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The three facts of the energy crisis

By Alejandro Melchor JrAlejandro Melchor Jr. is on the executive board of the Asian Development Bank. / April 28, 1981



Three facts stand out regarding the energy crisis. First, within two generations 90 percent of the world's oil reserves are expected to be depleted, along with a number of industrially important raw materials.

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Second, societies caught in the squeeze between declining conventional fuels and rising prices will tend to reduce their reliance on these fuels and opt for renewable energy such a solar, wind, hydro, and bioresources (i.e., combustible and fermentable material of vegetable origin like wood, charcoal, dung cakes, and corn cobs).

Third, there will be a shift in political power from nations controlling international currencies to nations controlling commodities such as oil, uranium , and gold.

As to the first fact, one thing is apparent: we can no longer rely indefinitely on nonrenewable energy, until now the main subsidy of industrial development. this does not mean the end of technological society, or the end of energy. But it does mean that, until new sources are substituted, the industrial nations will face recurrent, possibly violent problems of adjustment, faced with the struggle to substitute new forms of energy itself accelerating social and political transformation.

The industrial countries will either turn inward for new substitutes and resources, buying from one another and gradually lessening their economic ties with the nonindustrial states, or they will continue buying from the nonindustrial countries but under totally new terms of trade. In either case, costs will rise substantially, and the entire resource base on civilization will be transformed with its energy base.

Furthermore, as a result of the energy crunch there is likely to be a worldwide shift in the factors of production from energy-and-material-intensive inputs to more labor-and-technology-intenstive inputs. This trend is already discernible. Consumer tastes are shifting away from large automobiles, electric stoves, expensive air conditioning, etc. Similarly, higher energy costs are encouraging the growth of service industries.

Life styles are also expected to be less oriented to material consumption and more toward services consumption. More and more, conditions ar favoring the services sector, which is relatively more labor and information intensive, especially the so-called knowledge industries. On the other hand, the mining, power-production, and manufacturing industries will face difficulties because of higher raw material and energy costs.

There is a growing disenchantment in the world with purely economic indicators of development such as gross national product; and a growing popularity of social indicators such as employment and education. New concepts and approaches like appropriate technology, cooperative development, human-settlements management, and human-relations development indicate an increasing emphasis on human resources-centered approaches to development.

In fact, there is a fast-spreading recognition around the world that a society that is morally, aesthetically, politically, or environmentally degraded is not an advanced society, no matter how rich or technically sophisticated it may be. In short, we are moving toward a far more comprehensive notion of progress -- progress no longer automatically achieved and no longer defined by material criteria alone.

These shifts in human attitudes and perceptions reflect a disillution with material growth and environmental degradation that has brought with it a renewed interest in bio-resources for conversion to energy and by-products to provide developing countries the short-to-medium term increment to energy supply and possibly a cleaner source for energy supplies in the longer term.

Although new in our energy calculations, bioresources have been with us for a long time. Until not too long ago, all of mankind existed mainly on the basis of renewable resources. In fact, the majority of humanity, the large bulk of whom live in developing countries, still do.

The developing world is amply endowed with biomass resources. And these resources are well suited to meet the widespread need for energy in rural areas where they may prove economical sooner than in industrialized countries. However, there are still many social, political, and economic problems to be overcome in order to realize the full potential of biomass resources. But, paired with a strong energy conservation approach and adopted as a complement to strengthen an existing energy mix, bioresources open a promising new array of alternative paths to the heretofore capital-intensive development process that would take into account a community's development and an opportunity to reorder the urban-rural balance.

Failure to realize the full potential of biomass resources will reinforce the disenchantment of the poor nations with the international order, the growing worldwide consciousness of resource scarcities, and the increasing value of strategic commodities like oil, uranium, and gold. These developments will shift political power to certain commodity-producer nations and erode the political power of nations controlling international currencies and financial institutions.

The natural impulse to maintain one's global position or even to simply survive may give rise to a new crisis far more serious than the present: they grave implications of the increasing misery of the world's poor who are the real victims of the present situation may threaten the fragile balance that sustains a working environment for the world. The urgency of this potential crisis has imposed an obligation on all, rich or poor, to rethink traditional habits of thought, attitudes, and aspirations.

Mankind's hope will be that the approaching exhaustion of nonrenewable resources will work to move the world away from solely market or material determinism and more toward a system of moral values.