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Peak Oil
By Gordon Owen, Thu Dec 8th
Since corporations and governments are staffed by human beings,it's no surprise that corporate and governmental decisions aremarked by the same shortsightedness that we've been warned ofever since Aesop told the tale of the grasshopper and the ant;i.e., tactical decisions for the near term rather than strategicdecisions for the long term. True, some Asian corporations tryto look five years into the future and certain Europeangovernments require new construction to include energy-relatedfeatures that just don't pencil out at current energy prices,but those two cases are exceptions to the rule that decisionsare made based upon the next quarterly statement and the mostrecent poll or -- in the best case -- the current fiscal yearand the next election. Faced with a tightening of oil supply (only "the beginning ofthe end of cheap oil"), one might hope that the US governmentwould invest 3 or 4 years and a few tens of billions of dollarsin cash or tax incentives on strategic effort toreduce/eliminate dependence on foreign energy sources: * mostimportantly, establish sufficient grain production anddistillery capability to be able to use alcohol rather thangasoline for our internal combustion engines. (Most people don'tknow that when US forces took the Phillipines during WWII, allthose barrels of aviation fuel and truck fuel left behind by theJapanese were of no use because our engines ran on fuel producedby Standard Oil rather than by farmers.) * distributed acrossagricultural areas, set up facilities for anaerobic compostingof crop residues and manure. These produce methane (CH4), theactive ingredient of natural gas and 88 to 90% of its volume. Inaddition to its use in heating homes and generating electricity,natural gas can also be compressed and used to fuel ourvehicles. * again distributed but across desert areas, set upphotovoltaic facilities to tap solar energy with the electricityused directly or to electrolyze water into oxygen and hydrogen.High tech version would be two-pronged: (1) on-orbit facilitieswith power beamed to receiving antennas in those same desertareas and (2) with expensive solar panels at 16% efficiency andsuper expensive ones approaching 20%, we'd implement a Manhattenstyle project to put our best and brightest at work coming upwith a cheap photovoltaic film of maybe 3 or 4% efficiency thatcould be squeegeed onto flat surfaces across thousands of acresof sunlit desert. * possibly pursue similar efforts to tap wind,geothermal, and tidal energy sources. These efforts would leadtoward a future where a world population measured in billionscomes to adopt the Western mindset that light comes fromflipping a switch, drinking water comes from twisting a faucettap, and to go faster you just push down on the pedal. Theymight even lead to a future where a kid born in Iowa could hopeto go where no man has gone before. But gasoline packs more BTUs per cubic inch than any of thealternatives so even if/when oil goes to $100 per barrel none
ofthese efforts can show a profit this quarter or this year oreven before the next election. What's worse, they don't fit withthe unspoken assumption that what's good for the "awl bidness"is good for the USA. So, instead of those tens of billions beingstrategically invested over the next few years we got a shortterm tactical decision based on what's good for the oilbusiness. With Saudia Arabia (the #1 oil source) already onboard as one of the best friends that money can buy, with theTaliban unwilling to have a new pipeline across Afghanistan, andwith Saddam (the #2 oil source) threatening to price oil inEuros rather than dollars, we chose to spend a year (2003) and$84 billion to assure "the free flow of oil at market prices."Which also assures that Japan, Germany, and other non- oilproducers will continue to have to swap their currency fordollars in order to buy oil. It turns out that pursuing the freeflow of oil takes more than a year and a lot more than $84billion even though no oil flows from Iraq and even though Saudipipelines are now under attack, but there's no indication ofreversing course no matter who resides at 1600 PennsylvaniaAvenue.
Cheap oil means cheap food. As gasoline and diesel fuel passfour or five dollars per gallon (and gold passes $1,500 perounce), the biggest change in North America will be thatwholesale food markets in urban areas will no longer see trucksarriving with loads of vegetables from California, fruit fromChile, or wine and cheese from Europe. In the first place,fertilizers and pesticides are oil based so food will no longerbe cheap even at the source. And whether paying the freight fora ship from South America or a truck from California, ourcurrent food sources will become prohibitively expensivecompared to eating what grows within several miles of yourkitchen. Cheap oil also means cheap heat and cheap transportation. WhenNorth Americans can no longer afford to heat theiratrium-entried McMansions or commute from suburbia to theirurban jobs, we'll see a initial period of workers sleeping inthe parking lot and commuting once a week to join their familiesin huddling around the woodburning stove they installed in thefamily room after putting up plastic sheeting to separate thatarea from the rest of their unheated house. During this initialperiod, when it gets warm they'll be planting vegetables in theback yard and hoping their drafted son lives to come back fromVenezuela. Depending on how long it takes for them to realizethat the pension they've thought they were earning is imaginary(or will be so diluted by inflation as to be meaningless), theymay or may not harvest that first backyard crop before they quitgoing to work and simply begin trying to survive. The words"social disorder" don't begin to describe what life will be likeas gold goes from two or three thousand dollars per ounce tobeing recognized as a store of value not to be measured indollars. When the dust settles (maybe two years after what's left of UScentral government gives up on pursuing what's good for the "awlbidness"), the North American economy will be the same as therest of the world: * local populations using mostly localresources * worldwide population the same as in 1850 plushowever many more can be supported by the extent to which localpopulations succeed in (a) recreating the age of the coal-firedsteam engine and (b) establishing alternative renewable energyresources * an ounce of gold approximates the annual wage of askilled worker. The above paints a glum picture. But note that it's the outcomeof shortsighted decisions made by organizations, both corporateand governmental. At the level of the individual, there'snothing to prohibit each of us from heeding the lesson Aesoptaught more than two thousand years ago. Be an ant rather than agrasshopper. Instead of doing what feels good today, do what'ssmart for tomorrow. Put away some food for the coming economic"winter." Learn some useful skills and acquire the tools to gowith them. Consider moving to an area where your new neighborswill already have such skills. With less than one ounce of goldper person on the planet, buy a few ounces of real wealthinstead of that plasma television. Finally, if you like flushplumbing, look into having a couple solar panels and a 24-voltpump in your well. About the author:None |