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CIA, Russia, and resources

The CIA now says that its 1977 forecasts of Soviet oil output were too low. The sizable increase in estimates for the coming years has interest for at least two reasons:

* It tempers the outlook on Moscow's role in the oil-rich Middle East.

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* It comes just as a new challenge is being made to the common assumption that the world is reaching a time of scarce natural resources in general.

To take the specific matter of Moscow first, the earlier CIA forecasts had fed the idea that Russia would begin to compete for Mideast oil commercially -- and perhaps militarily -- by 1985. Soviet oil production was supposed to peak by 1980, and the world's largest producer of oil was expected to become an importer of oil by 1985. Instead, Soviet output has continued to grow, and the CIA has joined its critics to the extent of agreeing that Moscow will remain a net exporter of oil in 1985. Some Soviet watchers think the CIA forecasts may still be too low.

The upshot is not that Moscow can suddenly be assumed to have none of the designs on the Middle East that US strategists have stressed, and againt which they must prudently prepare. It can hardly be supposed that the bear's eye was not on the Gulf when it sank its claws in Afghanistan. Yet, if the new CIA estimates are borne out, Moscow at least would not have a domestic oil shortage to tempt it into Mideast adventures. Nor would it be entering the international oil market as a buyer and thus putting pressure on prices and supplies for the industrial and developing countries.

Indeed, a Swedish consulting firm, Petrostudies, said in a 1979 report that the Soviets have systematically played down their oil discoveries over two decades. It saw no likelihood of the USSR becoming a net importer for ten years at least. On the contrary, it cited a long-term Moscow policy to boost exports to the West to earn hard currency.

A CIA spokesman laid the USSR's higher production levels to a substantial increase in drilling in western Siberia. And this may bear on the second point mentioned above: the challenge to the common assumption that a time of resource scarcity is looming. For one part of the challenge involves the unforeseen events or technological advances that often have upset gloomy forecasts in the past.

The challenge is stated in the Atlantic Monthly for June by Julian L. Simon, professor of economics and business administration at the University of Illinois. Professor Simon has reservations about "technological" forecasting of resource supplies -- for example, estimating how much copper exists in the earth. He says it confuses abundance in the earth with economic availability. The latter can be greatly increased by a small change in price or a new method of extraction. Yet he notes that even the technology method offers hope: ". . . with relatively conservative guesses about future extraction developments, many qualified forecasters report enormous amounts of resources available --contrary to the glum stories that dominate the daily newspapers."

Alternative sources of energy are becoming necessary. But the director of the US Geological Survey in 1973 said he was confident that "for millenia to come" it would be possible to develop the mineral supplies needed to maintain a high standard of living for those who now enjoy it and raise it for the less well off in america and the rest of the world.

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Professor Simon cites past predictions of scarcity that have turned out to be wrong. When he turns to economic forecasting, he looks to a future of continued availability of mineral raw materials at prices growing smaller relative to other prices and to total income. He invokes a past history in which, for example, whatever the price of electricity in current dollars, an hour's work has bought more rather than less electricity each year. "The long-run trends make it very clear that both the cost and the scarcity of materials continuously decline with the growth of income and technology."

It is not a cornucopia of material resources that the professor finally hails. It is a cornucopia of "the human mind and heart" that ensures humankind's progress. Strife, politics, natural calamities may cause temporary shortages. Maybe the movement forward for each step backward is measured in fractions of fractions. But it is in the right direction, a nd there is no basic reason to keep it from continuing.

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