Peak Oil Choices

Life is choices. Choices must be made. Those we do not make, those we choose not to make, those we opt to ignore, those of which we unaware, often for reasons of chosen ignorance, are often made for us, by default. Those choices we choose not to make we have no control over. The outcome is decided by someone or something else. It's like an election. The old saying is - and I am not trying to quote but to paraphrase - if you choose not to vote don't complain about the results. Your vote is your entry fee for the right to complain. You get the government you don't bother voting for.

The approach of peak oil has brought with it a wide array of choices that had to and have to be made. Most of us in the peak oil movement are well aware of many of these choices, are making them at the personal level, are involving ourselves with the process of making them at the local community level. Through key web sites and organizations like ASPO we are attempting to get those national and international choices made. But it is a tremendously difficult task, like changing the course of a runaway ocean liner or stopping a runaway train. The end result of the inaction is that many of those choices are being made by default, by nature.

The biggest problem is getting decision makers - those who have to make the right choices - to understand what peak oil really is and what the implications of peak oil are on our global society. Peak oil is many things but it is not about running out of oil. The mainstream media seem to, for some reason, be very slow (unwilling?) to understand this. They continue to define peak oil as running out of oil and, as a result, characterize peak oil pundits as fringe wackos. If, indeed, peak oilers were defining peak oil as running out of oil that would be a fair criticism. Lew Rockwell, for another example, defines peak oil as the point where all of the oil has been found and irreversible decline starts. That's a little closer but still not a clear understanding of peak oil. All in the peak oil movement understand that discoveries will continue well after peak oil but that those discoveries will be fewer, smaller and far more difficult and expensive to process. The reality is we will probably never run out of oil.

Peak oil is not about your cost of gasoline as such. We will reach a point where whatever oil is left is so energy-expensive to extract and process that it will take more energy to turn it into fuel than the energy we get from the fuel produced. At that point it will simply be left in the ground.

Peak oil is about the rate at which what oil, in its various forms, does remain can be extracted and processed. The global human population currently uses somewhat more than 86m barrels of oil or other liquid hydrocarbon fuel every day. We do not extract that amount of oil and have not done so for over three years. The difference between what oil is being extracted and what liquid hydrocarbons are being used is being made up from alternative sources such as; tar sands, oil sands, coal to liquid, gas to liquid, methane to liquid, bio-fuels and from drawing down strategic petroleum reserves.

At the moment there is still a small buffer in all liquids, being liquid crude and the alternatives listed above. But that buffer is paper thin and global consumption has, for these past three years, been growing faster than the alternatives can fill the gap. That problem has been masked so far by a small amount of demand destruction as more and more "users" are priced out of using petroleum products by the rapid run-up in prices over these past three years. This demand destruction has been most apparent and most damaging in poor third world countries, many of which can no longer afford the importation of any gasoline. A thriving black market has developed in many of these situations where fuel is smuggled into the country and sold at ridiculously high prices to those few customers who are still prepared or need to buy fuel at whatever price.

But spot shortages are starting to occur in the rich, developed countries as well, including U.S., Britain, Germany, France, Japan, Canada, Australia and more. Gasoline shortages in developing nations such as China and India are also common occurrences as growth in demand far outstrips the development of the infrastructure needed to satisfy this demand. The frequency of shortages will undoubtedly increase. The global liquid fuels supply, because of the paper thin buffer, is susceptible to significant disruption from previously insignificant events. Every hiccup in Nigeria, Qatar, Venezuela or any other producing and exporting nation, the falling off the exporter list by countries like Indonesia, Mexico, possibly Venezuela, Russia and others throws a major monkey wrench into the global oil market and sees a major up-tick in spot market prices which may, over the course of a week, climb by more than what the average global price of oil oil was ten years ago or less.

One of the most economically disruptive impacts of the choices not made in the face of peak oil - more often exactly the wrong choices made - will be the death of globalization. Globalization has been the driver behind economic growth and expansion throughout the developed and developing world over these past several decades. China, India and other Tiger economies have been, much to the chagrin of a large portion of the population in the older economies of the "developed" world, the greatest beneficiaries of globalization. While the older economies have remained relatively static - these economies have seen a shift from a production to a service economy rather than real growth - with "real" growth (when there is growth at all) of only a couple of percentage points, the economies of China, India and other developing economies have grown at double digit rates, often exceeding twenty percent in good years.

But the mechanics of globalization are driven by cheap oil and its derivative fuels. It depends on the massive and rapid movement of goods over thousands of miles by ships, airlines, trains and trucks, all of which run on liquid fuels derived from oil. All of these forms of transport are under serious threat from rapidly rising oil prices. Airline companies are having to take a number for the line-up at bankruptcy court. Trans-oceanic shipping is teetering on the brink with shipping costs doubling or more because of fuel costs, especially for the long list of products where energy and shipping cost are a major cost component (in many cases more than 25% of the overall product cost before the price run-ups began). Rail lines and carriers, particularly in North America, have been shrinking and consolidating for years and no longer have the financial vitality to absorb these rapidly rising fuel prices. Independent truckers, which now represents the bulk of overland transport in North America, has absorbed so much of the cost of rising fuel costs that they can no longer stay on the road (as they slide ever closer and ever quicker toward bankruptcy), even if they could charge surcharges for fuel costs.

As I detailed in Peak Oil, Deglobalization and Ecolomics many outsourced industries that are being hit hardest by rising fuel prices are beginning to repatriate their operations closer to their markets. U.S. steel imports from China have, over the past year, declined by 20% while U.S. domestic steel production is ramping back up and has increased by 10% during the same period. Much of the production and assembly of goods that had been outsourced to China and other Tiger economies is being repatriated and ramped up in Mexico, the closest source of cheap labour for the manufacture of goods for the American consumer.

But these simplified repatriation decisions that may seem to make good economic sense in a business-as-usual scenario are not, as I detailed in the above article, are not good decision or choices in the face of peak oil. They simply move the energy consumption of the manufacturing processes from one location to another but are still built around an unchanged model of centralized production of goods moved by a hopefully-viable distribution system to the markets and consumers. Moving production to Mexico is definitely not wise in the long term. Mexico's domestic oil production is plummeting, by as much as 20% or more each year, and that poor country will soon find itself a net importer of oil if there is much effort to move outsourced American industry from China to Mexico.

Repatriating outsourced industries from the developing world to the developed world and doing so without redesigning the processes to be less energy-intensive and converted to decentralized processes that produce right in the consuming market, wherever it may be, simply defers the eventual and necessary industrial response to peak oil. Very soon there will not be enough liquid fuels being produced globally, from whatever source, to satisfy total global demand. Very soon the industrial model is going to have to be changed, choices - correct choices - are going to have to be made, to cope with the reality that there is not enough fuel being produced globally to support the present model that relies on centralized, mechanized production and long distance distribution by liquid-fuel-dependant transport infrastructure.

The choices we have neglected to make, for whatever wrong-headed reason, have been made for us. We are no longer in control of the rules of the game. that's the price of choices not made.

The Approaching Peak Export of Everything

Over the past half century we have become a truly global society. To those responsible, and perhaps millions or even billions of others, it seemed a good idea at the time. Many others, and steadily more through the benefit of hindsight, think otherwise.

There are no nations that are wholly disconnected from the global trade system, even among the most impoverished of third world countries. The whole concept of national self-sufficiency and self-reliance seems, in fact, to temporarily have been largely abandoned, at least in the developed, industrialized nations. The collateral damage in civilian lives in even the most minor of skirmishes, when long supply lines get disrupted, increases daily.

As we approach Peak Oil, if in fact we have not already arrived there as of May 2005, this has increasingly serious implications. The ongoing state of denial in the halls of government, business and industry, aided and abetted by the institutionalized apathy and outright disinformation in corporate-controlled mainstream media, is even more serious still.

Of late, those in the Peak Oil movement have begun to realize that peak oil is not going to be the defining watershed they had anticipated. That watershed, it is now realized, will precede peak oil, if it is still in the future, by a crisis in the global reduction of oil exports, peak oil exports. Whether or not we are yet arrived at peak oil, in fact, we very much appear to have already passed peak exports.

With increased oil revenues in the producing/exporting nations like those in the middle east comes an increased level of affluence for their citizens. That greater affluence means increased energy consumption at home with growing demand for automobiles and energy-consuming durable goods, but often dramatically increased with ventures like massive, year-round, 24-hour-a-day, indoor snow-ski facilities in the middle of the scorching desert.

No one in the developed countries - we are, after all, the primary importers and consumers of that oil - should begrudge those people their increased affluence, especially as it generally still does not approach the level of affluence in those western nations. But they do. That is partly, it appears, based on the sense of entitlement that has developed in western nations concerning the world's oil. We see it as ours. We are happy to buy it from the producing nations, seemingly irregardless of price, but are not willing to share it with them, even though it comes out of the ground in their country. So it is not the increased affluence that bothers people in developed nations, though it well could if that were to rival our own, but rather the increased energy consumption, particularly of oil, that goes along with it.

The wealth and affluence of western nations, we are constantly reminded through incessantly repeated phrases like good old American ingenuity, was built on the innovative use of the energy in oil to invent and develop the wondrous and complex new technologies on which the developed world is based. The energy from oil drives our technological societies, fuels that continued innovation, propels man out into space, to the depths of the oceans and to the frigid regions of the poles. The energy from oil has made western nations, in our own collective minds at least, not just rulers of the world but masters of the universe.

The expensive cars and home entertainment systems and heated indoor pools are perks, rewards for each of our roles in building that complex, technological society. They are not, as they appear to be in the developing world, their own raison d'etre. They are not the goal but simply the rewards for achieving it. The rising affluence in those oil-exporting nations is being purchased, not earned. The money with which it is being purchased derives from the same technological development of those first world nations in which the affluence is earned through innovation. In those first world nations energy from oil is being invested to build and power a society and culture. In those oil exporting nations the money paid by those first world nations for that oil is being squandered building decadent toys. So believes the populace of those oil-consuming, first-world nations.

This may not be a conscious belief or even a belief of our own choosing. It is a belief fostered largely by the corporate-controlled news media. We are constantly bombarded with images of the massive contradictions in those oil-exporting nations, the brutal suppression of women's rights, the abject poverty and virtual slavery of the lower classes, the constant violence and brutality in the streets, the wars, the terrorism, the roadside bombs, the suicide bombers, the beheadings. These are all contrasted against the indoor ski hills, the fifty storey, sail-shaped, climate-controlled hotels with helicopter pads on the roof, the private golf courses, the wealthy enclaves of new homes on land expensively reclaimed from the sea. There is no middle ground, just squalor and opulence, paupers and kings, sons of paupers and princes.

This is further contrasted against the constant images from our own society of our technology, our innovation, our ventures into space, our unending scientific achievements, our application of our innovative technology, and bolstered by the constant reminder of our reinvestment of the wealth accrued from our achievements in further research and development to assure an even better tomorrow. With our wealth we are building the future. With theirs they are building toys for their present, decadent gratification.

All of this media focus on the extreme contrasts in those oil producing/exporting countries and between those countries and our own serves two aims. It builds begrudging public sympathy for the constant whining by the corporate oil majors about the increasing number of state-owned oil companies in the still-exporting nations and how their increasing resource nationalism blocks access to those reserves by those oil majors and their claimed superior development and extraction technology. It also builds that public belief in our oil entitlement and assuages our apathy and acceptance for our governments doing whatever is necessary to ensure ongoing access to our oil.

The borderline between decadent competitor and evil enemy is kept very thin through these caricatured methods of portraying the people and leadership of these oil producing/exporting nations. It perpetuates the us and them mentality. The angst that it builds in the populace of our own nations over the constantly escalating price of gasoline and other commodities can very easily and quickly be parlayed into an acceptance of the need to wage war if our access to our oil is in any way diminished or threatened.

Let us be clear what it is that is being demonized as resource nationalism. It is somewhat akin to someone of middle age becoming suddenly conscious of their own mortality and deciding to take a little better care of their health. The government and leadership of those oil producing/exporting nations are becoming aware of their own nation's mortality, or at lease that of their goose that lays the golden eggs. They are suddenly becoming conscious of the finiteness and approaching decline of their only tradeable resource. And they are becoming increasingly aware of their country's own future needs for that same resource. More importantly, the general populace of those nations is becoming increasingly aware of their future need of that resource. The affluence they are now becoming accustomed to, they realize, is dependent on not the sale but the consumption of that resource.

That realization by the people increases the tenuousness of the control the leadership has over their people. Ultimately control through government is only workable when the people are prepared to accept that control. The more aware they become of their collective power the more they expect/demand in return for accepting that control.

This all amasses as a delicate quandary for the leadership of those oil-producing/ exporting nations. Do they continue to supply oil to the developed nations as fast as they ask, in return for further increasing their own personal wealth, and risk losing control of their own people? Or do they ensure the ongoing support of their people and their submission to authority and control by withholding enough of that resource from the market to continue to build the affluence of their own people for the foreseeable future, thus risking the ire of the importing nations? I believe the answer has been selected. They fear their own people more than the rich western nations, especially since they have control of the energy that powers the technology that makes those nations powerful.

What is happening in the oil industry and the geopolitics that swirl around it almost certainly will not be going unnoticed in other critical industries built around globally traded resources and commodities like food, mineral resources, and others. Any resource or commodity moved about on the conveyor belt of global trade that is important or critical to the future survivability of the source nation must, in the wake of what is happening with oil, be looked at by those nations in the same critical light. The same basic quandary will exist for all. What is more important; the short term building of elitist wealth and affluence that cannot be sustained or the long term survivability of the nation and its people? The closer any resource gets to depletion the more critical that issue becomes.

It has become increasingly difficult in our modern world for even the most dictatorial and authoritarian leadership to withhold and hide information from its nation's determined citizenry. The internet has been an astoundingly important tool in bringing that situation about. In those nations where the leadership tries to maintain even the veneer of social freedoms keeping the people from that information is impossible.

As we have proven throughout our history, it does not require that the whole population be rocket scientists for the rocket to be invented. It likewise does not require that everyone understand the concept of finiteness or the geology of oil fields or the molecular biology and nutrient-absorption of plants for there to develop an understanding of the limits to our growth, a stark realization that infinite growth is not possible. That is the power of ideas and knowledge. Once they have sprung into being as a meme from the mind of even a single individual they are accessible by all, shareable by all, and can potentially be propagated through the entire human population. That is the power of the human intellect. Biological evolution, the dispersal of a new gene through even the local population of one species happens slowly over geological time. The dispersal of a new meme through the entire human population can happen very quickly, even instantaneously through mass, global communications.

Through the ongoing focus on and debate over a single resource in the peak oil dialogue more and more people throughout the world are becoming intensely aware of resource finiteness, of resource depletion, and of the implications for the users of that resource as depletion and exhaustion of that resource nears. Oil is critical to the structure and functioning of our modern society. As such, the potential of its depletion, the implications to that modern society of it eventually running out, the impact on our global, perpetual-growth economy of even a developing and growing insufficiency of it to meet our societal needs, is becoming increasingly worrisome and even frightening.

But that focus on oil's finiteness is causing more and more people to consider the finiteness of other resources and the impact that their depletion, individually or collectively, will have on our society as well. In addition, and perhaps far more importantly, the widespread use of oil, the awareness of the thousands of products derived from it, the critical importance of it in our modern agriculture and our ability to produce the food needed by our 6.6 billion population, has caused people to become increasingly conscious of the depth and breadth to which a resource is used, the applications of it, the depth of our society's dependence on it.

I have written several articles for the blog (Peak Oil is not About Running Out of Oil!!!! , Post-Peak Agricultural Capacity, Plant stomachs and animal stomachs: the differences and similarities, Plants with stomachs - Peak oil implications, Ethanol/bio-diesel vs food and Soil fertility and carrying capacity) discussing the implications of oil depletion on our ability to produce the food required by our massive and excessive human population. The crux of the problem is that our ability to feed ourselves, at our current population, has become critically dependent on oil and its close cousin, natural gas.

The fertilizers that sustain the artificial fertility and productivity in over-cropped, nutrient-depleted, organically-dead soils is produced from natural gas. The pesticides that have to be employed in ever-greater volumes to fight off the increasingly pesticide-resistant insects and pests that prey on our crops and the herbicides used in ever-increasing amounts to fight off the encroachment of adaptive, herbicide-resistant weeds are both derived from oil. The more we use pesticides and herbicides the more resistant the rapidly-evolving organisms become that we use them against. The species that are most seriously impacted over the long-term, in fact, are the slowly evolving species, such as ourselves and other mammals. We are creating an increasingly toxic world with our constant release of our agrochemicals into an environment that has not evolved to break them down and recycle them. Our chemicals simply continue to accumulate in the soil, in the water, in the atmosphere, and in the tissue of living creatures, including ourselves. The higher up the food chain a species is the more saturated their cells become with our toxic chemicals.

The energy to build the increasingly colossal farm machinery and irrigation systems and the fuel to run those machines is derived from oil. And the fuel that drives the global food distribution system - the food on your table travels an estimated average of 1,500 miles to get there - that powers the refrigeration critical to long-distance shipping and long-term storage is derived from oil. The energy that drives the food processing industry, that keeps the food fresh at 24-hour, air-conditioned supermarkets, is all driven by fossil fuels. It is reasonably estimated that ten calories of fossil fuel energy are consumed in the production, preparation and distribution of every single calorie of food.

But the consumption of fossil fuel energy in feeding the human population is not the issue, nor the point of this article. It is estimated that as much as fifty percent of the food consumed globally originates in a country other than that in which it is being consumed. Put another way, fifty percent of the food being produced in countries around the world is leaving the country where it is produced to feed other people. Even that food consumed within the country of origin may have traveled a considerable distance before being consumed, often exiting the country and subsequently returning after a circuitous trip through the global distribution system.

As the global population continues to rise, and the population within nations, the demand for resources by a nation's growing population increases. If there is an increase in affluence in the nation, such as is happening in oil-exporting countries, resource demands grow even faster. If it is a natural human tendency to share one's bounty with others less fortunate, others in need - and I do not accept, at least in the modern industrialized world, that it is - any desire to share diminishes drastically when that to be shared is critical to one's personal survival and is in short supply.

That sentiment also manifests at the national level. It is what is being observed in the so-called resource nationalism that is the current cause of concern in the energy field. Most nations are quite prepared to sell their resources and commodities, even donate some of them to nations and people in need. When that country does not have enough of that resource to satisfy its internal needs, however, that willingness to sell or share diminishes or, as will increasingly be the case, disappears. As the prospect rises of the potential depletion of that resource, and particular as that point nears, the future needs of the nation and its people becomes the focus as much as current needs.

There is no resource more critical to the survival of a nation or its people than food. But food is more than just..... food. It is the land on which it is grown, the water for irrigation, the labour/energy to plant, manage, harvest, and process the food, the seeds from which the crop is grown, the distribution system to get the product to market, the weather and climatic conditions needed for growing the crop, any equipment needed at whatever level of technology to produce the crop, and more. The sufficiency of all of these resources must be factored into any consideration of a nation's future ability to feed its own people.

When a person or a nation reaches that critical point of consciousness of the needs for a resource tomorrow as well as today the result can be a dramatic shift in the attitude of the sale or trading of that resource. It can also be a point of major confusion, as former recipients/purchasers of that commodity wonder at the cause of the change in attitude, especially so if their focus is strictly on today. It can also, whether on a local, personal level, or an international level when it involves nations and the global trade system, be the source of considerable conflict, even wars.

As is obvious by the concerns in the energy field over resource nationalism by certain nations, all people and nations are not going to reach this critical juncture with regard to all resources at the same time. They should. What applies to one resource for one nation applies to all resources for all nations. It is far more likely, however, that the development of these flashpoints will be piecemeal. One nation at a time will become conscious of its own future needs for a particular resource, nationalize it and cut back on the sale and export of that resource/ commodity.

From this point forward, however, we should begin to see an increasing pattern of such shifts in trade policy, an increased incidence of export curbs to protect a nation's future access to an important domestic resource/commodity. As we are approaching near-simultaneous peaks in so many widely used resources (most mineral resources, water, wood and other non-food agricultural products, etc.) the frequency of these events should definitely be on the increase over these next several years as we pass the peak of global oil and fossil fuel production and head down the downslope. We have built our modern world, and the global trade system, on the back of cheap and plentiful fossil fuels. We will all ride the downslope together.