The Environmental Cost of Cheap Raw Materials Policy

by Jerome Friemel (assisted by Tom Asbridge)

Evidently, the United States embarked on a cheap raw materials policy with the mistaken belief there was in infinite supply of all natural resources. Although some raw materials are unlimited in supply, such as solar and wind energy, others are renewable, with certain limits on quantity, as is the case with hydro-electric generation, and agriculture, timber, and fishery production. Other raw materials are not renewable at all, as is the case of fossil fuel energy, metal ores, etc., and some fresh water reserves.

By reviewing oil and natural gas prices over the years, one notices an interesting phenomenon. As long as our oil and natural gas producers were able to produce more oil then we were using, our market system declared all oil and its products to be of little value. That cheapness caused the annual consumption of crude oil to increase from 10 barrels per person in 1940 to more than 30 barrels per person in 1977. The OPEC oil embargo changed all of that. By 1984, annual crude oil consumption decreased to 24 barrels per person. Since the Gulf War ended, our per capita consumption of crude oil has shown some increase.

Had national policy valued crude oil at parity throughout the 20th century, it’s not likely our automobile industry would have continuously increased the size of a car from the Model T Ford of approximately 1,000 pounds, to the large luxury pavement-based “liners” that weigh in at more than 5,000 pounds. Critics quickly blamed the American automakers for this extravagance, but the real culprit was our cheap raw material policy. After all, the signals given to the auto industry by our market system was that consumers wanted large cars, and why not? In North America, gasoline was so cheap they could afford to drive large comfortable cars.

When the OPEC oil embargo induced fuel price increases, Americans by the droves switched to more fuel-efficient foreign cars. These imported cars were produced in countries where energy was valued much closer to “parity.” Those automakers built cars that were smaller and gave much better fuel mileage than did their North American counterparts.

North American automakers were simply responding to demands of consumers by building cars geared to cheap energy. Everyone was caught off guard when gasoline prices escalated. The results were catastrophic to the auto industry and to auto workers. America suffered irreparable economic damage because of its cheap raw materials policy. To gauge the damage one should ask: “How much nonrenewable fossil fuel has been wasted by autos, and how much damage was done to the environment, and how many North American auto workers never went back to work because of these imported cars?” All this, a result of deliberate public policy leading to cheap raw materials.

Americans have long been told of the importance of recycling. However, our cheap raw materials policy appears to be the major deterrent to recycling.

There is little incentive to hire a crew to dismantle an old building to salvage the useable lumber for use in another building when our market system declares a value on the trees in the forest so low that it’s cheaper to cut new trees for lumber. Then we use a bulldozer to push down the old building and haul that perfectly good recyclable lumber to the landfill – wasting non-renewable fossil fuels in the process.

There is no incentive to utilize the branches and trees trimmed from roadways, parks, and private property, and residences for home heating purposes, when it’s cheaper to heat homes with non-renewable fossil fuels. This potential “fuel” is usually buried in the landfill, or it may be burned on the site.

Allowing low prices for metal ore at the mine does little to encourage recycling because it’s cheaper to use ore than to use recycled metals. Also, keep in mind that whenever items of metal are buried in a landfill, more than just the ore required to produce the metal is lost forever. The fossil fuel energy used to convert the ore to metal is lost as well. Both are non-renewable.

It would be interesting to know how much non-renewable fossil fuel has been wasted by reckless use of electricity brought about by the cheap raw materials policy?

Mother Nature blessed us with a large ocean of fresh pure drinking water underneath several High Plains states: the Ogallala Aquifer. For years, energy was priced so cheaply that it became feasible to use non-renewable fossil fuels to operate pumps required to lift this pure drinking water from the ground to use as irrigation water. Ironically, the crops grown with irrigation simply added more grain to the so-called “grain surplus” and further depressed grain prices. Today, experts warn that a drinking water shortage looms on the horizon, saying that a barrel of drinking water may someday be more valuable than a barrel of crude oil!

In an attempt to survive declining grain prices, farmers went to the petrochemical industry for synthetic plant stimulants to increase crop yields. These insecticides and fertilizers, produced from undervalued oil and natural gas, made it possible for farmers to continue the production of undervalued farm commodities.

Many soil scientists now believe the heavy use of chemical stimulants is “mining” our nation’s farm land, and future generations will suffer as a result. As early as 1936, it was recognized by some scientists that our foods were declining in nutritional value.

Cheap feed grains eventually led to much greater use of grain to fatten cattle. As a result, large commercial feedlots came into being throughout the High Plains. Many such firms are owned by companies who have always been the beneficiary of cheap raw materials policy.

There is a widespread belief, although challenged in some quarters, that excessive feeding of grains may be responsible for channeling more saturated fats into the diet of the consuming public, in turn, raising cholesterol levels. If the belief is true, the result most likely is increased heart disease and cancer, contributing to a rapid escalation in medical/health insurance costs.

Some observers believe that the large commercial feedlots may have triggered a more sinister condition. Their school of thought holds that whenever livestock is grown or fattened in total confinement, the animals must live in their own wastes 24 hours per day. This condition lends itself to the propagation of many diseases, rendering the large feedlots impractical were it not for antibiotics.

The practice of feeding large amounts of antibiotics to livestock has been blamed by some reputable scientists for causing more strains of bacteria to mutate and become antibiotic resistant. These drug-resistant antibodies move right on up the food chain. The long-term effects of this phenomenon (if indeed it is true) are as yet unknown, however, the implications are staggering. The potential for human disease resulting from this vast concentration of not only fed cattle, but also hogs and poultry, should be reason enough for us to examine “cause and effect.”

The agricultural practices mandated by our “Cheap Raw Materials Policy” must not be allowed to escape the eyes of our Nation’s leaders. The “mining” of our natural resources (selling at prices that encourage waste, exploitation, etc.) must be examined. The security of generations yet to come is at stake. Depleted soils lead to the “desertification” of our environment. These immense problems are nothing more than the natural consequence of our society’s choices over the past few decades.

The “effect” is the mere mandate of the natural laws of the universe. The “cause” is our failure to obey or even acknowledge these simple natural economic laws.

As you can plainly see, our nation’s “raw materials policy” can bring on dire consequences, or lead to untold rewards. As a nation, the United States of America has a choice ............

What will it be?