Consequences of Peak Oil

I began this blog with a definition of Hubbert’s Peak, namely, the maximum rate at which a resource can be extracted and used by a technological society. I mentioned Peak Oil as the most famous example of Hubbert’s Peak, and mentioned that while we in the industrialized West have enjoyed a fantastically high standard of living compared to the rest of the world, there are signs that the party’s over.

When thinking about what it means that this party’s over, there are implications which are obvious to most people. The impact of Peak Oil on personal transportation is one such consideration. Read the news or talk to acquaintances and you’ll hear all about how gasoline is getting insanely expensive. Many people are now trying to trade in their big, expensive luxury SUV’s and monster trucks for something smaller and more economical. In fact, a large number of SUV owners have seen the value of their vehicles drop steeply within the last year, precisely because these vehicles are so expensive to operate. These owners are finding out that they owe more on their SUV’s than the vehicles are worth. (Sources: “Being ‘Upside Down’ and Other Car Loan Hazards,” National Public Radio, 1 May 2008, http://www.npr.org/templates/story/story.php?storyId=90077688; “Economic Woes Dent Luxury Market, The Detroit News, 30 April 2008, http://www.detnews.com/apps/pbcs.dll/article?AID=/20080430/OPINION03/804300309) There are also regular interviews with the man/woman on the street filling up at a gas station, and news stories about how escalating costs of driving are hitting the poor especially hard. Over the last three months, the stories have taken a more ominous turn, with headlines about how high fuel costs are affecting trucking operations and airlines.

But cheap long-distance personal transportation is only one aspect of daily life that is now being threatened by Peak Oil. There are other aspects to consider – aspects which go far beyond the obvious. Crude oil has become the mainstay of the global economy. For instance, the use of petroleum for transport extends far beyond transporting commuters, tourists and soccer children. Because petroleum used to be cheap, and because petroleum yields a large amount of energy per unit volume, engines and vehicles which are fueled by petroleum have become the basis of our global economy. Petroleum has become the basis for cheaply selling clothes made in a factory in the Third World, or food grown on an industrial agribusiness plantation, or freight delivered by air. Without cheap and reliable supplies of crude, there would be no easy way to transport goods through the 10,000+ mile supply chains from the factories of China to the outlet stores located in the United States and other wealthy nations. Now that crude oil and petroleum products are becoming painfully expensive, the cost of big-box store items is also rising, because of increased costs of transporting goods to big-box stores. Meanwhile, the big global economic players have destroyed local economies and local producers of goods, by underselling them, so that there is no safety net on which to fall back in many parts of the world.

Food production is another thing being affected by Peak Oil, since modern globalist industrialized agriculture depends on petroleum-powered machinery, as well as petrochemical-based fertilizers and herbicides. Now that diesel fuel and petrochemicals are becoming more expensive, the cost of food is also rising. Of course, this is also due to crop failures caused by global climate change, as well as the evil choice the West has made to turn food into motor fuel, but that’s the subject of another post. And petrochemicals such as plastics are also becoming more expensive as a result of dwindling supplies of oil.

Petroleum, coal and natural gas are also used to supply power for generating electricity. In the Third World especially, diesel generators are used to supply prime power for the local power grid as well as mission-critical installations like telephone switching facilities and hospitals. But world supplies of diesel fuel are now extremely tight, since diesel is also the main component of home heating oil and jet fuel, and is the main fuel source for many cars in Europe. Some sources are predicting a worldwide shortage of diesel fuel as soon as this year (“Looming Diesel Shortage Could Mean Trouble,” Mining Weekly, 9 May 2008, http://www.miningweekly.com/article.php?a_id=131856, “World Power Crunch Tightening Diesel Market,” Reuters Africa, 29 April 2008, http://africa.reuters.com/business/news/usnBAN949650.html, “The Peak Oil Crisis: Diesel,” Tom Whipple, Falls Church News-Press, 15 May 2008, http://www.fcnp.com/national_commentary/the_peak_oil_crisis_diesel_20080515.html).

A shortage or spike in the price of diesel fuel also impacts the cost of raw materials, especially those that are mined, since these are almost always mined using diesel-powered machinery. This is one reason why coal recently became very expensive – coal, an energy source to which many have looked as an alternative. Unfortunately, nations are now having increasing difficulty getting coal. This is not only due to the rising cost of extracting it, but to its increasing scarceness (Source: “Arch Coal CEO Sees Worldwide Coal Shortage,” Reuters, 7 April 2008, http://www.cnbc.com/id/23998647/; “Coal: Resources and Future Production,” Energy Watch Group, March 2007, http://www.energywatchgroup.org/fileadmin/global/pdf/EWG_Report_Coal_10-07-2007ms.pdf)

Now, just as the German government has recently commissioned studies on the availability of supply of various energy sources, the administration of President George Bush also commissioned a few studies focusing directly on the subject of Peak Oil. These studies addressed the timing, likely effects, and recommended strategies to deal with a worldwide peak in global oil production. These studies are as follows:

1. “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” (also known as the Hirsch Report), Department of Energy, February 2005
2. “Energy Trends and Their Implications for U.S. Army Installations,” U.S. Army Corps of Engineers, September 2005
3. “Economic Impacts of U.S. Liquid Fuel Mitigation Options,” (DOE-NETL-2006/1237) (Hirsch Report #2), Department of Energy, July 2006
4. “Crude Oil – Uncertainty About Future Oil Supply Makes It Important to Develop A Strategy for Addressing a Peak and Decline in Oil Production” 9GAO-07-283), March 2007

Though these studies were commissioned from 2005 onward, there is anecdotal evidence that the Bush administration knew about Peak Oil much sooner. These studies all spoke of the seriousness of the threat posed by Peak Oil. The Hirsch Reports particularly warned of the massive social disruption that would likely result in the United States if the world experienced an oil production peak without having made timely preparation. And just what did our public servant and protector of the common good, our President, do with these studies? Surely he alerted the American public and frankly and openly told us what we were up against, didn’t he?

For a year and a half after the completion of the Hirsh report, it was not released by the United States government, and was only available for viewing on a high school website, whose webmaster eventually removed it. Finally a nonprofit citizen media advocacy group known as Project Censored obtained the Hirsch report and posted it for the world to see in July 2005. (Source: “Where is the Hirsch Report?”, Global Public Media, 24 July 2005, http://globalpublicmedia.com/articles/441) Only after this action did the government begin to post these studies and to speak in any public way about coming oil supply problems.

This failure of our government to warn us of an impending crisis is disturbing, though not surprising. On my blog, TH in SoC, in the post titled, “The Sins of the Right,” I wrote the following: “For most people, modern daily life is regulated by the present visible global economic system, also called the “official economy” by such agencies as the International Monetary Fund, or IMF. It is a system which was conceived and grew in the industrialized West, and the societies dominated by Western culture – Europe, the United States, and the wealthier nations of the British Commonwealth, such as Australia and New Zealand. For these nations, this system has produced a standard of living far above anything experienced by the majority of the world’s populations. The corporatist leaders and oligarchs who rule this system have been very successful in swaying governments to do their will. They have rallied political parties around them to promote and enforce policies favorable to big business. And they have recruited religious leaders to legitimize their activities and to sell their policies to the general public.

“However, there are problems with this present system. First, it is inherently unfair. It promotes the concentration of wealth in the hands of a few individuals by trickery and defrauding of the masses. It relies on unfair and unbalanced trade agreements with Third World nations – agreements which allow for the cheap extraction of raw materials and finished goods from these nations by means of slave labor, in order to sell products at profit in the markets of the First World. It allows big business to maximize profit by externalizing the true cost of doing business onto the poor, as when grossly polluting industrial plants with no environmental controls or oversight are built in poor neighborhoods or poor countries.

“Also, it is becoming increasingly apparent that this present system is unsustainable. The most obvious signs of this unsustainability are peak oil and global climate change, along with other examples of environmental destruction. And there are additional resource peaks which are now becoming apparent. The continuation of global “economic growth” at a certain percentage per year, ad infinitum, is becoming more and more obviously impossible. The “official” global economic system is breaking down bit by bit, piece by piece with each day, and is on its way to a terminal breakdown. However, while the system is still in any way functional, it is dangerous – first, because its masters seek to force as many people as possible into dependence on a breaking system, and secondly, because this system actively opposes anyone who would create a safety net of alternative systems.”

I want to focus on the last two sentences of this last paragraph. The “official” global economy is in fact beginning to break down. Peak Oil is both a sign of one such breakdown and a cause of other cascading breakdowns which will get worse as oil becomes scarcer. But the rulers of our present economic system – both the very rich, and the politicians whom they buy as their slaves – are doing their best to keep us locked into this system, utterly dependent on it, while they seek to destroy any alternatives to it.

I don’t believe the present global economic system can be reformed, nor the political system which exists to legitimize the “official” economy. Yet I believe that it is possible for ordinary people – the small, the poor, the unknowns – to begin to build local systems by which they can preserve something of value when the official system breaks. In future posts I will discuss the ways in which the masters of the official system are trying to force us into dependence on it, and I will talk about building local alternatives to the official system. I will also talk about the steps I am taking personally to build for myself a network of alternatives to the official system.

In the meantime, I leave you with a picture of some alternative transportation for this time of high gas prices. I saw this contraption while I was on my way home from work. The kid who built it told me that it's a "land luge." A pretty clever piece of engineering as long as you don’t kill yourself riding it…