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Resource Consumption

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Outline

1. Resources and Development
• Resource consumption and economic development
• Justification of unequal resource consumption
• Current concern with pollution rates, greenhouse effect
2. Petroleum
• Uses
• Formation
• Distribution of Production
• Distribution of Consumption
• Growth in Consumption
• Estimates of Remaining Supply by Country
3. Other Resources
• Natural Gas
• Coal
• Nuclear
• Wind, Sun, Ethanol
4. References
5. Review Questions

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Resources and Development

The role that resources play in the economic development of a nation is evident in our own country. The U.S. consumes vast quantities of fossil fuels to supply the energy needed to run cars, produce electricity, and heat buildings. In addition, various minerals and metals are needed to build the structures and machines used in everyday life. The extent of development of a nation is therefore directly tied to the rate of consumption of these resources. Since these resources are unevenly distributed throughout the world, countries that consume more than they can produce domestically must rely on foreign nations that have a rich stock of the needed resource. This means that much of the economic development of nations such as the U.S. is dependent on the availability and set prices of resources from foreign countries. As an example, many people attribute the economic growth of the U.S. during the 1990’s to the low price of petroleum.

The rate of consumption of resources per capita varies greatly by country. The U.S., for example, consumes 25% of the energy produced in the world while only having 4.5% of the world’s population. Much of this is attributed to the difference in extent of development of the various nations. This implies that every nation aspire to consume more resources and thereby develop further. Greater resource consumption is therefore justified by claiming that these nations produce more goods such as food and medicine than other countries. While this is partially true, many developed countries particularly in Europe produce as many goods per capita as the U.S. while using less energy. These countries clam that the U.S. is inefficient in its usage of energy. Less developed nations also say that the U.S. doesn’t deserve the use a greater share of the world’s resources because every citizen of the earth should have the opportunity to consume the same amount of resources in their lifetime.

With the consumption of resources come undesired byproducts that pollute the environment. In particular, the combustion of fossil fuels releases large quantities of carbon dioxide into the atmosphere. This gas in the atmosphere allows sunlight to pass through it, but acts as an insulator as the heat tries to escape. The increased level of this gas in the atmosphere leads to the greenhouse effect, where the average temperature of the world increases. This may have devastating consequences such as melting of the polar ice caps and rising of the ocean levels. Other byproducts of combustion cause smog in urban areas, and lead to acid rain that can affect plant life thousands of miles away. Alternative forms of energy must therefore be found that have less impact on the environment. Pollution is seen by many as one of the biggest threats that large consumption of natural resources poses to our society.

Petroleum

Petroleum has a wide variety of uses in our society. These uses have become essential to the functioning of our nation. As crude petroleum is refined, several products are extracted that are useful. These include gasoline, heating oil, kerosene, and diesel. Petroleum byproducts are also used to create plastics and synthetic rubber. These plastics are used to make a variety of goods needed for everyday life. Fertilizers are also produced from petroleum. Most importantly, petroleum byproducts are used to create energy to power cars, produce electricity, and heat homes.

Fossil fuels are formed from the decomposition of plants and animals over millions of years. Depending on the type of life and the area in which it decayed, different types of fossil fuels are created. Petroleum in particular comes from plankton and other microscopic oceanic life forms that settle and anaerobically decompose over millions of years. High pressures from the movement of the tectonic plates are also required. Coal originates from trees and land animals that undergo a similar process. Because these fossil fuels ultimately come from the energy of the sun, it is as if we are using up the energy of the sun stored by plants over millions of years. Due to the length of time needed to form these fossil fuels, they are considered a non-renewable resource. This means that we are using them up faster than they can be replaced naturally. Best estimates show that only approximately 100 years of petroleum and 300 years of coal remain in reserves. It will therefore have only taken us 300 years to consume what took millions of years to form. The largest oil reserves are found in places that used to be near the equator. This is due to the large amount of sunlight and lush tropical zones found near the equator that promote large quantities of plant and animal life. These areas that used to be near the equator move over time due to the tectonic plates, causing many sources to be found far from the equator. In addition, many reserves are located far off-shore, making it very difficult to drill for them.

The production of oil varies widely by country. Much of this obviously depends on the amount of reserves that a country has. The other important factor is demand. Most Middle Eastern countries have large production rates, although they use very little of it domestically. The United States, despite having the second highest production rate, uses more than it can produce annually and must import greater than 50% of its oil from foreign sources such as the Middle East. In an effort to control oil prices, the Organization of Petroleum Exporting Countries (OPEC) was created in 1960. The eleven countries that belong control 40% of the world’s oil production and three quarters of the proved oil reserves. The organization can thereby fix the prices of oil by controlling the level of production. The chart below shows the distribution and reserves for the top 20 oil producing countries (billions of barrels). The countries with stars belong to OPEC.

TABLE 1. Current World Oil Status
(in billion barrels)

Country .	Current Production	Proved Reserves	R/P Ratio	Probable Additions	Cumulative Production
Saudi Arabia* United States Russia Iran* Mexico Norway China Venezuela* Canada UAE* United Kingdom Iraq* Nigeria* Kuwait* Brazil Algeria* Indonesia* Libya* Kazakhstan Angola	8.71 8.05 7.28 3.80 3.59 3.40 3.30 3.08 2.73 2.56 2.54 2.45 2.25 2.11 1.56 1.52 1.45 1.42 0.79 0.42	262 22 74 132 12 8 16 53 12 70 4 115 37 101 12 11 5 34 40 9	30/1 3/1 10/1 35/1 3/1 2/1 5/1 17/1 4/1 27/1 1/1 47/1 16/1 48/1 8/1 7/1 3/1 24/1 51/1 21/1	142 45 25 63 39 17 40 13 17 32 16 24 19 15 16 3 11 11 43 4	83.11 176.15 101.48 48 25.09 10.6 23.2 51.28 19.43 18.46 15.74 27.9 18.45 30.41 5.36 11.12 17.15 20.92 4.19 3.52

Source: World Oil production by Country (http://www.ncseonline.org/nle/crsreports/energy/eng-3.cfm)

Reserves of Oil (http://www.eia.doe.gov/emeu/international/reserves.html)

Oil- production (http://www.theodora.com/wfb2003/rankings/oil_production_0.html)

The level of consumption of petroleum of most major countries has risen. This indicates that these countries are becoming more developed. The U.S. consistently uses the most oil by a large majority, with China coming in second. The chart below shows the top 25 oil consuming countries in 1980 and 2005:

Top 25 Oil Consuming Countries

Rank	Country	Tons 1980	Tons 2005
1.	USA	794,100,000	944,600,000
2.	China	85,400,000	327,300,000
3.	Japan	237,700,000	244,200,000
4.	Russia Federation	n/a	130,000,000
5.	Germany	147,300,000	121,500,000
6.	India	31,600,000	115,700,000
7.	South Korea	24,100,000	105,500,000
8.	Canada	90,100,000	100,100,000
9.	France	109,900,000	93,100,000
10.	Mexico	48,700,000	87,800,000
11.	Saudi Arabia	29,900,000	87,200,000
12.	Italy	97,900,000	86,300,000
13.	Brazil	55,000,000	83,600,000
14.	United Kingdom	80,800,000	82,000,000
15.	Spain	52,200,000	78,800,000
16.	Iran	31,000,000	78,400,000
17.	Indonesia	19,700,000	55,300,000
18.	Netherlands	38,600,000	49,600,000
19.	Thailand	11,600,000	45,600,000
20.	Singapore	9,500,000	42,200,000
21.	Taiwan	19,700,000	41,600,000
22.	Australia	29,700,000	39,700,000
23.	Belgium & Luxembourg	26,000,000	39,500,000
24.	Turkey	14,800,000	30,000,000
25.	Egypt	13,200,000	29,200,000

Source: World Oil Stats (http://www.xist.org/default1.aspx)

All of these countries are highly developed. The underdeveloped countries, in contrast, consume very little of the world’s oil.

The rate of consumption of petroleum is steadily increasing throughout the world. In 1997, the total world consumption of energy was at 380 quadrillion BTU. This figure is projected to nearly double in the next 20 years as indicated by the chart below:

Source: World Energy Consumption (http://www.eia.doe.gov/oiaf/ieo/world.html)

This is largely due to the increase in the consumption projected for the developing countries of Asia and Latin America. These countries are expected to double their demand for nuclear energy in the next 20 years. The chart below shows the projections for nuclear energy usage of developing countries:

Source: World Energy Consumption (http://www.eia.doe.gov/oiaf/ieo/world.html)

The highly developed countries show slow increases in oil usage over the next 20 years. The graph below shows this trend:

Source: World Energy Consumption (http://www.eia.doe.gov/oiaf/ieo/world.html)

The known oil reserves are scattered unevenly throughout the world. The largest reserves are found in the Middle East. Saudi Arabia has the largest proved oil reserves at 160 billion barrels. The other Persian Gulf countries of Iraq, Iran, and Kuwait also have some of the largest reserves in the world. The United States originally had a fairly large endowment of oil, much of which was located in Texas, Louisiana, Mississippi, Oklahoma, and Alaska. However, the U.S. has already consumed about 2/3 of this original amount making it the largest cumulative producer of oil. The western nations of Venezuela and Mexico also have substantial oil reserves. In Europe, Russia has the largest oil reserves at 49 billion barrels. Much of this is located around the Caspian Sea. The United Kingdom also holds large reserves in the North Sea off the shore of Great Britain. Other African countries such as Nigeria, Libya, and Algeria also have small amounts of oil reserves. The table below shows the distribution of original oil endowments and optimistic remaining reserves (billions of barrels).

Country	Original Oil Endowment	Remaining Oil
Saudi Arabia* Russia United States Iran* Iraq* Venezuela* Kuwait* UAE* Mexico China Libya* Canada Kazakhstan Nigeria* United Kingdom Indonesia* Norway Brazil Algeria* Malaysia	377 262 260 152 149 130 128 118 96 87 56 49 47 41 38 34 31 27 19 14	304 99 67 195 139 66 116 102 51 56 45 29 43 56 20 16 25 28 14 10

* = OPEC Members

Source: World Oil production by Country (http://www.ncseonline.org/nle/crsreports/energy/eng-3.cfm)

Other Resources

Natural gas as an energy source is still quite abundant. Its usage has also increased greatly. It is very clean burning and has very little harmful byproducts besides carbon dioxide. It is difficult to transport, however, and it must be liquefied in order to be moved safely. Natural gas forms when coal and petroleum undergo further decomposition under pressure. Pockets of gas can be found throughout the world, although the greatest reserves are suspected to be under Siberia in Russia.

Coal is another fossil fuel that is widely consumed. It is mainly burned to produce electricity. The U.S. has large coal reserves, much of which is strip-mined from the Powder River Basin area of Wyoming. Much of Asia, including China, also has large reserves of coal. The coal deposits in Europe have been largely depleted. This is because most of it was used to fuel the industrial revolution in Europe in the 1800’s and 1900’s.

Fifty years ago, nuclear power seemed to hold the promise of solving the world’s energy problems. It was very abundant and produced large amounts of energy. It was soon realized, however, that the toxic radioactive waste generated from nuclear facilities was difficult to dispose of and posed a major threat to humans and the environment. It has therefore had little growth in usage over the past 30 years in the United States and currently accounts for about 20% of the power produced domestically. There are several countries that have do depend heavily on nuclear power currently. France and Germany get upwards of 90% of their energy for electricity from nuclear power.

Several other forms of energy are utilized in small pockets throughout the world. Wind power is used where large flat expanses of land lead to consisted wind aspects. Portions of the Great Plains and the desert southwest in the U.S. have many windmills. Scandinavian countries also use large amounts of wind power. Solar power can only be used where it is sunny throughout much of the year. This includes some of the desert southwest in the U.S. Ethanol is a renewable resource that is produced from is fermented corn. It is currently mixed with gasoline to produce a motor fuel that is better for the environment. Ethanol could be particularly profitable in the future in corn producing states such as the Midwest as oil prices rise.

References

How Fossil Fuels Formed [Online]. Available: (http://www.fe.doe.gov/education/energy2.html) [2007, April 9].

Elert, Glenn. Physics Factbook [Online]. Available: (http://hypertextbook.com/facts/2000/TanyaAlbukh.shtml) [2007, April 9]

Department of Energy Annual Energy Overview [Online]. Available: (http://www.eia.doe.gov/emeu/aer/) [2007, April 9]

World Energy Consumption [Online]. Available: (http://www.eia.doe.gov/oiaf/ieo/world.html) [2007, April 9]

Riva, Joseph P. Jr. (Aug. 18, 1995) World Oil Production by Country Available: (http://www.ncseonline.org/nle/crsreports/energy/eng-3.cfm)

Reserves of Oil [Online]. Available: (http://www.eia.doe.gov/emeu/international/reserves.html) [2007, April 9]

DOE Slide Show [Online]. Available: (http://www.eia.doe.gov/emeu/25opec/sld001.htm) [2007, April 9]

Country Analysis Briefs [Online]. Available: (http://www.eia.doe.gov/emeu/cabs/contents.html) [2007, April 9]

World Oil Stats [Online]. Available: (http://www.xist.org/default1.aspx) [2007, April 9]

Oil - production [Online]. Available: (http://www.thedora.com/wfb2003/rankings/oil/_production_0.html) [2007, April 9]

Review Questions

1. How much longer will oil last if we keep using it up at such a rapid rate? (A.) 100yrs (B.) 200yrs (C.) 300yrs (D.) 400yrs (E.) 500yrs

2. Which country has the greatest proved oil reserves? A) Russia; B) Iraq; C) United States; D) Kuwait; E) Saudi Arabia.

3. Which of the following major oil producing countries has used the most of its original supply of oil? A) Saudi Arabia; B) Russia; C) United States; D) Iran; E) Iraq.

4. Which country in the western hemisphere has the second greatest oil endowment after the United States? A) Canada; B) Mexico; C) Venezuela; D) Brazil; E) Colombia.

5. Which country has had the greatest cumulative production of oil over time? A) United States; B) Saudi Arabia; C) Russia; D) Iran; E) Iraq.

6. Where are the greatest reserves of natural gas suspected to be found? A) United States; B) Russia; C) India; D) China; E) Canada.

7. Which of the following are petroleum products? A) Gasoline; B) Plastic; C) Fertilizer; D) Only A and C; E) All the above.

8. The United States consumes what percentage of the world's energy? A) 75%; B) 55%; C) 40%; D) 25%; E) 10%.

9. What is the major cause of the greenhouse effect? A) El Niño; B) Too much vegetation; C) Deforestation; D) Combustion of fossil fuels; E) None of the above.

10. In 1999 which country was the world's second largest consumer of oil? A) United States; B) Russia; C) Germany; D) Japan; E) China.

11. Where does the United States import most of its oil from? A) Middle East; B) Europe; C) Africa; D) South America; E) None of the above.

12. Why is oil found in places that used to be near the equator? A) Animal Life; B) Many plants; C) A lot of sunlight; D) Lush tropical zones; E) All the above.

13. Which areas of the world use a lot of wind power for energy? A) Desert southwest in the U.S.; B) Scandinavian countries; C) Japan; D) Only A and B; E) None of the Above.

14. What percentage of nuclear power does France and Germany use to power their electricity? A) 90%; B) 75%; C) 60%; D) 50%; E) 25%.

15. OPEC controls what percentage of the world’s oil production? A) 80%; B) 60%; C) 40%; D) 20%; E) 10%.

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Submitted by Jonathon Goldie on 4/02/01

Updated by James Brust on 4/09/07.