Our energy problem

You could read everything I have written below, or you could simply watch this video. The choice is yours.

 At the top of this blog I have written a subtitle which says The end of the age of abundance and our response to it. My aim is quite simply to add another voice to the growing chorus of people who are concerned about peak oil and, hopefully, foster some useful discussions about what to do about it. It's not to earn me money or glory (I will never have syndicated ads on this site) but simply to be another voice in the wilderness. About half of the people dropping by here are from the US (howdy!) with most of the rest coming from the UK and Europe i.e. the places where peak oil has traditionally fallen under the radar.

But it occurs to me that, in my experience, only about one person in every hundred has any idea what peak oil is about and they may well have ended up on this page by accident (perhaps lured here by my nettle soup recipe) so – apologies to those who took their Peak Oil 101 module years back and know how to tell their ASPOs from their EROEIs – but this post is dedicated to the newbies.

So (deep breath), what exactly is peak oil?

Well, it's two things. Firstly - and this is the dull but necessary technical definition - it's the point on the supply curve where precisely half of the accessible oil in the Earth's crust has been extracted. It's widely thought that we've either reached that point or are at that point right now or are about to hit that point – you can take your pick depending on who you listen to. The point is that from now on there will be less and less oil available to us. This is called peak oil i.e. we are at the peak of oil extraction and it can only go downhill from here.

Okay, that was the dull bit. Now for the Earth-shattering part.

You might think that this sounds slightly boring, vaguely problematic and the kind of thing that someone somewhere should probably sort out. Wrong: it is the most important thing that has happened in our lifetimes and quite possibly the greatest challenge modern civilization has known. Peak oil means your life will change dramatically in the near future, probably for the worse.

Okay, so that sounded a bit dramatic. You might be thinking that I am probably some kind of conspiracy theorist and that I spend my time watching videos about shadowy elites spraying mind controlling poisons on civilian populations from air planes and dynamiting the World Trade Center. I don't. Neither do I believe we are being controlled by David Icke's Lizards or the Space Brothers or the Illuminati, or that supernaturally gifted Mayan astronomers were able to predict the apocalypse from hundreds of years in the past. If you're one of the many people who does then fine, there are lots of other websites you can go and look at because what I propose is that we are not being controlled by anyone at all. That's right - nobody is in charge at all - and that's even more scary when you think about it isn't it?

So now I have got that out of the way, what exactly is peak oil and why should it concern you? Well, you see, another uncomfortable thing is that we are pretty much all addicted to oil. We swim in it, we breathe it and we eat it. None of us alive knows what a life without oil is like – it's like trying to explain the concept of wetness to a fish. Our whole civilization is built on it and all of us, directly or indirectly, profit hugely from its cheapness and its availability.

When we first discovered oil we didn't think much of it. It came out of the ground in globules and got stuck to the soles of Romans' sandals. It wasn't until the industrial revolution that we found a use for fossil fuels - and then its extraction and use really got going. If we say that this took off in around 1800, we have had just over 200 years of use from it. That's not to say that we have 200 years left of use though. Our lifestyles assume that oil is practically limitless and our numbers are swelling and swelling, so the rate at which we are using it up is growing all the time.

But still, you might think: so what? You might think that we still have 100 years or so of good usage left (whatever the ramifications of burning up all that oil has on the climate). You might, indeed, think that it's a problem for your grand kids, rather than yourself. You'd be wrong. Here's why.

Economics teaches us that a market will always find the correct price for a commodity when supply and demand meet. Up until now, supply has always been able to meet demand as new oil wells are drilled and new technology has enabled us to exploit those wells more efficiently. This has led to a stable and low price – so low in fact that economists have hardly bothered factoring the price into their equations when they calculate how much economies will grow. In short, it has been assumed that supply will always be able to keep up with demand. In the unlikely event that it couldn't they assumed that substitution would occur, i.e. the market would find some other replacement for oil to take its place – like hydrogen or cheap nuclear power.

The only problem is, it hasn't.

So we have a situation now where for the first time ever, demand, driven not just by the traditional energy gobblers of the west but also by booming countries like China and India, is starting to outpace supply. Just as economists predicted, when such a situation occurs, the price of the commodity will rocket. At least they predicted something right, and in case you hadn't noticed, the price of oil has remained around ten times what it used to be for some time now.

And that's a big problem because, basically, our economies are geared for growth and they can't grow when oil prices are at these levels. Years ago some of the original peak oil thinkers saw what was likely to happen when demand outpaced supply. They used oil production charts from hundreds of oil wells with known reserves, and estimated the production curves of the others. There has been some debate about the accuracy of their timing i.e. exactly when they said things would occur, but that could be put down to a couple of major finds and some extra technological innovation that has helped to squeeze out a few more barrels. But what they predicted was an inevitable end to economic growth and a jump in the prices of basic commodities which would lead to depression in the economies geared to run on cheap energy and revolutions across the Middle East as the knock-on price of foodstuffs rose.

Sound familiar?

A few people listened to their warnings in the 1970s (a couple of oil shocks cleared people's minds for a while) but by the 1980s people decided to turn off en masse and elect the likes of Ronald Reagan and Margaret Thatcher and a host of other politicians who promised sudden growth in the short term while neglecting to mention that it was at the expense of our long term welfare. Looking back, it was an all-too-human thing to do; after all, nobody likes living in a state of depression.

We could, instead, have pumped all of our resources into renewable energy and conservation programmes that would have at least cushioned our energy descent. Jimmy Carter famously installed solar panels on the White House to make a statement about doing just that, and one of the first things Ronald Reagan did when he was elected to office was to take them down again. Americans, it seemed, didn't like a visual reminder that they live in a world of energy limits, especially one so prominently placed.

Jimmy Carter with his new White House solar panels in 1979.

They were taken off again by this man shortly afterwards.

By contrast Denmark, where I live, was one of the few places that chose to do something even approaching the correct course of action. Politicians here are kept on a short leash due to cultural reasons and are forced to do things in the country's long-term interest. Houses were super-insulated, car driving was banned on Sundays and the population took to their bikes in order to save fuel. But Denmark, with its five or six million people, was too small to be noticed and almost every other country hit the snooze button and went back to sleep.

It was a missed opportunity and now there is practically nothing we can do about it, which is too bad.

In the interim 30 years we have not just been snoozing though, we've been busy eliminating every last trace of the idea that we live in a world of finite resources and that all we have to do is elect the right politicians, print enough money or create the right business conditions for 'enterprise' to flourish and we'll be on the never-ending upward slope of economic prosperity. So ingrained became this idea that we lost all sense of perspective. Indeed it's probably not too much to say that for most people, the idea of economic growth and progress has become a religion. It's how they interpret the world and the prism through which they see everything. Ergo, no economic growth equals no point in living; end of story.

But it is a bad religion. One aspect of it is that the money economy in this world has grown like a vast tumour, feeding off the physical economy of goods and services. If economic growth could last forever, then banks could lend ever more money and charge interest forever and governments and individuals could keep increasing their borrowing because there would never come a time to pay the piper. The money economy could continue to grow by feeding off the secondary economy of goods and services which could grow by feeding off the primary economy of raw materials, such as water and land and air, all powered by that magic yet invisible ingredient called oil. If energy was assumed to be infinite, then our ambitions could also be infinite in size and scope.

The fly in the ointment of this unrealisable dream, of course, is that energy, for all practical purposes, is not infinitely available for our exclusive use. Rising energy prices have a knock-on effect on the cost of every other commodity that requires energy to extract, process and transport. I can't think of any commodities that don't fall into that category, unless you count wishful thinking as one. So it might be helpful to imagine the spike in oil prices as a gigantic needle pointing skywards to prick the immense balloon of inflated 'wealth' that is hovering over the world like a Zeppelin. The result, as evidenced by the Lehman Brothers in 2008 and the current round of financial shocks hitting European banks and American cities and states, is nothing short of a Hindenburg Disaster.

Another crucial point to note - and this is the point that most people don't grasp - is that we are experiencing slowly descending net energy. Put simply, this means that in the good old days you could simply drill a hole in the ground and high quality cruse oil would gush upwards. This low hanging fruit had a rate of return of about 300 - that is, you got 300 units of oil back for every 1 you put into it. This ratio is known as EROEI (Energy Return On Energy Invested).

Those days of extremely high net energy have gone, but we have configured our modern world as if they would stay forever. These days, oil is in increasingly more difficult places to get at, and the stuff that is there is comparatively low quality stuff with a low EROEI. Basically put, the low hanging fruit has been well and truly picked.

Other stores of energy have varying EROEIs ranging from coal with about 80, nuclear with about 10 and corn ethanol of about 1 (i.e. you get as much energy back as you put into growing, transporting and refining it, meaning it is not worth the bother). Renewables have a range of EROEIs that are open to debate but tend to be of the order of 10 or less. This means they are technically viable as an energy source (all other things being equal) but would need to be scaled up on a truly humongous scale to get anywhere near what fossil fuels give us today.

That means we are on the cusp of what the Chinese euphemistically call 'interesting times'. The less polite way of putting it would be 'cursed times'. The spike of peak oil popping the bubble of inflated wealth and ideologically driven economic theory is the most disastrous event of our times. Remember, this is not a conspiracy because nobody is in charge. I don't know if anyone reading this has heard of the Peter Principle, but it states that in any hierarchy people rise to the position of incompetence. Given that we live in hierarchical societies it's very hard to look back at the last 30 years of history and conclude that the people making the tough decisions about energy policy were anything but incompetent.

So the changes we are experiencing are systemic and not controlled by any one or bunch of individuals. It's comforting to think that there are some arch-villains out there and it would just be a case of finding them and hanging them from a lamppost – and indeed there are plenty who might fit this description – but it would be a mistake to think that this would have any real effect beyond the cathartic. Indeed, it would be impossible for a handful of individuals to control such a large and complex system as industrial civilization, although a few have tried and failed dramatically. We were all in this together, to some extent. And just like a rising tide floats all boats, the falling tide will lower all of us.

You might ask, why isn't this all over the media? That's a very good question and I addressed it here. The simple answer is probably that nobody wants to rock the boat. The mainstream media is also heavily invested in the head-in-the-sand growth model and is no more likely to start shouting about peak oil than the tablet scribes of the Roman Empire at the end of the third century AD were likely to start shouting about Christianity. To them it represented the end of an order and a growing threat that was not spoken of in polite company.

That's not to say it isn't in the media – it's all over it, hidden in plain view. You can take your pick from the headlines, with anything from crashed pension funds and share price plunges to Arctic exploration deals and riots in the streets of Cairo – you don't have to trace any of it back much before arriving at peak oil. In fact the phrase 'follow the money' [if you want to get a true explanation of why a particular thing occurred] might be more aptly replaced with 'follow the energy'.

So what happens next, might be your next question.

Lots, is the short answer.

In the short term we are likely to see a lot of politicians promising to restore the growth that we are used to and regard as 'normality'. Growth, growth, growth; it's on the lips of every politician and they'll do anything to restore it in the form of stimulus packages, quantitative easing or allowing banks to lend money to themselves. In actual fact, historically speaking, growth has not been the norm and in the past we have opted for 'stability'. Nevertheless history is assumed to be just that and growth will be the thing that everyone who is used to a middle class lifestyle will be expecting. Of course, electing politicians will not be able to deliver that growth any more than floating an old lady down a river on a golden boat will restore a lost empire (to use a recent example that springs to mind …), but that won't stop people trying, because at this point we will be beyond the rational and will be engaging in cargo cult behaviour.

A cargo cult, for those who do not know, is the observed actions of cultures obsessively enacting the rituals of some past age of prosperity in the hope that it will magically appear again. It was named as such after some Pacific island tribes, having observed the technologically superior Americans during WWII, attempted to bring them back again after the war had ended, by wearing sunglasses made from coconut shells and carrying sticks to represent guns, amongst other things. Every day they spoke into walkie talkies made of bricks and sat in tall bamboo towers that were meant to resemble the ATC towers they had seen the Americans build. But none of it did any good and the cargo that the American soldiers had brought with them had a stubborn habit of not turning up again as expected.

As far as we are concerned though, with prosperity not appearing, plenty of other things will similarly disappear. There's no point even making a list – you can just think of a thing that is part of modern day life and sooner or later it won't be there any more. Other forms of energy, be they high tech vaporwear projects like nuclear Thorium reactors, or mid tech things like windmills and solar panels can only ever make up a fraction of the slack that will be left when coal, oil and gas tail off. The reason for this is that oil has absolutely masses of energy in it compared to other energy sources and we have no realistic Plan B for replacing it. Some people say coal can and will replace oil, but they neglect the fact that coal receives a massive fossil fuel subsidy from oil, that is you need plenty of cheap oil in order to extract and transport coal, making it not such a viable proposition (and damn the climate … again).

This is seriously worrying because all of the things we have become used to will disappear from our lives. Modern medicine is one of those things. Cheap food is another. As is fossil fuel powered transport and anything that requires a highly energy intensive production process that relies of a tightly operating supply chain of hundreds or thousands of suppliers – like, say, the computer on which I am typing these words.

In the mid term we're likely to revert to scarcity capitalism, that is, a permanent state of depression with many of the structures of a functioning modern state spiralling into a state of dysfunction. This will be followed by and combined with a stage of self-cannibalising salvage in which we recycle the materials that were produced during the age of abundance. I doubt anyone alive now will outlive the salvage economy stage as it will take many decades to play out. At the end of it, when some degree of order returns, we'll be looking at much simpler forms of society with few people and fewer resources. Rinse and repeat this cycle several times and you'll get an idea of the long slow arc of collapse that James Kunstler calls 'the long emergency'.

Resource wars will loom as nation states try to grab whatever they can to stop their populaces rioting. Six out of the seven billion people alive on the planet today will discover sooner or later that their food is based on oil and gas production. You might even be one of them.

The modern religions of scientific materialism, economic growth and unlimited human progress will shatter to be replaced by … who knows? All bets are off because the world will revert again to something most of us would rather not think about – a dark and dangerous place where anything can happen to you. Of course, it's like that anyway for 80% of people currently alive, but the fact is that if you're reading this you're probably one of the 20% who are wealthy enough to be highly concerned about losing it. It's a certainty that the way people think 100 years from now will be 100% different to the way we think now.

And what's more, there is no escaping this brave new world. A handful of nations are turning up at the wild teenage party of fossil fuelled economic growth just as it is winding down. After causing a racket all night and acting as if there is no tomorrow the original guests are staggering out onto the front lawn to vomit over the marigolds just as the harsh light of a new day dawns. The parental booze cabinet has been well and truly raided and all that is left to do now is sleep off the hangover.

So how long have we got before a collapse? And what is a collapse anyway? Not surprisingly, people disagree on the first point. Everyone might agree that a huge collapse – defined as a massive loss of complexity within a society – is inevitable but they can't agree on the speed of it. John Michael Greer, for example, argues persuasively that industrial civilization has about 200 years before it passes into mythology, although there will be sudden downward lurches along the route, such as the one we are now starting to feel. Others, like Dmitry Orlov (there are many others, but these two spring to mind) think we may be about to plunge of Seneca's Cliff – and he uses his experience of witnessing the Soviet collapse to argue his point of view.

Money will become practically worthless in short order, and office jobs will disappear along with it. True value will be measured in access to productive land and skills. Viewed as such, our 200 year oil binge could be seen as a curse. It has been just long enough to de-skill us of everything that we truly need to know in order to survive. Before oil hit the scene we were becoming quite good at harnessing the Earth's natural cycles to live meaningful lives with at least some comforts. Now, our addiction to oil has taken away most of our abilities that we spent generations learning. It's safe to say that we'll make quite a few mistakes as we try to relearn those skills.

So how can we solve this problem?

Okay, the first step is to stop seeing it as a problem. It's bigger than that. Problems have solutions, and peak oil doesn't. It's more helpful to recognise our limitations and admit that we are dealing with a predicament. It's a predicament that one day the Earth will be consumed by the Sun, but you don't hear many people asking what can be done to prevent that. A more apt question, in that case, might be 'how do we make the most of the time we have left before our planet is consumed by the sun?' Now we're talking.

So how do we make the best of the energy predicament that we are staring at? Well, I could write a million words on that, but luckily I don't have to because others have. In any case, if I said 'This is the plan that we have to follow to get us out of this mess' I'd be talking out of my trousers. Nobody has a 'solution' to this, although there are plenty who have some very good ideas about what you can do make the ride less bumpy. You probably already know what they say is necessary, it includes things like:

Learning to grow some of your own food
Learning to make things that are not manufactured by oil dependent machines
Learning to be a part of the community
Learning to tune out from popular culture and develop your own sense of what is right and wrong
Learning to live without borrowing money
Learning to become energy literate
Learning to be more spiritual
Learning to take responsibility for your health

As you can see, the above involves a lot of learning and learning takes time. So the best piece of advice is to try and get away from all these things that eat up your valuable time and get learning and practising all of the things that you will need to know if you want to ride out the rest of years in some comfort. I'd also recommend reading up on what others are saying too. Stay away from the people who write about peak oil as an investment opportunity or discuss it in purely technological terms – there are the siren voices of the unstated religion of scientific materialism. Of course, read all about money and science – these are super important subjects to get to grips with – but at then end of the day it is not abstract concepts that will put food on your table.

Luckily for us in this stage of collapse (there's a clause with a limited shelf life) we are in a stage of hyper-connectivity in the form of computer communications. That means all the best peak oil writers have their own blogs and you can see the ones that I follow on the right hand side of this page. Read them week in and week out and learn what they are saying. They all have their own focus so you'll get a rounded picture from multiple viewpoints. One of the benefits of becoming learned in peak oil lore is that your understanding of the world will greatly increase. I can't even count the number of subjects I have begun to explore as a result of the peak oil key unlocking their mystique.

But reading and learning is one thing, doing something useful with it is crucial. That's what I talk about on this blog so, if you're new here and your interest has been pricked, please do continue to read and join in with any comments you might have. As I stated above, to borrow the UK Conservative Party's motif du jour 'We're all in this together' – although the difference is that I don't mean it in an ironic way.

What kind of future awaits us?

A picture says a thousand words and this video says at least a million. Watch it and share it.