Past the Peak - what the peak oil theory means to the economy

Except for scores of cars abandoned on the shoulder, the eight-lane highway was nearly empty one Friday morning last September. Gas stations along the feeder roads were closed, with trash overflowing the bins and blowing across the pavement. Shopping center parking lots were empty; entry doors were blockaded. It was the day before the much-anticipated arrival of Hurricane Rita and the entire Houston area had evacuated. The highway, a virtual parking lot only the day before, now looked like a scene out of a sci-fi movie. It also looked eerily prescient of a day when people might no longer be able to afford to drive cars long distances along the extensive interstate highway system.

To anyone who has investigated the concept of peak oil, the scene is not so implausible. Peak oil is the theory that once we recover half of the world’s petroleum reserves, production must decline. While they won’t run out, the supplies that remain will be more difficult and more expensive to recover. For economies dependent on vast supplies of cheap oil, the consequences could be dire, experts predict. Many insist that without a major transformation in our lifestyles, economic and social decline could be inevitable.

Proponents of the peak oil theory point to last year’s natural disasters in the U.S. and the accompanying spike in oil prices as indicative of future economic challenges. Others in the industry scorn the naysayers as alarmists, citing vast reserves that are available to be tapped as the price of a barrel of oil rises to make recovery economically feasible.

In fact, Chevron just announced that it successfully completed a record-setting production test on the Jack #2 well in the U.S. Gulf of Mexico, sparking claims that it could be among the biggest U.S. oil discoveries. The company estimates that the region could hold between 3 billion and 15 billion barrels of oil and natural gas. However, the stuff is an unfathomable 7,000 feet below the surface of the Gulf and another 20,000 feet below the sea floor. For those anticipating relief in prices at the pump, the wait for this supply will be years, at best. Considering Americans consume more than 7.5 billion barrels of oil a year, this major discovery does little to allay concerns for the future of the energy-consuming world, as petroleum reserves become harder and more expensive to find.

Many have cited the Chevron find as evidence that we can quit worrying that that we are running out of oil; others are cautioning against complacency and urging Americans to plan for what could be a drastically different lifestyle over the coming decade. They contend that adjusting to a shrinking oil supply is essential to put our economy on a path that can sustain progress.

'From fossil fuel plus nuclear sources, worldwide we use the energy equivalent of a billion barrels of oil every five days, said Jeffrey J. Brown, an independent petroleum geologist from the Dallas area, addressing a recent conference hosted by the Houston Peak Oil Progressives. “We burn through the energy equivalent of Prudhoe Bay every 60 days. We are consuming a staggering amount of energy in this country and worldwide.”

The End of an Era?

For more than half a century, Americans have been reaping the benefits of cheap oil. Unlike in Europe, the car has shaped our lifestyle. We’ve built sprawling cities and moved to the suburbs. People living in suburbs depend on cars just to get a loaf of bread. We continue to build cars, roads, parking lots, and housing developments as if the days of cheap oil will never end. Our food industry is heavily dependent on hydrocarbons.

Policymakers at all levels of government seem blithely unaware of the potential challenges ahead. Rep. Roscoe Bartlett of Maryland and the city of Portland, Oregon, are among the exceptions. Smaller communities like Willits, California, and Yellow Springs, Ohio, are banding together to anticipate and provide for what they believe is an inevitable and potentially cataclysmic shift in lifestyle.

Should residents of Houston, a city built on cheap energy and that generates 140 million miles of vehicle traffic daily, using 4.5 million gallons of gasoline, be concerned? Absolutely, says Jim Kunstler, author of The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century.

“Well, this may not be a happy thought,” Kunstler says, “but the folks in Houston may have to lower their expectations about what kind of life will be possible in Houston. Houston has become what it is because of cheap car travel and cheap air conditioning. These are two things that may not be with us much longer – and I would not necessarily count on alternative fuels to do exactly what oil and methane gas have done for us in the past.

“Houston will have to face two very serious problems,” Kunstler says. “It has a very challenging climate, and the development pattern already built and in place, namely suburban sprawl, has poor prospects for usefulness in the near future.

“I would add a third consideration,” Kunstler continues. “Virtually everything in our daily lives is going to have to be re-scaled, from the way we do business and trade, to education, to farming. To be more precise, these things will have to be downscaled in an energy-scarcer future. This applies to cities, too. And the US cities that are most characterized by a sprawling suburban pattern will be the most severely challenged.

“I'm convinced that all our cities will have to contract substantially. Many of them may densify at the centers and along their waterfronts even as they contract in population and serviceable area. Houston, in my opinion, is a city that may become especially small. While it is connected to the Gulf of Mexico by waterways, it has no harbor or waterfront per se, in the sense of, say, Baltimore or Charleston, so this is an additional factor in Houston's ability to remain a substantial city.”

Personal Provisions

While Kunstler’s assessment of Houston’s future may seem apocalyptic, perhaps such an alarming wake-up call is what is needed to mobilize debate. Galvanizing a city the size of Houston – particularly one so rooted in maintaining the status quo of the hydrocarbon mystique – to develop policies and infrastructure in anticipation of peak oil could require nothing short of a cataclysmic economic downturn.

With 70 percent of a barrel of oil fueling transportation, the ramifications of personal auto use and truck transport must be anticipated. Revitalization of the nation’s rail system can mitigate the increasing cost of shipping food and other goods by trucks, which get between three and six miles to a gallon of gasoline. Moving people by light rail and urban trolley are other viable options that have been proposed. Instead of being centered around automobiles, experts insist future transportation systems must become far more diverse, widely employing light rail, buses, and bicycles as well as cars. The goal must be to maximize mobility, not automobile ownership.

If community response seems inadequate, what can individuals do themselves to mitigate the impact of energy scarcity and the accompanying economic consequences?

Geologist Jeffrey Brown offered three sobering recommendations to those who want to take personal actions to mitigate the impact of increasing energy prices: economize, localize, and produce.

“If gas hits the $6 to $10 a gallon range, how will you change your lifestyle?” Brown asks. He urges individuals to create a three-pronged defense: economize, localize, and produce. This means, he says, planning a lifestyle that can sustain a 50 percent reduction in income, eliminating debt, and reducing consumption. He also encourages strategies for more local living, including moving as close as possible to work or telecommuting and eating food grown locally. And he urges anyone who is serious about preparing for the economic impact of peak oil to become a provider of essential services or work for a company that is. (The majority of us, he said, live off the discretionary income of others.)

Brown also supports a proposal to abolish the payroll tax (Social Security and Medicare) and to replace it with an energy tax, principally a tax on liquid transportation fuels. “Instead of taxing payrolls to fund the Social Security and Medicare systems, we would instead tax energy consumption,” he said. “This would unleash powerful economic forces against profligate energy use.”

A group in Ohio, Ohio Peak Oil Action, offers these suggestions to prepare for peak oil:

Grow a garden
Weatherize your house
Join or start a re-localization group
Preserve and store food
Make and eat meals with your neighbors regularly
Get healthy
Learn wild edible plants
Volunteer in your community
Learn a self-reliant skill
Learn about permaculture
Promote and use renewable energy
Support local farmers
Get rid of your fossil fuel addiction
Pay back your debts and get rid of your credit cards
Reduce your material possessions
Think independently
Start a post-peak oil library
Take a firefighting, EMT, or first aid course

Most significantly, the conversation on peak oil can be considered an opportunity to reexamine and recreate our lifestyles. We can think about how we want to live: closer to work; in a community with like-minded families sharing various household responsibilities; walking or biking for exercise as well as transport; with cleaner air and a healthier way of life.

As Jeff Brown says of his recommendations to economize, localize, and produce, “The good news is, if I’m wrong about peak oil, you’ll have reduced stress, less debt, and more money.” Who can complain about that?

And maybe – just maybe – the idea of an abandoned highway can become a kindly reminder of less pleasant days when we spent far too much time on it.

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