Frosting On The Cake

My mother never dared turn her back after making the frosting to spread on a cake. I was right there with a big spoon in my little hand, ready to dunk and run with whatever I could get. Second best was a beater to lick, and third best was the chance to scrape the mixing bowl with my fingers. I always wanted the frosting to last forever. It was much better than broccoli. To me the bowl always looked so big, but unfortunately the frosting always ran out.

A lot has happened in the years since then, but one thing has remained true: nothing lasts forever. As adults of course we plan around things running out; we have contingencies and “Plan B’s.” We even plan for outages of normally reliable things like electricity. For some reason though, many of us find it difficult to plan around the concept that the earth has a limited supply of something we extract from underground: petroleum. Surely we will never run out of that!

The answer is: yes and no. Because the oil industry actually drills for profit, not for oil, there will always be some oil left in the ground. At some point the only oil left in the ground will be so deep, or so contaminated, that it becomes unprofitable for the industry to extract, refine, and deliver. To do so would mean selling it at a cost the market simply wouldn’t bear. So yes, there will always be oil in the ground, and the Earth will never run out. But you and I, and all our vehicles, and all our businesses, and all our governments, we will all definitely run out. Running out of petroleum is not a question of ‘if’ but rather of ‘when.”

Some people make it seem as though the world will run out of oil tomorrow; others as though the Earth has a miraculous endless supply. Scientists have run countless computer models, most of which give us about another twenty years. Here’s how it works:

Remember the bowl of frosting? The first oil mankind drilled was the low-hanging fruit. It was close to the surface, and had relatively few impurities to be refined out. That was easy picking, akin to dipping a spoon in a bowl of frosting.

In the second half of the twentieth century mankind had tapped a lot of the low hanging fruit. In 1972, America’s oil wells began producing less than they used to. It was as if a balloon were deflating. When oil extraction productivity had been maximized and the curve began dipping, the USA had hit what is called “peak oil.” Luckily for us the rest of the world was still highly productive, so we began importing to meet demand. Hello 1973 gas crisis!

Since then many other oil-producing countries have also hit peak oil production and also begun downward slopes in extraction and refining. As a planet, Earth hit peak oil globally back in 2005.

When a country passes peak oil extraction, most of their easy and clean oil is gone. If you can no longer dip a spoon in the bowl of frosting, the next step is to lick the beater. It’s more work for less reward, but it tastes the same. In oil’s case, the next step is to drill in awkward places like the ocean, or by hydrofracturing (fracking). These are terribly expensive methods of extraction, generally result in smaller yields, and the oil extracted contains more contaminants that must be refined out – making that process also more lengthy and expensive. At this point, the costs involved are often so high that it’s simply not worth the oil industry’s investment.

Back in the kitchen, if we cleaned the beater we could always run our fingers through the bowl. Then that was it, the frosting was all gone. In oil terms, if the industry exhausts the easy oil fields, then secondary options such as ocean drilling and fracking, there is one final option left: tar sands. This is the most expensive, dirtiest, petroleum in the world. To extract and refine a usable vehicular gasoline product from tar sand the industry requires a high retail price, one much higher than we are seeing at the pump today. Tar sand oil would be sold at a price many consumers would find objectionable, and most responsible businesses would plan around.

Something to consider: if efforts are already being made to extract oil from tar sand, how close are we really to the bottom of the barrel?

It would be nice to think that business as usual could last indefinitely, but there is only a finite amount of anything that is extracted from the ground. At some point we need to plan for what’s next. That means petroleum’s gradual disappearance from our lives, and embracing the products and energies that replace it.

Do you or your business have a 20-year plan?

Why has the price of oil fallen so much recently?

Three things have contributed: first, due to their slowing economies, demand has fallen in China, Japan, and the EU. Second, oil production has increased here in the US so we are importing less. And third, despite sluggish demand worldwide, Saudi Arabia (the world’s biggest producer) has not slowed down exports. All these factors mean that the world temporarily has more supply than demand, and this has naturally forced down prices.

You may have noticed that this has benefited American consumers, and has lowered many costs for American businesses. On the other hand, it has strengthened the US Dollar relative to other currencies, making American exports less competitive. Some companies with a global presence are hurting, and individuals may be finding evidence of this in their investment portfolios. Such conditions are not likely to improve until the dollar weakens.

So what will happen next? Some economists expect the price of oil to remain relatively low for the next year, possibly two years, before climbing again as US production falls. That one or two years will seem like an eternity though for many fossil fuel companies. Fueled on credit, the industry expanded rapidly over the past several years. With the price of their product halved some fossil fuel companies may now find it difficult to meet the terms of their enormous loans, and this may leave their creditors in a very difficult place. Economists therefore warn of a potential crisis in the banking industry again, which of course would have further ripple effects on the economy overall. Are you prepared for another credit crunch?

With prices so low, oil companies are pulling back from ocean drilling and other high-cost, low-return projects. This will contribute to a slow down of supply, and in one or two years the temporary return to familiar territory of our supply:demand ratio and price. What should us individual and business consumers do? Rather than plan our future around a volatile past, the savvy among us will build foundations for the future on reliable economic theory and solid science.

Worth considering:

How would gasoline at $1 per gallon impact you or your business ten years from now? How about at $10 per gallon?

How would another banking crisis impact you or your business two years from now? How about ten years from now?

James Cameron’s 2009

Yes, I have them too: flashback moments. Suddenly out of nowhere I’ll remember songs, movies, books, and television shows from years ago and they’ll be stuck in my head until I hear, read, or watch them again. So it was earlier today with “Dark Angel,” a television series that ran 2000-2002.

I watched the pilot for the “Dark Angel” series again and was genuinely surprised by how current some aspects of it seemed. In interviews about the series James Cameron noted that his goal was to portray a 21st century, high-tech Great Depression, which is essentially what the world is experiencing right now.

Our society’s increasing levels of polarization and class separation mirror the heroes and villains aspect of the show. The importance of being an active member of a network of people was emphasized on the show, and is also emphasized now in the progressive lessons of the No Impact Project, the Transition Town movement, the New Economics Forum, and others.

I was also struck by how localized and entrepreneurial the economy had become, things we are also seeing take place. In Cameron’s “Dark Angel” scenario an electromagnetic pulse had wiped out America’s electronic financial system and markets, grinding the larger economy to a standstill. In reality energy descent and climate change are and will impact financial systems and markets, forcing the larger economy to localize and become more entrepreneurial. In the show as in real life, small scale commerce thrives but also presents a regulation challenge.

Ironically, the electromagnetic pulse in “Dark Angel” was supposed to have happened in the then futuristic 2009 – the year that Iceland’s economy and banking system famously collapsed, the year of the G-20 world economic summit that accomplished nothing, and the year that supposedly oil-rich Dubai asked the world for debt deferments, causing worldwide stock market panics. The opening scenes of the series are supposed to have taken place in 2009, then the bulk of the series takes place in 2019 – just eight years from now.

As in “Dark Angel” it is highly likely that our future will involve more bicycling and walking, but we are unlikely to have any of the automobiles, motorcycles, and other petroleum-fueled vehicles seen on the show. The computers, cellular telephones, and bright lighting are also likely to be far rarer in future than seen in the show. But maybe that’s what makes a show entertaining: just realistic enough to be possible, and just unrealistic enough to take your imagination for a ride.

Watching this old show made me consider how my own vision of the future differs from James Cameron’s – and how everyone’s vision of the future must be unique. I then considered that if we all envision a different future, we are all working towards different things. Sometimes we may be working together, other times we may be impeding each other. Let’s find out, so we can all be more productive. I’ve been contacting a number of people – politicians, CEOs, academics, activists, etc – who influence others, people of a variety of disciplines, industries, and philosophies. I hope to discover some common ground, maybe unexpected, that can help bridge the widening gaps in our society and provide some foundation material for the networks that we will need in future.

Take A Vacation!

Author and energy expert Richard Heinberg and his wife reportedly conduct “energy fasts” on a regular basis. This is a fascinating concept, and an important one. This means more than just turning out your lights “Earth Hour” style; it means not using energy. No mobile devices with batteries, no automobiles, no air conditioning, no natural gas for cooking, no oil for heating… no energy. This doesn’t mean modern life comes to an end – you can still have friends over for a drink, work in the yard, do many kinds of work, read a book, fix a nice dinner, chat with a neighbor, walk the dog, do all kinds of things. But you do them with your own energy. These energy fasts are a wonderful energy descent preparedness drill.

When you think about it, we could do almost everything in our life today without outside forms of energy. Electricity, natural gas, and petroleum simply make these things easier for us, and therefore make us more productive. If electricity, natural gas, and petroleum were to go away, many of the conveniences we currently rely on would go away too. Our lifestyles would have to change to reflect that.

Luckily, with the possible exception of an act of war, it is highly unlikely that we would lose any form of energy overnight. A gradual transition gives us time to adapt with a bit more ease. Fossil fuels are finite to be sure though, so are indeed going away. Like any other resource they will gradually become more expensive over time as supplies decline. Rising costs will force low-profit margin aspects of our fossil-fuel reliant economy to change first, then others. We use fossil fuels to create most of our electricity, and to create both solar panels and wind turbines, so the decline of fossil fuel supplies really is the thing to watch.

The sciences of declining supplies of cheap and abundant fossil fuels, and how humanity loosens our dependency on them, are what energy descent theories are all about. It may seem tempting to champion just one theory we feel is most likely and plan around that one, but it’s likely that many of the theories will play out in various places depending on local conditions. The big question faced by each of us today is not in what way we will react when cheap and abundant fossil fuels are gone, but how we react as they become more scarce and expensive. How we adapt and evolve the fossil fuel-dependent lifestyles we lead today into the sustainable fossil fuel-free lifestyles needed tomorrow will determine either our prosperity or our fate.

Politics, business, and apathy in our society all point toward domination of the Adaptation and Collapse theories. Don’t wait for politicians, business leaders, or other people – let’s make sure our lives each represent a step towards resilience and less dependence on fossil fuels. Take a vacation – from fossil fuels.