The recent letters relating to climate change highlight the positive impact actuaries can make and some pitfalls awaiting those who wish to get involved with this topic.
It is just three years since the paper Limits to Growth - The World is Not Enough was published in this magazine warning us that "demand (for oil) was outstripping supply" and "current reserves are not enough to meet the demand into the future - and yet-to-be-found reserves are questionable".
The paper was largely written by non-actuaries. It was supported by a research report presented by the Institute and Faculty of Actuaries without the qualification that it was written by the same non-actuarial authors: Resource Constraints: Sharing a Finite World. Implications of Limits to Growth for the Actuarial Profession.
The report contained extensive statistics and commentary, which neatly ignored the rise in US fracking activity and its then-expected continuation, and focused on the suggestions by some observers that published numbers for reserves had been deliberately exaggerated.
It is worthwhile noting how far removed the oil industry is today from the Malthusian forecast in that paper - in just three years. The estimated proved reserves in the most recent BP Statistical Review of World Energy (at end 2014) are 1.7trn barrels, compared with those (considered to be optimistic) in the 2012 paper of 1.2-1.3trn barrels.
The current price of less than $30 a barrel compares with the over $100 applying in 2012. While there may be political reasons for the low price, it still demonstrates that current supply availability to meet the world's needs in the foreseeable future is not a problem. Perhaps the authors could be called upon to comment.
Geoff Dunsford FIA
26 January 2016