone of research and development (R&D), mapping, and feasibility testing for decades before private companies could start fracking in earnest, particularly in the more northerly of the two Dakotas. Like most new technologies, initial R&D is best viewed as a public good financed, like most public goods, by the government. Now that these technologies are reaching maturity, there’s plenty of investment by private companies like Chesapeake Energy, Devon Energy, Anadarko Petroleum, and Halliburton into further refinement and improvement. These companies are also plugging investment into infrastructure, including hundreds of thousands of drill rigs, thousands of miles of pipelines, and everything else that makes the wheels spin. The takeaway lesson is this: we made a willing choice sustained over decades to invest significant monetary and technological prowess into shale gas, and it paid off.

It doesn’t end with shale gas. With demand soaring from growing economies around the world, powerful market incentives exist to find more sources of hydrocarbon fuels and a ready-made, technology-rich, and capital-rich industrial apparatus eager to exploit them. In fact, in summer 2013, Japanese scientists announced the first successful mission to tap natural gas hydrates. Like shale gas, it was a breakthrough financed to the tune of hundreds of millions of dollars of government research. Keeping in mind that seafloor gas hydrates may contain up to ten times the previously known existing global natural gas supply, these sources can keep us humming along on carbon for a long, long time.

A limited understanding of our hydrocarbon resources isn’t that bad, it’s when you cross that misinformation with Econ 101 that things really start to take a turn for the worse. Most people think of fossil fuels the same way they think of land (fixed supply, unlimited demand); Economics 101 would say price will rise as supply shrinks, creating an ever-increasing incentive to switch to other energy sources.

If we look around, we can already see how that simple logic isn’t realistic. Look at natural gas prices—even with the need to develop new technology and access more challenging reservoirs, prices on natural gas are at the lowest levels in a quarter of a century. Oil prices have risen, but we’ve also gotten much better at using oil efficiently. According to the International Monetary Fund, in 1970, we needed over 0.3 tons of oil equivalent to produce about $1,000 of gross domestic product (GDP), while today we need half that amount to get the same return. That’s a trend that is predicted to persist over time, taking much of the bite out of the non-bubble price increases associated with extracting harder to reach hydrocarbons. Lastly, most of the cost-rise in oil has been due to demand-side increases, not supply-side costs. If we allow hydraulic fracturing and other unconventional sources to scale up to meet demand, price falls in the long run.

Our Econ 101 view of the hydrocarbon market is a faulty and dangerous one because it implies that market scarcity will guide us away from carbon fuels when the truth is that, until we drown ourselves on a flooded—or scorched—earth, we can have all the carbon we want. Global climate disruption is the real threat that lies at the end of the carbon road. Sure, we’ll reach a point where scarcity logic will kick in, but our greenhouse gas emissions will have long-past ravaged our planet by then. Our market misunderstanding hides a critical lesson we need to know to ensure a safe, healthy, equitable future for all of the world’s citizens: making the leap from carbon fuels is not market inevitability.

Our real challenge isn’t to extract what we perceive to be the last bits of carbon so we can survive until something better is ready, or fastidiously avoid intervention so that market scarcity can work its magic. Just in the past few years, we’ve already made the leap to hydraulically fractured reservoirs; that moment was the result of a long path of technological investment and innovation, and it happened because we consciously chose over and over again to make the investments to allow us to operate an economy that continues to rely on carbon fuels. Deliberately walking away from developing better extractive technology is the key decision we’re going to have to make if we want a fossil fuel–free future. If we’re not constrained by the supply, we are only constrained by our ability to obtain it.

Much of the time, the shift to other energy sources is seen as taking a gamble on untested technologies that don’t even exist and turning our back on dependable oil. That’s another faulty conjecture. With the depletion of many of the types of reservoirs we’ve been accustomed to drilling, we’ve needed to develop an entirely new technological apparatus to get at additional sources of hydrocarbon fuels (each of which is itself also a gamble). What we need to do now is recognize there’s no advantage to funding and encouraging better carbon extraction technologies. If it’s a gamble either way, why pick the inferior side?

Like all things, the choice is a story of technology, investment, and vision. The rather larger question remains whether our vision will be fixed on better technology for hydrocarbon extraction specifically, or better technology, period. We need to make an intentional choice to step away from carbon fuels and the climate disruption they will bring and toward a different future. We can’t rely on scarcity and the market to make that choice for us. Our journey down that path starts with accepting that we are never running out of carbon.


Adam Banasiak is a geoscientist currently studying at the John F. Kennedy School of Government at Harvard University.

1 Tabuchi, Hiroko. “An Energy Coup for Japan: ‘Flammable Ice.’” New York Times, 12 March 2013.
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