Cheap Energy Means Economic Growth, But It’s a Bit More Complicated

I had an encounter at dinner with my wife and friends the other night that I found funny.  Someone asked me if I was aware that it was cheap energy that caused the improvement in the British economy in the Margaret Thatcher years.  I was a bit muddled.  Why the 1980s? Why Britain?  For that matter, why energy?  Cheap resources always drive economic growth.

I didn’t really take the fellow to task on this, but I responded with something I believe everyone should be aware of and use to inform their thinking on the subject: the only issue with cheap energy isn’t its effects on the economy; when that energy is derived from fossil fuels, it’s destroying the environment.  And this, of course, is becoming more the case with each passing year; where what we mean by “cheap energy” is stuff like shale gas and tar sands.

I’m not an opponent of economic growth, though I do believe that there are limits to growth on a planet of finite size with a finite amount of natural resources.  Having said this, there are certain areas of the planet that need to be consuming more resources, to stimulate the improvement of conditions for the poorest one-third of the population, boosting productivity, education, and reducing women’s fertility rates.

In any case, what all people of conscience should oppose is growth that comes directly and immediately at the expense of environmental catastrophe: climate change, ocean acidification, loss of biodiversity, skyrocketing rates of childhood cancers, etc.  We, the peoples of Earth, have no excuse for not developing a strategy that steadily migrates us away from fossil fuels over the coming decades.  We need a path toward the sustainable generation and consumption of energy, one that says that we will not permit the extraction of the last molecule of hydrocarbons from the Earth’s crust, merely to drive the GDP numbers and further enrich a few billionaires.