In a new report out today we explore the impact of sustained high oil prices on current prospects for economic recovery. We argue that economic prosperity is predicated on the availability of cheap oil. This is not just based on simple correlations. In recent years a number of economists have begun to re-write the very foundations of macroeconomic theory, demonstrating that energy plays the most important role in economic growth. This is supported by warnings in the past year from the IEA, IMF and G7 that high oil prices have likely been constraining economic growth and economic recovery from the recession.
Extreme energy will mean an extreme planet….All these processes have at least one thing in common: each pushes the envelope of what is technically possible in extracting oil (or natural gas) from geologically and geographically forbidding environments. They are all, that is, versions of “extreme energy.” To produce them, energy companies will have to drill in extreme temperatures or extreme weather, or use extreme pressures, or operate under extreme danger — or some combination of all of these. In each, accidents, mishaps, and setbacks are guaranteed to be more frequent and their consequences more serious than in conventional drilling operations. The apocalyptic poster child for these processes already played out in 2010 with BP’s Deepwater Horizon disaster in the Gulf of Mexico, and this summer we saw intimations of how it will happen again as a range of major unconventional drilling initiatives — all promising that “golden age” — ran into serious trouble.
Evolution can be ruthless at eliminating the unfit. “Red in tooth and claw,” as Tennyson memorably described it, Nature routinely sacrifices billions of individual organisms and sometimes entire species in the course of its adaptive progression.
We humans have been able to blunt Nature’s fangs. We take care of individuals who would not be able to survive on their own—the elderly, the sick, the wounded—and we’ve been doing so for a long time, perhaps tens of thousands of years. In recent decades more and more of us have leapt aboard the raft of societally ensured survival—though in ways that often have little to do with compassion: today even most hale and hearty individuals would be hard pressed to stay alive for more than a few days or weeks if cut adrift from supermarkets, ATMs, and the rest of the infrastructure of modern industrialism.
And so the hypothesis stands: Maximum world economic output is nigh. If that is truly the case, the most reasonable forecast would be for a significant decline soon, as debts default and as investors pull back. We may be in for a series of subsequent booms and busts (the booms never managing to bring us back to current output levels, the busts plunging us further into economic turmoil). Mere stagnation would be a benign outcome, one that would require considerable planning and effort to achieve, but even then resource limits (which we’ll get to in Part 3) would ensure contraction sooner or later.
I think most of my regular readers are aware that I spent last weekend at a peak oil event. There have been plenty of those over the last decade or so, but this one, The Age of Limits, was a bit unusual: it started from from the place where most other peak oil events stop, with the recognition that the decline and fall of industrial civilization is the defining fact of our time.
One mile north of the Mason-Dixon line in Southeastern Pennsylvania, nearly 200 people from the US and beyond, gathered this weekend on the land of Four Quarters Inter-Faith Sanctuary to consider Peak Oil, climate change, and economic meltdown—and the collapse of industrial civilization. On this Memorial Day weekend, we not only “remembered” how we got to this watershed in our planet’s journey through the time and space, but concluded almost unanimously that this event must become an annual occurrence.
The seeds of energy conflicts and war sprouting in so many places simultaneously suggest that we are entering a new period in which key state actors will be more inclined to employ force — or the threat of force — to gain control over valuable deposits of oil and natural gas. In other words, we’re now on a planet heading into energy overdrive.
The poorest and most vulnerable die first, out of sight, and everyone else just does what they can to survive. Peoples’ priorities change: they concentrate on getting by from day-to-day rather than planning for the future. They stop getting married. They have less children or none at all. They live for today. They work harder for less. Taxes go up even as basic services are cut. Long term unemployment has been conclusively linked to greater mortality and susceptibility to illness, physical and mental. Would many of these people not still be alive today if were not for austerity measures and declining middle class opportunity? Isn’t that a die-off? It’s been said that having children is a referendum on the future. Based on global birth rates, I think the human race is collectively registering a vote of “no confidence.”
With a gallon of gasoline in America now averaging almost $4.00, the topic of oil dependence is timely. Cheap oil and other fossil fuels have helped create the modern American economy, and to a lesser extent, the economies of other industrialized cultures around the world. Big industry totally depends on them. Naturally, this includes the food industry.
Spread Reckoning: US Suburbs Face Twin Perils Of Climate Change And Peak Oil [Excerpt], By Maggie Koerth-Baker
Sprawling metropolitan areas like Merriam, Kans., face fundamental challenges from global warming and the end of easy oil