It bears repeating that the heart of the predicament industrial society faces in the first decades of the 21st century is not primarily a technical problem, but a social and intellectual challenge; one might even risk using an utterly unfashionable word and calling it a spiritual challenge as well. The technical issues of downshifting from an energy-wasting economy and society based on fossil fuels to an energy-conserving economy and society based on renewable energy resources are significant, granted, but they could have been solved easily enough if they had been tackled in earnest starting in the 1970s.
Even today, though the transition would be a good deal more wrenching and the human cost much greater, the thing could be done successfully given the social and political will to do so. Yet it’s precisely the social and political will to deal with the crisis of our time that are nowhere to be found. We need to talk more about why this happens, and one place to start is precisely with what happened at the end of the Seventies, when the industrial world turned its back on the signs of crisis, and a great many promising steps toward sustainability went into the dumpster.
Part of that sea change in industrial society was political, of course. “Conservative” parties in most of the industrial world – the word belongs in quotation marks, since today’s conservatives have forgotten how to conserve just as thoroughly as their liberal counterparts have forgotten how to liberate – realized that they could cut their opponents off at the knees by proclaiming that limits to growth didn’t exist, and papering over the energy crises of the previous decade with short-term political and economic gimmicks. Part of it, though, was a reflection of the sheer success of the sustainability movement of the Seventies. In the aftermath of that movement, defying nearly all predictions, petroleum consumption and energy use per capita throughout the developed world went down and stayed down for much of a decade.
This, as much as anything else, made it possible for politicians in the US and Britain to force down the price of oil to levels that, in constant dollars, were lower than ever before in history. When oil hit $10 a barrel, alternative energy and conservation technologies that had been profitable at higher energy prices became a quick ticket to bankruptcy. To the extent that the push for energy efficiency in the ‘70s helped drive down the demand for oil, the sustainability movement of that decade dropped dead from the consequences of its own success.
It’s a useful experience to read through publications on energy issues from the 1970s and compare their confident predictions that permanent limits to growth had arrived with the very different realities of the decades that followed. One of the bits of Seventies nostalgia on my shelves is a thoughtful little book titled The Rise of the Welsh Republic by Derrick Hearne, an attempt to portray the first decade of the history of an independent Wales in the imminent Age of Scarcity. Hearne did not invent the Age of Scarcity; it was expected by many other thinkers of the same period, and Hearne’s proposals mirrored those being discussed in now-forgotten periodicals such as Rain and Seriatim, where appropriate technology and organic agriculture rubbed elbows with social criticism amid the last hurrah of the idealism of the Sixties.
Fast forward from these perspectives to today’s peak oil debates and you might be forgiven a strong sense of déjà vu. Part of the received wisdom in the peak oil community these days is that once worldwide petroleum production peaks and begins its permanent decline, the mismatch between production and demand will cause exactly the same sort of Age of Scarcity that Hearne and so many other thinkers imagined in the Seventies. Now as then, the major issue under debate is whether the changeover to sustainability can be done quickly and completely enough to prevent a crash.
There are good reasons to think that the energy put into this debate will turn out to be just as misplaced as it was in the Seventies, and for much the same reasons. Prophecy is risky business, but it’s a risk worth taking on occasion, so I would like to offer the following seemingly unlikely prediction: fifteen years after the definite arrival of a peak in oil production, the price of crude oil in Euros will be no higher than it is today, and may actually be quite a bit lower.
The time frame is more important here than it may seem at first glance. The most likely immediate aftermath of a significant decline in world oil production, of course, is skyrocketing prices for oil and everything made or transported with it, and the possibility that oil could hit E200 a barrel or higher, even corrected for inflation, is a real one. Price surges on that scale can hardly mean anything less than a body blow to the economies of most nations in the developed world. It also means that any method of conserving energy or using alternative energy resources in place of oil will be worth much more than its weight in light sweet crude.
So far, this fits the conventional wisdom in the peak oil community, but it’s worth looking a step further into the future. If economies across the industrial world contract, the demand for petroleum will soften as people are forced to abandon the lifestyle choices that account for much of today’s extravagant energy usage. Especially in the US, where 5% of the world’s people use 25% of its petroleum production and arguably waste most of it, a severe economic contraction could readily cause what economists call “demand destruction,” which can be simply defined as the process by which people who can’t afford a product stop using it. Meanwhile, in a global market awash with effectively limitless amounts of paper capital, the chance for huge profits in the conservation and alternative energy sectors guarantees that entrepreneurs in these fields will have more money to hand than they know what to do with. The most likely result, as these trends start to bite, is that the price of oil will level off and then begin to decline.
Does this mean that peak oil can be ignored, because it poses no threat to industrial society? Hardly. As oil production worldwide continues to contract, and conservation and alternative energy reach the point of diminishing returns, oil prices will spike upward in turn, rising even higher than before and unleashing another wave of economic and social disruption. Just as the economic contractions of the 1970s and 1980s spawned intractable unemployment in most industrial societies and launched a process of downward mobility from which many families never recovered, each wave of economic contraction will likely force more and more of the population into a permanent underclass for whom the abstract phrase “demand destruction” plays out in a downward spiral of impoverishment and misery.
In such a future, the periods of apparent recovery that will likely follow each round of energy shortages and demand destruction will provide little room to rebuild what has been lost. Those periods will, however, make it exceptionally difficult for any response to fossil fuel depletion to stay on course, so long as that response depends on market forces or politics. Each time oil prices slump, the market forces that support investment in a sustainable future will slump as well, while governments facing many calls for limited resources will face real challenges in maintaining a commitment to sustainability which, for the moment, no longer seems necessary. Thus the collapse of public and private funding for the alternative energy sector in the aftermath of the 1970s will likely be repeated over and over again as we stumble down the long downhill side of Hubbert’s peak.
Those planning for a future of peak oil, in other words, need to beware of the perils of linear thinking. Much more often than not, the world moves in circles rather than straight lines, and planning for a future that is like the present, only more so, is a good way to come to grief in the real world. In next week’s post I want to focus on the way that this has played out in one of the most discussed and least pursued responses to peak oil – the establishment of lifeboat communities to preserve knowledge through the deindustrial Dark Age approaching us.
4/12/07, 2:03 AM
4/12/07, 9:27 AM
It will be interesting to read your next article on "lifeboat communities" - can a significant number of people hide themselves away in such places?
4/12/07, 2:09 PM
John Michael Greer said...
Loveandlight, yes, Jevon's paradox is one of the driving forces behind the cyclic process I've outlined. The cycle is the crucial part, though, because current peak oil thought isn't taking it into account.
Maura, the scenario you've outlined is pretty much exactly what I foresee. No, I don't expect lifeboat communities to be any more viable this time than they were in the Seventies, but that's a story for next week.
4/12/07, 5:49 PM
On the other hand, I think the middle class can only shrink so much before people get completely fed and start grabbing torches and pitchforks — America's self-image simply doesn't allow for a descent into Third World conditions. The rich have been waging class warfare on everyone else for a long time, and eventually everyone else will fight back.
Coming back around to JMG's point, the periods when demand falls back below supply would have to raise a lot of boats to keep the lid on society at large. Even in this slumbering age, people are starting to notice that record highs on the Dow aren't translating to more and better jobs. Future conservative leaders, if Bush doesn't destroy conservatism completely (one can hope) would have to tread carefully here.
4/12/07, 8:52 PM
Your short-cycle high-amplitude or "ringing" response is quite possible given moderately rational response from western power groups.
Given an energy shock sufficient in intensity to permanently close the US interstate highway system to all but commercial traffic, a new balance could emerge, for a time.
High depletion rates are striking multiple resource cycles all at once. A shock is coming. May we all respond well.
4/13/07, 2:39 AM
4/13/07, 6:49 AM
4/13/07, 6:57 AM
4/13/07, 6:58 AM
What do you see happening to the renewable energy systems that exist today, and those that will be built over the coming years for that matter, when humanity descends into, as you put it, a "deindustrial Dark Age"?
4/13/07, 7:01 AM
John Michael Greer said...
Senecascenes, you're right that a whole range of resources are closing in on their peaks, but not all at the same rate. I expect not a single shock but a whole series of them -- the bumpy ride down the far side of Hubbert's peak I've discussed in previous posts.
Jim, thanks for the resource! I'll check it out.
Pancho, the tiny fraction of energy that comes from renewable sources in the US today, and the slightly higher fraction we can hope for in the near future, depend on the petroleum economy just as surely as any natural gas-fired generator or gasoline station does. Most so-called "renewables" have relatively short working lives, and require very substantial fossil fuel inputs to be manufactured, maintained, and replaced. Thus they'll sunset out as petroleum does.
One thing that's nowhere near common enough in the peak oil debate is a willingness to look at whole systems over the long term. Unless an energy system can be manufactured, maintained, and replaced with the resources that will be available in the future -- that is, with a lot less net energy than we have now and far less concentrated supplies of rare minerals -- it's not sustainable. Thus my suggestion that the industrial age is nearing its end.
4/13/07, 3:12 PM
4/13/07, 8:43 PM
In the case of limited oil flow into a global economy which demands more, with feedback provided by conservation or "demand destruction," I don't think enough evidence exists to predict whether cyclical behavior is a likely outcome.
OPEC's voluntary manipulation of prices in the 1970s does not provide a good model of the coming period of involuntary limitations on the total quantity of fossil fuels available to the world.
I'm not suggesting that the cycles you predict are implausible, only that predicting behavior of this kind is much more complex and quantitative than it at first appears.
If demand continues to grow while supply remains constant or starts to decline, the resulting economic strictures might be severe enough to preclude the development of exuberant cycling between conservation and waste.
For now, I am convinced we will just have to wait and see what happens over the next 5 to 10 years. Then maybe we will be able to make reasonably accurate predictions about the future.
4/13/07, 8:50 PM
4/13/07, 9:01 PM
4/13/07, 9:02 PM
Having given up hope myself, I feel much better. :-) Seriously, though, one person losing hope may not change society, but I can at least change my own situation.
4/14/07, 10:30 AM
John Michael Greer said...
Ralph, one difference between human affairs and the hard sciences is that qualitative analysis works surprisingly well in predicting what human beings will do. For example, in 1985 and 1998 I predicted, on purely qualitative grounds, that the stock market booms then in course would end in humongous crashes. I didn't try to predict the timing or exact scale of those crashes -- that's a level of quantitative exactness you can't get by qualitative means -- but the basic predictions turned out to be quite correct.
The situation is the same here, since what I'm predicting is that human beings will respond to an energy crisis more or less the way they responded to the last one, for a variety of reasons, some of which I put in the post. I'll leave quantitative analysis to those whose strong suit that is, but in qualitative terms I stand by my prediction.
Farfetched, the "recovery" of the 1990s was basically a statistical artifact buoyed by media coverage. My research leads me to think that real standards of living sank like a stone for most Americans over the last three decades or so. They didn't revolt -- not in significant numbers, at least -- and I don't expect them to do so as the process continues. But of course we'll see.
4/14/07, 11:52 AM
Nigel Fogden said...
I could be reading too much into your analysis, but you seem to be assuming that renewable energy systems will never be well developed enough to compete with (temporarily cheap) petroleum. If they were, how would affect your analysis?
4/14/07, 3:46 PM
Another excellent post. And I believe that one thing we'll see--that we've already begun to see--is that the cycle of impoverishment will not only hit the working classes, but also many who call themselves professionals. Accountants and financial analysts in India not only speak English but will work for much lower wages than their Western counterparts. Add in the huge amounts of leverage that most American households are carrying and even the upper middle class in this country will soon begin to disappear.
I wonder whether the decline of the industrial age will mark a slow but steady return to the medieval age, at least in the West. We'll have a sliver of wealthy people who own land and hard assets and will perhaps import luxury goods by ship from China and India. There will be a small class of skilled craftsmen and artists to keep the aristocrats entertained and provide them with jewelry, shoes, nice clothing, and the like. And then there'll be the vast majority of the population that is barely able to keep itself fed.
Talk about a cycle.
4/15/07, 4:33 AM
Not a bad analysis. You are right of course that all straight-line predictions of the coming collapse are ridiculous. The place where I would take issue is the idea that as a society, we can or should do anything to try to prevent or ameliorate it.
My contention is that ultimately, any attempt to manage the crash will be futile. "Crash" is probably too strong a word for what is coming. What we will see is periodic spikes in oil prices, any time supply is reduced for reasons that the system used to have reserves to mask.
As an example, The hurricane induced flooding in the Gulf coast in 2005 sent the price of oil to new heights. Eventually, those wells and shipping and processing facilities came back into production, and the price of oil moderated, but not all the way back down to pre-Katrina levels. Currently, the US-facilitated civil war in Iraq is sending the futures markets into a speculation frenzy, jacking the price up. Eventually, the situation in Iraq will settle down a bit, and prices will again moderate but not back to pre-insurrection levels. So it will go, prices up, prices down, but always ratcheting to reflect the actual decline in production, on the average.
Companies and individuals will make decisions, one at a time, reflective of their own situations and expectations that will help them to meet this crisis, and even thrive in he new situation. Some will make bad decisions, and will fail. Then most of those will pick themselves up, and try again. That is how a market economy works.
Governments will make attempts to deal with the ongoing crisis, most of the attempts will be hapless, some will do some good, some will be remarkably wrong-headed, and some will be evil. None will do much good, because no-one in government will be able to predict the situation with any accuracy on a two-year time frame, which is the granularity of our political system (think Congressional elections).
The only realistic plan of action is to place yourself where you can take advantage of the opportunities that will become available, particularly in sectors only peripheral to energy prices. Horse powered truck farming in/near a large city anyone? It can be made to work now, but will be so much easier in 5 or 10 years when gas is permanently above $8.00/gal. Public transport, particularly rail-based? it's a sure bet in the same time frame. Rural McMansions? probably not a good idea.
Dan Baker (Yes, that Dan Baker)
4/16/07, 1:51 AM
John Michael Greer said...
Jeannette, I expect a return to medieval conditions over most of the western world. Yet the class divisions you've outlined already exist today; it's just that most of the developed world's peasantry is what Toynbee called an external proletariat, living outside the borders of the minority of privileged nations. Our sweatshops and latifundia are in the Third World today; the end of globalization simply means that they'll be closer to home in the future.
Dan, I'd tend to say that societies should make changes to cope with the approach of peak oil, but they won't, and for the most part, at this point in history, they can't; most nation-states are already far enough into the early stages of catabolic collapse that they don't have the resources to spare to carry out any sort of large-scale program to deal with the future.
Individual choice obviously offers one approach, and it's a necessary one -- change has to start there or it goes nowhere. I also think, though, that changes made at the local level, through city and county governments as well as businesses and voluntary organizations such as churches, could do a lot of good as we lurch down the stair-step pattern of decline toward the deindustrial age.
(Good to hear from you, btw -- I hope all's well with Susan and the kids.)
4/16/07, 12:36 PM
Economists frequently peddle the idea of diminishing marginal utility. This being the idea that the amount of satisfaction that I derived from my 1st mercedes benz was much greater than my 300th. Which confers a pseudo complimentary notion to the trickle down idea.
Who is willing to put this idea to the test? Joe Smith owner of 500 mercedes no doubt has very litte desire in the 501 st. Would you venture into his yard to relieve him from his 501st? Although he has a gun and a security system.He really shouldn't mind. Of course his hand is firmly fixed to the apple(mercedes). He continues buying mercedes though, as he is caught in a frustrating hamster wheel. He is mad that it doesn't deliver the happiness as promised.
A poet says:
"If you get those possesions you'll forget their names. It's the political carrot, it's the dating game..."
Another idea that comes to mind is how energy constraints would re-shape the just in time marketing model that people on t.o.d. have discussed. Businesses and individuals have to guess the future, as difficult as it is. Hindsight falsely convinces the uninitiated would be prophets, how complex and difficult this task truly is.
Believing in the certainty of a coming energy crunch will eventually precipitate large numbers of people to seek greater self sufficiency and autonomy.
Dan Baker thinks that a return to horse powered truck farming will prove profitable. As demand for food will no doubt be exhorbitant. I assert that the food 'business' will
collapse under serious energy constriction. Small mixed farming is the only known semi-sustainable agricultural model capable in an energy restricted world to take advantage of 'natural efficiencies'. However the number of small farmers that have this knowledge is not something that is valued by this society. Small farm failures have been rationalized as being the consequence of not being able to capitalize on economies of scale. Which is partly true. But does not address the contrived market. Farmers are signed into a system where they are price takers not price setters. So tomatoes can be $20.00 each. The supermarket and middlemen would be getting wealthy and the farmers would still be going bankrupt. If energy becomes atrociously expensive then is cheap foreign produced food still cheap? Furthermore the farmers are supposed to absorb these costs, which suggests wide scale farm failure.
Planning on communal gardens and root cellars is, from an environmental perspective alone a great idea.
Cheap energy (refrigerated trucking)has offered community's isolated from each other the opportunity to shield themselves from crop failure.
Finally let's say that you see a shortage that would need to be addressed by careful pre-planning and stockpiling of parts etc. The only business advantage would be if you were correct in your futur forcast so that you could charge an amount that would cover your 'cost of doing business'.
Just how well do you think you would be rewarded by such a venture? Would you not be deemed to be a pariah taking advantage of the situation?
It is clear that our current course of behavior does not bode well. I agree with you, and Noam Chomsky, David Suzuki and others that the change required is in fact spiritual in nature.
An interesting blog.
"The soothesayers are mired their existence foretold always chasing, chasing fool's gold"
4/16/07, 2:22 PM
The other factor that no-one else takes into account, which you thankfully do, is that people will react to changing conditions. When the price of fuel goes up, people make adjustments to their lives to use less. In the short term demands tend to be inelastic. The same goods need to be transported to the same markets. The same employees have to get to the same cubicles regardless (within reasonable limits) of the cost.
In the long term, however, fuel costs become part of the decision making process. People move, and moving closer to work makes sound economic sense. People replace their vehicles, and getting a more efficient vehicle makes sound economic sense. Which is why American automakers are all in trouble. Transit ridership goes up, so agencies expand their fleets and extend their routes. When the cost of fossil fuels exceeds a certain point, and doesn't look like it will come back down, certain people will pungle up the money to start producing alternative fuels. It will make sound economic sense.
One critical measurement in how it all works out is volatility. If fuel prices are skating between $1 and $10 per gallon, it's very difficult to justify investing serious money in alternate fuels. The uncertainty is just too much.
Another measure is the lag between the need and the implementation of the solution. Very few people are going to dispose of a 1 year old car in order to improve gas mileage and save, say $100 each month in gas. It's too much of a monetary hit. Similarly, very few will move to a new house to save a similar amount. When the price of keeping the old car or house goes to $1000, then you can be sure that a great many will make the needed adjustment, but that sort of jump is unlikely in say a 2-year timeframe.
The other time lag to watch is the time needed to bring alternative fuels actually into the market. The lag for most industrial facilities, from investment to market production is from 2 years (for well-understood processes) to 10 years (for bleeding edge high-tech). 10 years is an unimaginably long time for economic decision making. If peak oil has already occurred, a project with that sort of time frame would probably be doomed by market-wide economic collapse before it could yield significant benefit for anybody.
I do think you are right that some things can be done on a local/regional scale to ameliorate the worst of the excesses. I think they will in some cases happen, particularly in the parts of the US that have a strong local tradition of citizen participation, thike New England and the NW. Mostly, however, the attempts will be of the "Let's give tax breaks to hybrid vehicle purchases" type. Sounds good, but wrong-headed and actually make the situation worse rather than better. (For those that don't know, hybrids use more excess fuel in their production than they save over their projected lifetimes.)
(BTW, all are fine. It's good to have an intellectual conversation with an intellectual who's actually intelligent as well as intellectual.)
4/16/07, 2:27 PM
Re: farming. I have some practical experience in this area. The small farm is dead in this country for three reasons; cheap fuel, manipulated markets, and subsidies. A conscious decision was made back in the thirties, by the government, the agricultural supply (chemical) companies, and the commodities markets, to drive the small operator out of business. Ostensibly it was in the name of efficiency, but really it was about control. Check some of Lynn Miller's essays at smallfarmersjournal.com. One of my hopes is that the coming oil crisis will create a set of conditions that make it possible for the small farmer to once again thrive in this country.
4/16/07, 2:38 PM
John Michael Greer said...
Dan, volatility and time lags are exactly the factors that so often get left out of the picture. I foresee huge swings in energy prices in the coming decades, which will make market-based responses to the crisis almost completely ineffective, given the lag time for getting anything from the drawing board into production. It's going to take action by non-market and non-government players to make a lot of the constructive possibilities happen. More on this later.
As for farming, the one bright spot in that otherwise grim situation is the explosive spread of farmers markets and community supported agriculture in the last two decades. A growing number of small farmers are going right around the middlemen, selling directly to consumers, and making a decent living doing what modern monopoly capitalism is supposed to do, and doesn't: meeting people's needs in a relatively free market. As transport and tractor fuel prices wobble upwards, there's going to be a much greater niche for the sort of local farming that was part of every US town's outskirts fifty or sixty years ago. A century from now, half the American people will be growing food for a living, so the sooner people get started on that, the better.
4/17/07, 11:34 PM
That being said, statist Communism in industrial countries has clearly been the bigger disaster. Not only were these economies not very good at meeting people's needs, but also the ecological devastation they caused in Russia and eastern Europe was nothing short of horrendous.
4/18/07, 9:32 AM
4/18/07, 10:47 AM
As we slide into self survival mode will society as we know it morph into general lawlessness with what are now street gangs becoming war lords of a territory. Controlling all?
Will we be able to pay taxes to keep the Police employed, the courts and jails functioning?
I sometimes get the feeling that with the major changes about to occur in the world with peak oil, etc. and development of coping systems at an individual level, we will see the collapse of societal protection agencies.
While we can more easily cope with answers to address individual issues we also need to adress how our new societies cope with how my viking ancestors lived in their society (with little regard for others property rights).
4/18/07, 1:40 PM
An era of volatility in fuel prices means that the big corporations will be unwilling or unable to adjust quickly enough to capitalize on the crisis and regain control. It also means that big-factory hyper-tech solutions just aren't going to be the way out.
What it does mean is that the local, small independent business will take up the slack. There are already small garage-scale outfits around the country that produce and sell bio-diesel. There are already thousands of farmers around the country that farm using horse power (Amish anyone?). The higher the petroleum prices the better these people will do.
What happens when Joe English's fuel costs are driving him out of business, and he sees his neighbor, Jacob Kalbfuss prospering? Some percentage of those farmers are going to ask Jacob to maybe sell him a horse, and a few driving lessons. He sells half or three-quarters of his land, pays off his debt, and makes a better profit with more independence on what he keeps. Word gets around and eventually, the market pressures of rising prices lead to a lot of other farmers doing the same.
In a volatile market this is possible. In a situation where the prices just go up and stay up, Jacob does quite well, but Joe just goes into bankruptcy, forcing him out of business, and driving up food prices.
4/18/07, 2:12 PM
4/26/07, 5:32 PM
Thomas Mazanec said...
12/16/14, 4:27 AM
I get chills when you step over into speculation about the future. Very much magical in the sense you laid out a few posts before this one.
1/1/15, 5:35 AM
Bukko Boomeranger said...
2/4/16, 6:38 PM