Resource frontiers

How certain or uncertain are we about future supplies of oil and gas, metals and minerals? Andrew Mackenzie, formerly head of BP Technology and now chief executive of Rio Tinto Industrial Minerals, picks his way through the predictions.

The materiality of life depends critically on the science of geology. Everything we can touch has been dug up or pumped from the Earth, pulled out of the air, or grown. Yet there are major differences, driven by contrasting economic and geological perceptions, between industries based on materials that exist as fluids in the Earth, like oil and gas, and those based on solids, like coal, minerals and metals.

Surging energy prices in part reflect a perception that Earth’s natural stocks of oil and gas are struggling to meet rising demand. A further factor on perceived scarcity is that political considerations are now more keenly felt. The geological conditions under which fluid hydrocarbons form and accumulate are well understood, so the large expenditures on exploration in recent times make it seem likely that most of the places where major accumulations of oil and gas could exist have been identified and, to some extent, assessed. With oil and gas, also, there have been huge advances in the technology of exploration and production, allowing most deposits to be imaged with some precision and extracted at reasonable cost. Hence, although forecasts of natural resources failing to meet demand are usually misplaced, the perceptions of longer term oil and gas supply on which such forecasts are built can have some basis.

Recent increases in metal and mineral prices have a different set of drivers. There are few perceptions that natural supplies of any important metal or mineral cannot satisfy growing demand in the long term.