Global demand will force U.S. to look at full range of energy options

State Geologist Vince Matthews can think of more than a billion reasons to expect increasing pressure to develop Colorado’s natural resources, and they all live in China.

A ravenous appetite for resources by the Chinese and another billion-plus residents of India holds serious implications for the United States in general and Colorado in particular, says
Matthews, director of the Colorado Geological Survey.

Thanks to the increased global demand, American consumers can expect higher prices.

Matthews also believes shortages of energy and other natural resources will force lifestyle changes in a country that still has the world’s biggest appetite for resources. As this happens, the country is likely to look to Colorado and its abundant supplies of fossil fuels and other minerals — particularly in western Colorado — to fill some of the gap.

MAN ON A MISSION

Driven by his concerns, Matthews has given presentations on this subject to more than 18,000 Coloradans over the past several years. He thinks the situation could end up like the one in the 1970s, when oil shortages led to talk of the West becoming a sacrifice zone to meet America’s energy needs.

These days, Matthews finds himself referring to “The Angry West: A Vulnerable Land and Its Future,” the 1982 book co-authored by former Colorado Gov. Richard Lamm. It focused in part on the immense push to develop western Colorado’s vast oil shale deposits before the 1980s shale bust.

Matthews hopes Colorado and the nation will look ahead to the resource demands to come.

For Colorado, proper planning could help it maximize the benefits while minimizing the negative effects to the environment and communities, he said.

“I think that if you think about these possibilities up front, if the push does come, you can manage it perhaps better. Not everyone wants the western U.S. being the sacrifice zone for the East,” he said.

One benefit of the global economic slowdown is buying some time, if only the nation will put that time to good work in planning for future growth in demand for resources.

“I’m hoping that we would take a little bit of advantage of this breather period to try to develop some kind of policy,” Matthews said.

What worries Matthews are the fast-developing economies in China and India and the raw materials they require.

From 2004 to 2006, China’s gross domestic product grew 10.4 percent, and India’s 8.1 percent, compared to 3.5 percent in the United States. Yet at $3.2 trillion for China and $1.1 trillion for India in 2007, their total GDPs were still mere fractions of the United States’ $13.8 trillion GDP, suggesting their potential for continued growth is huge.

As economies of China and India have grown, so has their oil consumption. Matthews says China imports 53 percent of its oil, and India 71 percent.

To Matthews, expectations for continuing global growth in demand for oil, even as production declines in 54 of the 65 producing countries, explains why companies are forging ahead with oil shale research and development efforts despite the lack of an upfront payback.

NOT ENOUGH TO GO AROUND

Americans are well-attuned to the world oil situation because it reflects itself in prices at the gas pump. But Matthews thinks there’s a general lack of awareness about the future global demands for energy and for strategic minerals, and about what that may mean for consumers and for resource-rich areas such as Colorado.

It’s not just about China and India’s demand for resources.

“It’s about them, us, the rest of the world,” Matthews said.

“Really, once China gets cranked back up, all these things are depletable resources, and we’re using them, have been using them, at an ever-increasing rate. There’s just not going to be enough to go around forever,” he said.

He thinks increasing global demand will force America to look at the full range of energy options, including coal, uranium, natural gas and renewable sources such as solar and geothermal, all of which Colorado has in abundance.

Matthews said he’s worried after hearing recent reports that some of the nation’s new natural gas plays in shale formations may not be as productive as expected. He thinks the nation is counting too much on natural gas despite lingering questions about the ability to replace diminishing reserves.

He fears the nation is too readily abandoning coal, which has been an important part of providing a stable electrical grid, rather than trying to resolve concerns such as how it can be used in a cleaner fashion.

Likewise, he thinks the country needs to explore whether issues surrounding nuclear power can be addressed. And with increasing global reliance on nuclear power, the state should expect a growing push to develop its uranium deposits.

HOLY MOLY

Beyond energy, rising global demand could translate into increased molybdenum mining in Colorado, along with development of other minerals as well.

Matthews fears the United States is left vulnerable by heavy reliance on imports for many vital minerals and materials. Some of these, such as zinc and manganese, have applications in photovoltaics and other alternative energy technologies that the U.S. is hoping to increasingly develop.

Matthews also is concerned about foreign companies’ involvement in U.S. natural resource development and where those companies’ allegiances will lie if resources become hard to come by.

For example, more than 80 percent of cement manufacturing in the country is by foreign-owned companies.

But Matthews’ big focus is what rising resource demands will mean for Colorado.

“The real thing is: As Coloradans we need to recognize that there can be pressure to develop our resources. And how do we think about this as far as how we deal with that kind of pressure?” he said.

Reeves Brown, executive director of western Colorado lobbying group Club 20, has heard Matthews’ presentation. He thinks it serves as a reminder that the region is blessed with resources and should do whatever it can to access them in a manner that protects the environment and communities.

“I think we are well-positioned and very capable in Colorado of striking that balance,” he said.

Pam Kiely, legislative program director for Environment Colorado, said it’s important not to let natural resource decisions be guided too much by today’s mindset. A renewable energy advocate, she said resource challenges are so great they require bold thinking, which goes beyond concepts such as trying to figure out how to make coal cleaner.

“Really, we can and should be looking at not what is in the realm of what we’re currently doing, but really thinking what we could be doing, what we should be doing,” she said.


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