Shooting the Elephant

Elephant by Raphael Riegger

When I started penning this blog a few years ago the idea that we might have reached some fixed limit of oil production and all that entails for our rapacious industrial civilisation seemed rather preposterous to most people. What’s changed in the interim? Not much, by most accounts. Those who accept the reality did so ages ago, and those who tune out reality continue to do so, lumping anyone who mentions ‘peak oil’ into the same mental category as Space Lizards and Mayan prophesies.

There aren’t many rewards attached to being a blogger writing about the grinding reality of the limits to growth and pointing out the presence of a large elephant in the middle of the sitting room becomes quite tiresome. Cornucopian believers send you poisonous emails, friends quietly get married without telling you and you spend those small hours before the sun’s rays lighten the eastern horizon wondering quietly “What if I’m the mad one and you can have infinite growth on a finite planet?” After all, the newspapers are full of pronouncements of ‘the recovery’, with more people buying new cars than ever before, m/b/trillionaires thronging the streets of London and the stock markets testing ever greater heights. Yes, there are the occasional dark clouds in an otherwise sunny sky, such as the recent NASA-funded report concluding that industrial civilisation is doomed, and the latest IPCC report which stated that … ummm, global GDP may be reduced by a tiny fraction by 2100 due to global warming (so, actually let’s not bother doing anything then!)

So anyway, amidst all of the white noise perhaps it’s time to sweep away the clutter from the desk and get back to basics with a pared-down recap of the situation we face and why it actually matters.

Peak oil snuck past us

Let’s deal with peak oil first of all. Yep, that old bugbear that won’t go away - no matter how much guff is pumped out by the mainstream media who take their cues from industrial PR flacks and lobbyists. Listening to it, we might imagine that there’s enough oil to go round for the next few decades or centuries. But they’re wrong. As Kurt Cobb points out, actual production levels of regular ol' crude oil hit a plateau of 67 million barrels per day in 2005 and, despite a bit of minor fluctuating, was at the exact same level in 2012, the latest year we have figures for. And that is despite the ‘boom’ in tight oil in the US and, more importantly, more money being flung at the industry than the average person can imagine.

So, in the last eight or so years, despite rocketing demand from China, India et al. combined with the throwing of mega sums of money at the industry, the amount of crude we can get out of the ground has remained stuck, while the price has risen several fold. How did they get away with hiding this? Simple - they just included all sorts of ‘oil-like fuels’ such as biodiesel into the mix and hoped nobody would notice. Let’s not forget that oil companies always like to inflate their figures so as to attract new investment. An honest oil company who says ‘Actually we didn’t produce as much as we said we had, and next year it will be even lower,’ is an oil company that will shortly be out of business.

Conclusion: Big fat industry lies can only mask reality for so long. Peak oil has been hidden from our view for too long.


High oil prices matter

For the last century or more, economic growth has occurred on the back of cheap oil. We, a single species among millions, have burned through most of the Earth’s accessible store of cheap fossilised sunlight. 99.9% of economists never thought that this would matter because they barely gave it a thought. Instead, we built a global civilisation that simply cannot continue to function unless it is constantly growing on the back of cheap fossil fuels. Now that the oil price seems stuck at around $100 a barrel, meaningful growth has stopped. Instead of productive economic activity we now simply have the growth of the money supply. Some countries, such as the UK, have managed to create the illusion that their economies are growing, but if you strip out the billions added in quantitative easing, Chinese and Russian casino money and the dubious gains of the stock market then an entirely different and more honest picture emerges.

There are now about 99 dollars/pounds/yen of credit/debt for every ‘real’ dollar/pound/yen. It is the mother of all credit bubbles and even if it partially pops it will take down a huge chunk of the global economy with it. The question is not if but when it will pop.

But because all of our economic systems have no reverse gear, this means future payments will not be honoured, no matter how much they are promised. In reality, negative economic growth means no new lending for business, no investments and no pensions for the masses. What will you do if your pension is sharply reduced or taken away just before you retire?

Conclusion: Economic growth is dead for most people and living standards are declining accordingly. The ‘recovery’ is simply the paper wealth rich getting richer at the expense of everyone else, as well as the entire system they depend upon for their wealth. You will probably not get a pension and your kids will be slaves to debt. This is what peak oil looks like.


Peak oil hits

'So what?' say environmentalists. Oil is evil and solar panels are good. We can transition to a world of clean energy and life can continue much as it has but everything will be more pleasant. Except that it can’t and won’t. Peak oil means that from now on in there will be less and less energy available to us. And like a falling tide that reveals all the rocks hidden on the beach, falling energy supplies mean that those who control power will do their best to consolidate that power. This means more privatisations of institutions that were previously considered off-limits, more squabbles over resources and more self-cannibalisations of societies.

Furthermore, we face diminishing complexity in our techno-obsessed cultures. Less concentrated readily-available energy means business slows down and companies go bust. The thousands of components that make up a tablet computer, for example, are produced in a web of specialised factories spanning the globe. Add a credit crash, a currency war or a bog-standard economic panic and the whole ultra-complex just-in-time model for producing an iPad shatters into a million little useless pieces.

What is a million times more complex than an iPad? A national electricity grid. To keep all that electricity flowing from the wall sockets takes an enormous amount of complexity and the whole system relies on global supply chains functioning perfectly. Add renewable power into the mix and we’re okay for a certain percentage, but beyond that the grid becomes unstable due to the inevitable unwillingness of wind, sun and waves to conform to our precise human desires. An unstable electrical grid means industry is unable to operate and relocates, causing more economic damage as it does so. In actual fact, it may not even be possible at all, because renewable energy systems rely on a very high level of socio-economic complexity - the kind that only concentrated forms of energy can provide.

Conclusion: Renewable power is great on a small scale, but we can’t power an industrial scale civilisation on it. 


Too high, too low - but never just right

What does peak oil look like from the top? At the moment we are existing in a kind of oily no-man’s land. Oil prices are too high to allow economic growth to happen, but too low to make it profitable to produce the stuff in the first place. That’s why big companies such as Shell are walking away from the North Sea, the Arctic and the US. All of the low-hanging fruit has been picked and it is just the hard-to-reach stuff at the top of the tree which is available. Oil companies cannot make a profit if it costs them $150 to extract a barrel of oil using all the latest technology and drilling techniques, which they will then only be able to sell for $100.

Conclusion: Expensive oil kills economies. Cheap oil kills oil companies. Dead oil companies don’t produce oil. Less available oil kills growth-based economies. Rinse and repeat and this is what peak oil looks like.


Grabbing what’s left

As the US struggles with a moribund economic situation, unpayable debts, high-level corruption and falling access to real energy supplies - it is becoming ever more desperate. Just like George Orwell shooting an elephant in Burma to maintain face in front of a mocking crowd:

“I perceived in this moment that when the white man turns tyrant it is his own freedom that he destroys. He becomes a sort of hollow, posing dummy, the conventionalized figure of a sahib. For it is the condition of his rule that he shall spend his life in trying to impress the "natives," and so in every crisis he has got to do what the "natives" expect of him. He wears a mask, and his face grows to fit it. I had got to shoot the elephant. I had committed myself to doing it when I sent for the rifle. A sahib has got to act like a sahib; he has got to appear resolute, to know his own mind and do definite things. To come all that way, rifle in hand, with two thousand people marching at my heels, and then to trail feebly away, having done nothing — no, that was impossible. The crowd would laugh at me. And my whole life, every white man's life in the East, was one long struggle not to be laughed at.”


Is there any way of seeing John Kerry posturing over Ukraine or Obama with his red lines not looking like Orwell’s ‘hollow posing dummy’? Because Ukraine is not about freedom or democracy or any of the other words that are subject to the laws of diminishing credibility, but about energy. Ukraine is all about getting a natural gas fix to Europe’s needy energy markets and the power play between east and west threatens to crush Ukraine like a nut between two grind stones. The US didn’t spend all that money installing a friendly government only to see it be overthrown - even if it did mean cosying up with some unsavoury people. And Putin may be the largest shark circulating the floundering figure of Uncle Sam, but he is not the only one.

We must ask ourselves - would we be willing to risk a major war over fossil fuels if those same fossil fuels were as abundant as many claim they are? Just why are US energy majors such as Chevron and Exxon salivating about fracking natural gas in Ukraine?

Conclusion: Increasing hostilities over who has access to the remaining fossil fuels, combined with a changing worldwide power dynamic as one big growling dog faces down another is the new reality. This is what peak oil looks like.


What to do about it

As I’ve been writing here on these pages for a while, there is no single action that you or I can take which will steer this ship away from its suicidal course. Our systems of governance are a system for ensuring that we are only ever ruled by sociopaths, so the best course of action to take is to avoid them and the systems they have created. This system is not reformable, so the best thing to do is help build a new paradigm that can run in parallel until the old one inevitably expires. What this means in practice is disassociating yourself as much as possible from a global economic system that is collapse-prone and which does not have your interests at heart. You need to learn to cover the basics of food, fuel and shelter for you and your family, and learn new ways of living that are in harmony with nature as much as possible.

This doesn’t mean, as I’ve repeatedly said, filling a bunker with tins of corned beef and guns, but instead requires that you get out there and make some friends with a community of people who share the willingness to put in the work rather than just talking about it on internet forums. Get hold of a bit of land, if you can, and practice permaculture. Share stuff. Teach what you have learned to others. Write about it, talk about it, but most importantly do it. Every day thousand more are tossed onto the scrap heap by an economic system which is isn’t fit for purpose. Try not to join them.

If you find that depressing - don’t. There are some silver linings to this cloud - such as our inability to fry the atmosphere. If you come along for the ride then you’ll likely be fitter, happier and your brain will not be frazzled by working a 60 hour week to pay off endless debts with no prospect of an easy retirement at the end of it. That, at least, has to be worth something.