Global energy availability

One of the most common misconceptions about energy is that it is scarce or limited. In the popular imagination, the earth has a limited supply of
energy that humans consume whenever they heat or move anything. This scarcity perspective views energy consumption as a bad thing because any thing that consumes energy depletes our planet's finite supplies of energy. Reality is very different.

The total amount of energy resources available for humans to exploit is practically infinite, and beyond our ability to even quantify, let alone consume. The solar energy that hits the earth every day is hundreds of times larger than global energy consumption. The rivers of the world that run every hour of every day also contain more energy than global energy consumption, as do the winds that blow, and the hydrocarbon fuels that lie under the earth, not to mention the many nuclear fuels we have barely begun to utilize.

To begin with the most obvious of energy sources, the sun alone showers the earth with 3,850,000 exajoules of energy every year, that is more than 7,000 times the amount of energy humans consume every year. In fact, the amount of solar energy that falls on earth in one hour is more energy than the entire human race consumes in one year. The amount of wind energy alone blowing around the world is around four times the total energy consumed worldwide. Some estimates put the potential hydroelectric yearly power capacity at around 52 PWh, or a third of all the energy consumed in the world.

There are no accurate estimates of the amounts of hydrocarbon fuels that exist in the earth, but the closest estimate we have (proven oil reserves) is constantly increasing due to new discoveries, and at a pace greater than that of the increase in consumption of oil, as discussed in The Bitcoin Standard.

The belief that resources are scarce and limited is a misunderstanding of the nature of scarcity, which is the key concept behind economics. The absolute quantity of every raw material present in earth is too large for us as human beings to even measure or comprehend, and in no way constitutes a real limit to what we as humans can produce of it. We have barely scratched the surface of the earth in search of the minerals we need, and the more we search, and the deeper we dig, the more resources we find. What constitutes the practical and realistic limit to the quantity of any resource is always the amount of human time that is directed toward producing it, as that is the only real scarce resource (until the creation of Bitcoin). In his masterful book, The Ultimate Resource, the late economist Julian Simon explains how the only limited resource, and in fact the only thing for which the term resource actually applies, is human time. Each human has a limited time on earth, and that is the only scarcity we deal with as individuals. As a society, our only scarcity is in the total amount of time available to members of a society to produce different goods and services. More of any good can always be produced if human time goes toward it. The real cost of a good, then, is always its opportunity cost in terms of goods forgone to produce it.

In all human history, we have never run out of any single raw material or resource, and the price of virtually all resources is lower today than it was in past points in history, because our technological advancement allows us to produce them at a lower cost in terms of our time. Not only have we not run out of raw materials, the proven reserves that exist of each resource have only increased with time as our consumption has gone up. If resources are to be understood as being finite, then the existing stockpiles would decline with time as we consume more. But even as we are always consuming more, prices continue to drop, and the improvements in technology for finding and excavating resources allows us to find more and more. Oil, the vital bloodline of modern economies, is the best example as it has fairly reliable statistics. As Figure 20 shows, even as consumption and production continue to increase year on year, the proven reserves increase at an even faster rate. According to data from BP's statistical review, annual oil production was 46% higher in 2015 than its level in 1980, while consumption was 55% higher. Oil reserves, on the other hand, have increased by 148%, around triple the increase in production and consumption.

There is no energy scarcity problem, because energy cannot run out as long as the sun rises, the rivers run, and the wind blows. Energy is constantly available for us as humans to utilize as we like. The only limit on how much energy is available to us is how much time humans dedicate to ward channeling these energy sources from places where they're abundant to places where they're needed. All energy is ultimately free, but the costs lie in paying the supply chain of individuals and firms to transport this energy to where it's needed and in a usable form. It thus makes no sense to discuss energy itself as a scarce resource, which implies a fixed, god-given quantity for humans to consume passively. In its usable form, energy is a product that humans create by channeling the forces of nature to where they are needed. Like with every economic good other than bitcoin, there is no natural limit to the production of this good; the only limit lies in how much time humans dedicate to producing that good, which in turn is determined through the price mechanism sending signals to producers. When people want more energy they're willing to pay more for it, which incentivizes more of its production at the expense of producing other things. The more people desire it, the more of it can be produced. The scarcity of energy, like all types of pre-bitcoin scarcity, is relative scarcity, whose cause lies in the opportunity cost of securing resources.
The real scarcity of energy lies not in its absolute availability, but in its availability in the right times and places (e.g. high energy over short periods of time) when and where it is needed. Hydrocarbons have value because they're chemically stable, light, and easy to transport forms of energy, which lend themselves to usability for purposes that demand high power at any time and location in the world. Concentrated populations anywhere in the world can regularly access energy through the importation of relatively small volumes of hydrocarbons.