No Physical Basis for Recovery

Cyril Lagel[This is a guest post from Chris, who has been looking into nonrenewable resource depletion for some time now. His conclusion is that, even if oil weren't the immediate problem, we'd still be "running out of planet" for many commodities without which an industrial civilization will collapse.]

The prevailing perception among the American public is that the hard times we are currently experiencing are temporary, that their leaders are implementing the proper mix of economic and political fixes, and that life will be back to normal soon. While this perception is entirely understandable given their historical experience, it is also entirely wrong. There will be no recovery this time.

Nonrenewable natural resources (NNR) are industrialized humanity's fundamental enablers. The industrial lifestyle (the "American way of life," if you will) is made possible almost exclusively by enormous and ever-increasing quantities of finite and non-replenishing NNRs: fossil fuels, metals, and nonmetallic minerals.

NNRs are the raw material inputs to the industrialized economy, providing both the building blocks that make up industrial infrastructure and support systems and the primary energy sources that power industrialized society.

NNRs comprise approximately 95% of the raw material inputs to the US economy each year. In 2008, the US used up nearly 6.5 billion tons of newly mined NNRs, or 43,000 pounds per capita. This is an almost incomprehensible 162,000% increase since the year 1800.

America's historical experience has been one of having continuously more and more with each generation. Since the start of their industrial revolution in the early 1800s, but especially during the 20th century, America's level of societal well-being and material living standards have improved dramatically.

[image error]20th Century USSocietal Well-beingWhile US population increased by 270% between the years 1900 and 2000, from approximately 76 million to over 282 million, per capita US GDP, which is a proxy for the average material living standard, increased by 610%, from less than $6,000 annually to nearly $40,000 annually (source). This increase in American societal wellbeing was made possible by ever-increasing utilization of NNRs, which were both abundant and affordable.

[image error]20thCentury USNNR Utilization
Total annual US NNR utilization increased by an extraordinary 2100% between the years 1900 and 2000, from approximately 300,000,000 tons to over 6,700,000,000 tons; while annual per capita US NNR utilization increased by 525% during the same period, from approximately 7,700 pounds to over 48,100 pounds. (Source: Mineral Information Institute, from USGS data)

For the entire 20th century, Americans reality can be summarized as "continuously more and more." This being the common experience, it is little wonder that a cornucopian worldview had become firmly entrenched within the American mindset. Most Americans firmly believe that we can achieve perpetual economic growth, continuous population expansion, and ongoing improvement in material living standards through ever-increasing utilization of the earth's unlimited supplies of NNRs.

But, as their designation implies, NNR supplies are not unlimited. NNR reserves are not replenished on a time scale that is relevant to human history. Moreover, economically viable supplies associated with the vast majority of the NNRs that enable an industrialized way of life are becoming increasingly scarce, both domestically (in the US) and globally.

Domestic NNR scarcity increased throughout the second half of the 20th century and into the 21st, so that by the year 2008, immediately prior to the Great Recession, 68 of the 89 NNRs (76%) were scarce domestically. That is, domestically available, economically affordable NNR supplies were unable to meet US demand. NNRs that were scarce domestically included chromium, cobalt, copper, magnesium, natural gas, oil, potash, silicon, tin, titanium, uranium, and zinc. NNR imports provided fully 100% of 2008 US supplies in 19 of 89 cases (21%). NNRs for which the US was totally import-reliant included bauxite, graphite, fluorspar, indium, manganese, niobium, quartz crystal, rare earth minerals, tantalum, and vanadium. While the US has been able to rely increasingly on imported NNRs to offset ever-increasing domestic NNR scarcity, the world has no such safety net: there is only the one Earth, and it imports nothing.

By the year 2008, 63 of the 89 NNRs (71%), including coal, chromium, cobalt, copper, iron/steel, magnesium, manganese, natural gas, oil, phosphate rock, potash, rare earth minerals, titanium, uranium, and zinc, had become scarce globally. The planet is not running out of any NNR, but it is running short of many. That is, for an increasing number of NNRs, while there will always be plenty of resources in the ground, but there already aren't enough economically affordable resources in the ground to perpetuate an industrial lifestyle.

Global NNR scarcity is a permanent phenomenon that will persist until industrial civilization comes to an end. With the emergence of many newly industrializing nations in Asia, Africa and Latin America, global NNR requirements have increased meteorically since the beginning of the 21st century. Whereas some 1.5 billion people lived in industrialized and industrializing nations in the late 20th century, that number currently exceeds 5 billion, and most of these people have yet to even remotely approach their full NNR utilization potential.

Global industry's ever-increasing global NNR requirements are manifesting themselves within the context of increasingly constrained—i.e., increasingly expensive and lower-quality—NNR supplies. The cost reductions achieved through improvements in NNR exploration, extraction, production, and processing technologies have been insufficient to offset the higher costs of exploiting the remaining NNR deposits, which are smaller, less accessible, and of lower grade and purity. The earth cannot physically support the current—much less continuously increasing—NNR requirements. In fact, NNR scarcity had become sufficiently pervasive by the onset of the Great Recession to permanently depress future economic growth trajectories and societal wellbeing trajectories at both the domestic and global levels.

The pre-recession episode of pervasive NNR scarcity marked a transition point for the United States. Per capita US NNR utilization peaked in 1999 at 48,427 pounds per US citizen, while total US NNR utilization peaked in 2006 at 7,141,465,500 tons. (Source: Mineral Information Institute, from USGS data)

[image error]Peak US NNR UtilizationGiven the dramatic decreases in both per capita US NNR utilization (17%) and total US NNR utilization (21%) from their pre-recession peaks, it is almost certain that US societal well-being peaked permanently prior to the Great Recession. We should expect the average material living standards in the US will decrease over time, to be followed eventually by a population decrease as well.

[image error]Peak US Societal Wellbeing
The average US material living standard, as proxied by per capita US GDP, peaked in the year 2007 at $43,700, and decreased by 3.4% to $42,200 by 2010 (source). Total US population increased through 2010, and will likely continue to increase until widespread economic distress drives down the birth rate and the childhood survival rate while driving up the death rate.

The historical reality of "continuously more and more," which Americans had experienced since the inception of industrial revolution and had come to take for granted, is giving way to a new reality of "continuously less and less," for reasons that are entirely beyond of their control or ability to fix.

The perception among the American public regarding current "hard times" is therefore accurate. What the vast majority of Americans have yet to understand, however, is that, notwithstanding the increasingly ineffectual and transitory boosts from desperate government and central bank stimulus programs, their well-being as a society will now follow a permanently declining trajectory.

For supporting evidence and references, please request a draft copy of my forthcoming book "Scarcity—Humanity's Final Chapter?" Contact: coclugston at gmail dot com. See also www.wakeupamerika.com.

Bio

Since 2006, Chris has conducted extensive independent research into the area of "sustainability," with a focus on nonrenewable natural resource (NNR) scarcity. NNRs are the fossil fuels, metals, and nonmetallic minerals that enable all of modern industry. His previous experience included thirty years in the electronics industry, primarily with information technology sector companies. Chris received a BA in Political Science from Penn State University, and an MBA in Finance from Temple University.