The Great Lakes Zephyr - Wind Energy & Hydrogen Journal

Plan B Book Byte 2006-7
For Immediate Release
May 23, 2006

THE WORLD AFTER OIL PEAKS

http://www.earthpolicy.org/Books/Seg/PB2ch02_ss6_7.htm


Lester R. Brown


Peak oil is described as the point where oil production stops rising and
begins its inevitable long-term decline. In the face of fast-growing
demand, this means rising oil prices. But even if oil production growth
simply slows or plateaus, the resulting tightening in supplies will still
drive the price of oil upward, albeit less rapidly.

Few countries are planning a reduction in their use of oil. Even though
peak oil may be imminent, most countries are counting on much higher oil
consumption in the decades ahead, building automobile assembly plants,
roads, highways, parking lots, and suburban housing developments as though
cheap oil will last forever. New airliners are being delivered with the
expectation that air travel and freight will expand indefinitely. Yet in a
world of declining oil production, no country can use more oil except at
the expense of others.

Some segments of the global economy will be affected more than others
simply because some are more oil-intensive. Among these are the
automobile, food, and airline industries. Cities and suburbs will also
evolve as oil supplies tighten.

Stresses within the U.S. auto industry were already evident before oil
prices started climbing in mid-2004. Now General Motors and Ford, both
trapped with their heavy reliance on sales of gas-hogging sport utility
vehicles, have seen Standard and Poor’s lower their credit ratings,
reducing their corporate bonds to junk bond status. Although it is the
troubled automobile manufacturers that appear in the headlines as oil
prices rise, their affiliated industries will also be affected, including
auto parts and tire manufacturers.

The food sector will be affected in two ways. Food will become more costly
as higher oil prices drive up production costs. As oil costs rise, diets
will be altered as people move down the food chain and as they consume
more local, seasonally produced food. Diets will thus become more closely
attuned to local products and more seasonal in nature.

At the same time, rising oil prices will also be drawing agricultural
resources into the production of fuel crops, either ethanol or biodiesel.
Higher oil prices are thus setting up competition between affluent
motorists and low-income food consumers for food resources, presenting the
world with a complex new ethical issue.

Airlines, both passenger travel and freight, will continue to suffer as
jet fuel prices climb, simply because fuel is their biggest operating
expense. Although industry projections show air passenger travel growing
by some 5 percent a year for the next decade, this seems highly unlikely.
Cheap airfares may soon become history.

Air freight may be hit even harder, perhaps leading to an absolute
decline. One of the early casualties of rising oil prices could be the use
of jumbo jets to transport fresh produce from the southern hemisphere to
industrial countries during the northern winter. The price of fresh
produce out of season may simply become prohibitive.

During the century of cheap oil, an enormous automobile infrastructure was
built in industrial countries that requires large amounts of energy to
maintain. The United States, for example, has 2.6 million miles of paved
roads, covered mostly with asphalt, and 1.4 million miles of unpaved roads
to maintain even if world oil production is falling.

Modern cities are also a product of the oil age. From the first cities,
which took shape in Mesopotamia some 6,000 years ago, until 1900,
urbanization was a slow, barely perceptible process. When the last century
began, there were only a few cities with a million people. Today there are
more than 400 such cities, 20 of them with 10 million or more residents.

The metabolism of cities depends on concentrating vast amounts of food and
materials and then disposing of garbage and human waste. With the limited
range and capacity of horse-drawn wagons, it was difficult to create large
cities. Trucks running on cheap oil changed all that.

As cities grow ever larger and as nearby landfills reach capacity, garbage
must be hauled longer distances to disposal sites. With oil prices rising
and available landfills receding ever further from the city, the cost of
garbage disposal also rises. At some point, many throwaway products may be
priced out of existence.

Cities will be hard hit by the coming decline in oil production, but
suburbs will be hit even harder. People living in poorly designed suburbs
not only depend on importing everything, they are also often isolated
geographically from their jobs and shops. They must drive for virtually
everything they need, even to get a loaf of bread or a quart of milk.

Suburbs have created a commuter culture, with the daily roundtrip commute
taking, on average, close to an hour a day in the United States. While
Europe’s cities were largely mature before the onslaught of the
automobile, those in the United States, a much younger country, were
shaped by the car. While city limits are usually rather clearly defined in
Europe, and while Europeans only reluctantly convert productive farmland
into housing developments, Americans have few qualms about this because
cropland was long seen as a surplus commodity.

This unsightly, aesthetically incongruous sprawl of suburbs and strip
malls is not limited to the United States. It is found in Latin America,
in Southeast Asia, and increasingly in China. Flying from Shanghai to
Beijing provides a good view of the sprawl of buildings, including homes
and factories, that is following the new roads and highways. This is in
sharp contrast to the tightly built villages that shaped residential land
use for millennia in China.

Shopping malls and huge discount stores, symbolized in the public mind by
Wal-Mart, were all subsidized by artificially cheap oil. Isolated by high
oil prices, suburbs may prove to be ecologically and economically
unsustainable.

In the coming energy transition, there will be winners and losers.
Countries that fail to plan ahead, that lag in investing in more
oil-efficient technologies and new energy sources, may experience a
decline in living standards. The inability of national governments to
manage the energy transition could lead to a failure of confidence in
leaders and to failed states.

National political leaders seem reluctant to face the coming downturn in
oil and to plan for it even though it will almost certainly become one of
the great fault lines in the history of civilization. Trends now taken for
granted, such as urbanization and globalization, could be reversed almost
overnight as oil becomes scarce and costly.

Developing countries will be hit doubly hard as still-expanding
populations combine with a shrinking oil supply to steadily reduce oil use
per person. Such a decline could quickly translate into a fall in living
standards. If the United States, the world’s largest oil consumer and
importer, can sharply reduce its use of oil, it can buy the world time for
a smoother transition to the post-petroleum era.

#     #     #

Adapted from Chapter 2, “Beyond the Oil Peak,” in Lester R. Brown, Plan B
2.0: Rescuing a Planet Under Stress and a Civilization in Trouble (New
York: W.W. Norton & Company, 2006), available for free downloading or for
purchase on-line at www.earthpolicy.org/Books/PB2/index.htm


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