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$20 per Gallon
Submitted by Dan Sweeney on Thu, 2010-02-11 23:15.
So called green energy ventures definitely constitute a growth industry and no segment more than publishing in this area. I myself am contributing to the flood of new titles, so I should know.
Recently I made my way through a new book entitled "$20 per Gallon – How the Inevitable Rise in the price of Gasoline Will Change Our Lives for the Better" by Christopher Steiner. Mr. Steiner is a staff writer for Forbes, a publisher for whom I once worked myself on a free lance basis. He has chosen to specialize on energy topics and in particular on the energy transformation which he sees coming. His formal qualifications for his role are rather scant - he is a civil engineer by training - but he is a lively writer, and I suppose that counts for something.
Steiner believes that steeply ascending petroleum prices are on the way and that they will have a major if not positively wrenching impact upon our lives. His book examines those impacts in a sequence of vignettes, each distinguished by a different price for oil, beginning at $4 per gallon and reaching all the way to the $20 per gallon of the title.
The imagined world of high priced petroleum is not exactly new to literature nor to popular culture for that matter. Remember Mad Max inhabited a post apocalyptic realm where gas was hard to come by, and more recently James Kunstler, formerly a novelist and architectural critic has made a second career for himself penning dystopian fulminations about petrol scarcity. Then of course there are the numberless peak oil screeds whose authors seek to establish that scarcity is indeed impending.
What distinguishes Steiner, at least to some degree from these other peak oilers, is that he foresees a fairly painless transition to scarce oil and to a world that gets by very well without it. In this he is the opposite of Kunstler who foresees proximate disruptions eventually followed by a return to an imagined bucolic existence of the past.
There are of course countless other scenarios one might pose for an oil scarce future and there is no certain knowing of which will come to pass. All one can do is to examine the response of human societies to various protracted scarcities in the past. Unfortunately, however, all that one has to go on are the experiences of pre-industrial societies. The industrial era has been marked by the unending abundance of those resources upon which its inhabitants depend for sustenance. Except for transient shortages resulting from wars and blockades no industrial society has had to endure a severe decline in the availability of a truly vital resource. And where important though not absolutely vital resources such as guano fertilizer or natural rubber have declined adequate substitutes have always emerged, and in many cases the substitutes have proved more satisfactory than their predecessors.
It's a different story in pre-industrial societies where shortages of various foods, fuels, and building materials have had devastating impacts. Our ancestors understood peaks and declines very well and often suffered the consequences of them.
So is Steiner right? Are we facing a fairly soft landing, or will it be otherwise. And how might we arrive at a sound forecast of what lies ahead?
There is now a fairly abundant literature on resource shortages in pre-industrial societies. Clive Ponting's a "Green History of the World" and Jared Diamond's "Collapse" are two recent examples of the genre which happen to be aimed at popular audience, and which represent as it were reviews of the literature rather than strikingly original research. Both are well worth reading, and both, incidentally, hold ominous implications for our own predicament. In most cases where societies have faced severe shortages arising either from over consumption or to ecological upheavals arising from changes in climate or precipitation patterns, the results have been dire and have usually entailed the appearance of the Four Horsemen of the Apocalypse, famine, disease, war, and death, and often the disappearance of the culture facing such shortages. And in some cases, such as the Norse settlements in Greenland in the Middle Ages, not only did the culture disintegrate, the people themselves died out entirely, the victims, evidently, of a self induced genocide.
One might argue that pre-industrial societies are, compared to our own, at a severe disadvantage in coping with constrained resources because they are relatively disorganized and unable to undertake programs of systematic technological innovation, and there is undoubtedly some truth in such arguments. Nonetheless, we must remember that much of the technological innovation of the modern industrial age has been supported by the exploitation of just those fossil fuel resources which may even now be at or near their peak production levels. And we also must remember that the high level of social organization in our modern industrial era may also bespeak a lack of flexibility, actually a maladaption in the face of catastrophic change. Social organizations, particularly those which are primarily economic in nature, may be extraordinarily averse to making the fundamental changes that might foster adaptation to a future of fossil fuel scarcity. If they have a stake in the past of fossil fuel abundance, and most do, they won't want to believe that that past cannot be sustained.
Worse yet, necessary changes may be resisted on ideological and even religious grounds, and adherents to core believe systems that are opposed to adaptive changes may cling to such beliefs even in the face of their own extinction.
We see evidence of this phenomenon in our own nation. The whole issue of fossil fuel resource depletion has become politically polarized, with most believers in peak oil veering toward the Left while most of the Right believes that superabundant resources are still available and that any faltering in production must be due to the nefarious activities of environmentalists bent on denying energy companies access to untapped deposits. Sarah Palin's "drill, baby, drill," mantra during the last Presidential election exemplifies such thinking.
One must also contend with the fact American agriculture, whose enormous output sustains our swollen population, is heavily dependent upon huge inputs of fossil fuels. While some advocates of scientific organic agriculture contend that the outputs of fossil fuel based factory farms can be equaled by highly labor intensive organic methods, the changes necessary to put such a system in place would require a complete and rapid transformation not only in agriculture itself but in the entire society. Many more individuals would have to be recruited to perform agricultural work unless very rapid progress in robotization were made. One would require hordes of real peasants or their mechanical equivalents or else some resurrection of the small family farm, an unlikely occurrence given current concentrations of agricultural land in the hands of the very, very few.
Steiner doesn't really confront this issue or many other crucial issues in the energy debate though he does acknowledge that transportation and housing patterns are going to have to change radically. He suggests that market forces will readily accommodate such changes, however, and that, for instance, modern high speed rail systems will emerge as replacements for much of the current transportation system based upon paved public roads, automobiles, and commercial trucks.
The problem with such assumptions is that change is likely to be resisted in many quarters and that the longer we attempt to cling to the old order of fossil fuel abundance in the face of real shortages, the more economic disruption will ensue. And the more economic disruption ensues, the more difficult it becomes to appropriate funds, either public or private, for the establishment of new infrastructure appropriate to diminished resources.
Then too, reactionary and maladaptive ideologies are also apt to flourish in the midst of such economic and social disruptions, and these would make the pursuit of meaningful changes all the more difficult. Such philosophies inevitably look toward an imagined idyllic past not toward a sustainable future and are characterized by scapegoating as an expressive activity for assuaging the frustrations of impassioned adherents confronting catastrophic change and an external environment that refuses to conform to their expectations. That in turn gives rise to fresh conflicts and a diversion of energy into counterproductive activities.
To be sure, some industrial societies have risen to the challenge of acute resource scarcities during the military conflicts of the past. During times of war special interest groups can sometimes be persuaded, at least temporarily, to work for the common good and for national survival. To cite an example, voluntary labor peace prevailed in the United States throughout the course of our nation's involvement in World War II. There were neither strikes nor lockouts as work forces and corporate managers put aside their differences in the interest of national survival. Even organized crime agreed to curb some of its activities and to watch the docks for evidence of espionage and conveyed its intentions to the FBI. And the political left, which had been pacifist and opposed to the war effort during the First World War, expressed staunch support for U.S. military efforts against the Axis powers.
Such solidarity is not inevitable, however. In the fall of 1918 the governments of Germany and Austria Hungary collapsed in the midst of revolutions launched by citizens no longer willing to endure wartime privations, privations which were far less extreme than those suffered by either nation during World War II. In Germany the political revolution was followed by a near total societal collapse lasting nearly three years. This was followed by a fragile reorganization under a republican government followed, after a ten year interval marked by devastating economic losses, by the brutal despotism of the Third Reich.
Interestingly, many of the pre-industrial societies described in Ponting's and Diamond's books responded to material shortages by fragmenting and engaging in civil conflicts which hastened the total collapse of those societies.
Peaks beyond Peaks
Steiner assumes this nation and the planet will begin to dismantle the petroleum based material culture as conventional oil declines. I'm not so sure. America's political leaders could conceivably extend the profligate consumption of petroleum based fuels and petrochemicals for decades beyond the arrival of peak oil and possibly for as much as a century.
As long time readers of this journal know, synthetic petroleum fuels can be readily produced from coal, oil shale, biomass, and unconventional forms of methane. The cost of doing so is much higher than pumping oil out of super giant fields, but such costs are not such as to result in $20 gasoline. Five dollars per gallon might be more like it, or maybe less. Fuels derived from oil shale and coal will probably carry production costs of under $90. There's 42 gallons in a barrel so the cost of production is less than $2 per gallon. That's several times as much as what it costs to produce oil from Saudi Arabia's Ghawar field, the biggest and most productive in all the world, but it's not enough to bring the petroleum civilization to a standstill. There's enough coal and oil shale to support mass automotive ownership in the U.S. for decades more. Methane hydrates, should they be exploited successfully and cost effectively, could ensure business as usual—sort of—for two centuries.
Of course no form of business as usual ever lasted two centuries after the Stone Age was over, and business as usual of the sort I'm describing would be decidedly unusual. The U.S. would have to withdraw from the global petroleum market which it essentially created and allow most other nations to endure crippling scarcities. Just as the U.S. once had the world's largest oil reserves, it now has by far the largest coal and oil shale reserves and among the largest methane hydrate reserves, and by reserving those for its exclusive use it could continue to burn fuel on the same scale as today. The U.S. has been singularly blessed in its allotment of fossil fuel and unquestionably this huge endowment has been as important as anything else in providing for world dominance. The fact that so much hydrocarbon wealth is still retained give America the option of clinging to its high consumption ways for quite some time.
To do so would of course result in huge global economic imbalances unless the rest of the world can place primary reliance on renewables—an uncertain proposition at best—and would also contribute to greatly accelerated buildup of greenhouse gases. It would constitute a grave act of economic and environmental aggression against the rest of the world. Could it happen? I happen to think it's entirely conceivable.