Ugo Bardi: The Banquet of Consequences

by Adam Taggart

Everybody, soon or late, sits down to a banquet of consequences. ~ Robert Louis Stephenson "Growth is the problem; not the solution" says Ugo Bardi, Professor of Physical Chemistry at Italy's University of Florence and author of the recent book Extracted: How the Quest for Mineral Wealth is Plundering the Planet. In this week's podcast, Professor Bardi and Chris discuss resource depletion and its growing impact on geopolitical events and the world economy. In many ways, the future is becoming increasingly predictable due to the obvious math of resource extraction. Many of these predictions, by the way, are not new; but an accelerating preponderance of evidence now indicates we are quickly moving into the era where future forecasts are now becoming present reality. From Bardi's perspective, human society has been running at an unsustainably high rate of consumption given the resources it depends on. At some point, the limits of scarcity will force a contraction of the status quo. Bardi concludes that time is now: People ask me:  Are we running out of rare earths? Are we running out of oil? Are we running out of natural gas? And it is very difficult to give a simple answer to a question which is not the right one. Because if I say No, we are not going to run out of anything, then people just switch off their attention. They say Okay, if we are not going to run out of anything, thank you very much, bye-bye Professor. But really the question is not when we run out of something, but When are we able to afford a certain mineral commodity? Because it is a very well-known story, and it goes back to 19th Century, to the work of William Stanley Jevons, that the cost of extraction increases over time. Simply because you pick the low hanging fruit, so to say, in this case you pick a fruit, which is below ground and not from a branch. But it is the same concept, you have to go deeper and deeper to get the more difficult minerals, if you run out of the easy, the least expensive mineral that you can effect. So this is the problem, and at some point, you do not run out of anything, you run out of your financial capability of buying, of paying for this task of extraction. So I try to refrain from these questions. It is not a question of running out, it is a question of diminishing economic returns. A concept that also goes to Jevons, back in mid-19th Century. It is a very simple concept, diminishing economic returns. So you make less and less money, and in order to keep your profit, the company, which it reflects, has to raise prices, and at some point customer will say, well we cannot afford that anymore. At that point, it is like it is stuff running out, in the sense that you cannot have it anymore. It is still there, the mineral is still underground, but you cannot afford to extract it, and that is the problem. All commodities: mineral commodities, fossil fuels, whatever you have -- it is the same problem everywhere, because we have been mining for tens of thousands of years. But in the past one or two centuries, we stepped it up, the speed of extraction. Right now we have extracted the easy resources. Now we will start having troubles because we have to access the difficult resources. These resources are expensive. And if it is expensive then it means that you have to allocate resources to pay for these results. So that is having bad effects on the economy. My impression, and not just mine, is that many of the problems which we see today in the world, economic problems, political problems, strategic problems, geo-political problems, are due to the fact that resources everywhere are becoming scarce in the sense that they are becoming expensive. And at this point, you have to fight for what is left.

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