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Page added on May 7, 2012

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Peak Oil: Capitalism & Sustainability (Pt 7)


Back in November, Naomi Klein offered a fascinating and thought-provoking essay in Nation magazine entitled “Capitalism vs. the Climate” in which she discussed the transformative changes needed if we are to successfully (not a guarantee) and thoroughly address the challenges of our warming planet. Her insights and observations can easily be adapted to the similar considerations and challenges Peak Oil will extend to us as well. Taken together, the confluence of these looming impositions on our once-cozy ways of life mandate responses far more expansive than a policy here or a tweak there. Ms. Klein offers us all a well-reasoned approach for both how and why.

Every Monday for the past six weeks, I’ve taken advantage of her arguably controversial yet well-reasoned assessments to elaborate and extend the thought process as it applies to Peak Oil. This is the final installment of the discussion inspired by Ms. Klein’s essay [links to installments 1 – 6 are at the end of this post].

[* Any quotes following are taken from Ms. Klein’s essay in Nation unless noted otherwise.]


If oil production can’t grow, the implication is that the economy can’t grow either….This is such a frightening prospect that many have simply avoided considering it.…
Economists and politicians continually debate policies that will lead to a return to economic growth. But because they have failed to recognize that the high price of energy is a central problem, they haven’t identified the necessary solution: weaning society off fossil fuel [1]

And as the author of this above-cited article notes, “Unfortunately, since most governments are unwilling to admit the prospect of indefinite economic stagnation due to our reliance on fossil fuels, they’ve been unable to generate the political will to even begin these efforts.”

We’re at a crossroads. Up to this point, cheap and abundant energy has fueled consistent economic growth. The only real discussion among the managerial elite was how to grow the economy—whether in planned or unplanned ways, whether with sensitivity to the environment or without.
Now the discussion must center on how to contract. Sadly, that discussion is radioactive—no one wants to touch it. It’s hard to imagine a more suicidal strategy for a politician than to base his or her election campaign on the promise of economic contraction. Instead, discussions in policy circles tend to turn on how to maintain the illusion of growth. Denial runs deep, but sooner or later reality will make itself known.
And sooner or later we must make conservation the centerpiece of economic and energy policy. The term conservation implies ‘efficiency’ in the usual sense—building cars and appliances that use less energy. But it also means cutting out non-essential uses of energy. Rather than continuing to increase economic demand by stimulating human wants, we must begin to think about how to meet basic human needs with minimal consumption of resources, while discouraging extravagance.
This of course amounts to a profound change of course for our economic system, and it will not be undertaken except by necessity. But necessity is inevitably approaching. We will have less energy, like it or not. And with less energy, we will no longer be able to operate a growing consumer society….
The transition would go much better if we were to plan for it, pre-adapting to a low-energy global economic regime. However, little of that planning is likely to occur, simply because nearly everyone—from investors to policy makers to ordinary consumers—wants the fossil fuel-fed fiesta of manic consumption to continue as long as possible. So we are most likely in for a wrenching shift. [2]

We are unwilling to compromise, much less relinquish, the historically unprecedented material living standards associated with our industrialized American way of life, which we consider to be a birthright. Our vested interest in the continued success of our existing lifestyle paradigm is simply too great to permit us even to consider deviating from our current trajectory, despite the fact that our current trajectory leads to collapse. [3]

If large-scale mitigation of peak oil and climate change is not feasible soon, what will happen? Given current investments in the existing pattern of trade and the high costs of reorienting it, change will be resisted, with resulting widespread economic disruption. But change will occur. Clearly, increased fuel costs and higher transport risks will cause supply chains to shorten and long-distance trade to decline…..
It is now critical for economic planners, laypersons, and governments to recognize that long-term energy and climate realities will impose limits on the global movement of goods. …This is not the result of either ideology or policy. Only when we accept these realities can we design and rebuild less vulnerable patterns of production and trade throughout the world. [4]

Common sense about our energy supplies and what needs to be done should not be among the shortages we’re going to contend with. A finite resource–magnificent to be sure—whose substitutes simply do not match the original resource in terms of its efficiency, availability, cost, and other essential criteria, cannot and will not last forever. No matter how optimistic one is about the still-available reserves of conventional crude oil, what’s left is now on borrowed time.

And for all the hoopla about the tar sands and shale oil and North Dakota’s great economic miracle, those resources are not up to the tasks which conventional crude has performed so ably for so many decades. A recent opinion piece by Tom Dennis in North Dakota’s Grand Forks Herald, gushing about the wonders of the state’s increased oil production, is yet another example of the half-truths, context-free assertions which do nothing but provide false assurances to an uninformed citizenry.

The author cites a statement by a University of Michigan economics and finance professor that the state’s production is “currently on track … to exceed 800,000 barrels per day” by the end of 2012. Furthermore, we’re offered this assertion: “‘At that point, North Dakota oil could be [my emphasis] enough to displace either Venezuela’s or Nigeria’s imports.’ Venezuela and Nigeria, of course, are longtime members of OPEC, the Organization of Petroleum Exporting Countries.
‘So, now that North Dakota is poised to pump oil at the rate of an OPEC country, can we at last retire the notion that the world is in the clutches of ‘peak oil’”?

Seriously? The U.S. consumes some 18 million barrels of oil per day. Our total oil production is currently in the neighborhood of 6 million barrels per day, down from a four decades-ago peak of more than 10 million … which we have not come close to since the early 1970’s. And we’re supposed to be doing cartwheels about 800,000 barrels of an inferior quality, harder to extract, more expensive substitute? (Of course, there was no mention in that piece about depletion of existing fields which might counter the wonder of 800,000 barrels, nor are readers given any information whatsoever about the process….)

And displacing “Venezuela’s or Nigeria’s imports” means … what? Did space considerations prevent the author from offering any context? If just mentioning OPEC, coupled with some vague reference to the import totals of two lesser producers serves as one’s argument that our energy worries are over, perhaps some reconsideration is in order. Adding facts and context would be a good place to start.

Recently, beliefs have shifted again, with people worshipping just one part of a god, the invisible hand. Thanks to Adam Smith and those who followed him, especially the current neoclassical economic theologians, we have seen such an increase in the world’s wealth and sheer numbers that it is hard to imagine life before the industrial revolution, with its shift from mostly human and animal muscle power to the energy dense fossil fuels—coal, oil, and natural gas. It is also hard to imagine that humanity could someday slide back into another age of scarcer and more expensive energy, but that is a possibility that cannot be excluded from our thinking.
The Faustian Bargain
What about the Faustian bargain? It remains deeply hidden from view because its exposure by the high priests of modern economics would force us to rethink how we live and why we live this way, as well as what we’re planning to leave for future generations. The Faustian bargain goes something like this: Thanks to the discovery and exploitation of fossil fuels, humans (really just a small minority of them) are able to live richer lives today than even the queens and kings of yore could have dreamed of.
The other side of the bargain, the side hidden from view and never mentioned in economics texts is this: At some undetermined time in the future, one that creeps ever closer, this economic system, fed by energy and other resources at ever increasing rates at one end and spewing out waste products at rates that cannot be absorbed by Earth’s ecosystems at the other, is unsustainable. What that means is simple enough: Industrial society as we know it cannot go on as it has forever—not even close. [5]

… [I]t’s such a huge change, the implications of the end of growth and what that means for our institutions and the way that our society is organized. The politicians now would be thrown out of office because people, the average American, is not educated to understand these things, so it’s a very threatening story. I mean, it’s very difficult to grasp that the biggest threat to the American way of life is the American way of life. And that’s kind of a profound crossroads that we’re at….we are not going to respond to this crisis until the crisis is truly upon us….
… [S]o we have this physical constraint that’s coming because of Peak Oil. There’s nothing we’re going to do about it. We can’t out-clever that. It’s just a constraint, it’s a limitation, there it is. We could manage it well or we can manage it poorly, but it’s there. We have a political system that’s not really geared for the magnitude of the change that we’re seeing, so the most likely outcome is that we’re going to wait, we as a culture are going to wait until we’re forced to deal with this. That’s probably going to come with disruptions….[6]

What to do? It will not be enough for us to hope our leaders start planning at some point. We need to educate ourselves and get involved in the process in our own communities. It’s not pleasant to contemplate no matter what spin you conjure up; but the alternative—to just wait for       life as we’ve known to change because of the drastic changes in our supplies of energy—seems like an utterly foolish relinquishing of opportunity.

At some point, we’re going to have to accept the facts for what they are and begin the long, complex, not-always-satisfactory process of planning for and then implementing change on a grand scale beyond our individual capacity to fully appreciate at this moment. Without the steady supply of high quality, affordable, always-at-the-ready crude oil to provide the energy which makes possible almost every aspect of our personal, economic, and cultural lives, adaptation and transition to something other than the profit-driven capitalism we’ve all reaped countless benefits from will be an inevitability.

And because that process is so all-encompassing, revising if not undoing major elements of a multi-centuries old, entrenched economic system is an undertaking that will be years in the making. How much farther down the short road do we kick this can?

And in the end, although almost none of us will approve, agree, or enjoy this, Naomi Klein’s conclusion about the economic system we’ve built and enjoyed may be our only viable option:

It means that a green-left worldview, which rejects mere reformism and challenges the centrality of profit in our economy, offers humanity’s best hope of overcoming these overlapping crises.
There is simply no way to square a belief system that vilifies collective action and venerates total market freedom with a problem that demands collective action on an unprecedented scale and a dramatic reining in of the market forces that created and are deepening the crisis.

Crisis or opportunity? The choice is ours.

Peak Oil Matters

3 Comments on "Peak Oil: Capitalism & Sustainability (Pt 7)"

  1. Plantagenet on Mon, 7th May 2012 7:05 pm 

    Why not just switch from oil to natural gas? Its cheaper than oil and is abundant thanks to frakking.

  2. BillT on Tue, 8th May 2012 1:55 am 

    Natural gas cannot replace oil in most uses except to generate energy/electric and run vehicles. But, if we switched even those uses to natural gas, peak gas would happen before 2020. Then what?

  3. Indigoboy on Tue, 8th May 2012 12:25 pm 

    There’s a lot of talk about natural gas and how there are billions or even trillions of cubic meters of natural gas to be had by the process of fraking.
    People who know the peak oil situation fairly well, also know that we (globally), use 30 billion barrels per year of oil.
    Using energy content as the basis of comparison I’ve done a rough calculation which tells me that a global years worth of oil (30 billion), is (roughly), energy equivalent to 5,100 billion cubic meters of natural gas (5.1 trillion).
    I’d appreciate someone else doing the math to see if they come to a similar or more accurate figure.
    I realise that it isn’t a straight comparison of energy use, but it would give me a general idea that if we see reports of 100 trillion cu/m of natural gas, then we are talking about 20 years of ‘oil equivalent’ energy use.

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