GLOBAL RESOURCES ANALYSIS


LIMITS | RESOURCES


Resources are the elements and energy that our planet has formed in millions of years, and that are exploration able by us here and now. By their millions years period of forming, it's very clear to everybody that it's a fact that these resources are finite at least sometime in the future. This is the most important problem of resources: they're all not renewable and we can use them till they (in terms of economic -is relatively easy- exploration) are run out and than they are no longer available (or only by severe higher exploration costs). Resources problem number one. There is only a certain volume present (and that is the case by resources), there is no growth in this (and that is the case by resources: it takes millions of years to form them), the new recoveries are slowing down in high speed to always zero (and that is the case by resources) and there is a major write down on discoveries of the past by too positive projections and by too expensive or only partial possible exploration (and that is the case by recourses). Each of the above facts has a major impact. Therefore the current and future supply of resources is under an increasing load of pressure. Problem two is: By the suddenly fast increasing global prosperity (which literally nobody has expected that it would happen so quick in mainly Asia) the process of using the available resources has speed up severely by this strong increasing demand out of the emerging countries. Hereby by the end of many resources has suddenly come in substantial speed forward. This has had a major self-enforcing/self-esteem impact on resources rich nations. They are the ones that know the resources situation the best. They are 1) scarced by this high speed depletion of their national resources and want to use the income of their resources as long as possible to develop their countries to sustainable prosperity 2) sees that increasing production only lead to less better prices current and future prices and also lead to a much quicker depletion of their natural resources. These two major facets/emotions are the reason they almost all have nationalized their resources. An example: in the '70ties the Oil Big Five had more than 70% of the proven global resources, today their market share has declined severely, today they own only 10% of the global proven reserves, without there was any significant huge new discovery that has entered the market, and even this 10% is continuous under high pressure by new origin state taxes, that doesn't allow them to take them the full profit of these 10%. Their profits are huge due to high oil prices and less investments, but their market share is dropping each year. When in times of high market prices and huge profits, profits not are used for new explorations, but for re-purchasing own stocks (ironically named: stock retirement) you know that their dominant role of the past is over. And the new (origin countries based) players, doesn't stay home, they enter offensive the world markets: Even Gazprom want to buy or build a consumer gas brand in each Western European country. PetroChina is growing gigantically in many African countries. The high market prices these days are formed by the (technological) limiting supply by the origin nations. These nations have taken over the market and the twilight zone between the old and the new situation is a situation of under investment. Conclusion of all of this: regarding global resources there is a situation of higher costs of exploration, less supply by more difficult exploration, combined with more demand. These three facets that will take care of never seen high prices for resources (energy and elements). Elements are the real issue, they are really finite. Energy can be generated renewable.


Author: Gijs Graafland


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