Peak Oil, in the simplest terms, means that about half the oil has been used up. When I say half the oil, I mean half the oil that's economically viable has been used up. That's the simplest way of thinking about it. What it actually means, if we want to be technically correct, is that the rate of production, or extraction, of that oil, will reach a plateau, or peak. It will reach its maximum level, and from that point on, it will decline, inexorably.
So what we're saying here is that, oil being a finite substance, will come to some point where it actually hits a maximum level, then it goes into a decline. And at that point where it starts to go into decline, we're going to have to figure out how to make do with less. We don't know how to do that at this point, because our recent history has always been, making do with much, much more oil. So each year, we're using several percent more oil.
Now what happens when we come to a point when we no longer can do that? That's what gets the folks that are looking at the Peak Oil phenomenon excited, because they're realizing we're coming into a point where the game needs to be changed, where things need to be done differently, because we're not going to have all this cheap and abundant energy available.
Let's also mention that there is a significant problem with natural gas, as well. And many people who've looked at the natural gas issue believe we're headed into a period, at least in North America, and perhaps a little bit later in the world, we're headed into a period where natural gas is going to be much more scarce than it is now.
There are people that believe, and there seems to be ample evidence that natural gas has peaked already in North America. And because natural gas is much more difficult to transport, we need to think about regional supply, as opposed to world supply, at least until a whole set of new infrastructure is built. A lot of people don't believe there is enough natural gas to justify the building of a natural gas infrastructure, which would cost billions of dollars.
So, both natural gas and oil are used to heat people's homes. In the East Coast of the United States, people use a distilled product called heating oil to heat their homes in the winter, and it's actually quite crucial there, because of the temperatures. There are also, in the East Coast, and also throughout the rest of the country, there are a number of folks that use natural gas to heat their homes, and who actually need that natural gas to provide a habitable situation. We've seen a situation come up in the last several months with the hurricanes, and specifically [Hurricane] Rita, although it was downplayed in the media. it took out about 110 drilling rigs, as well as some other key infrastructure, specifically to get natural gas back to the shore.
So, we're gong to be coming into a period when the prices of natural gas, and, most likely, as well, heating oil are going to be going up quite a bit. So it's not necessarily just thinking about oil, but also these other products that are used and are important for heating people's homes.
So, what does that mean for the average person? Well, it means there's going to be higher prices and less availability. We already are seeing major problems for people on the margins of the system. We can think about it internationally, or globally. Throughout Latin America and Africa, there are many issues with high oil prices. If we want to look in the U.S., there are a lot of people who won't be able to afford their heating oil, or their natural gas, this winter. Folks are feeling the energy pinch right now.
Now, as we move along on time, and prices go higher, and the availability of energy and oil is lessened, we don't know how that's actually going to shake out. But one thing we can say is that, with a market-based system, the energy's going to go to the people that can pay for it. So, I can imagine a scenario where the folks that have access to energy and are able to continue their lifestyles are the ones who are very well off now, that people who are on the margins or maybe even the middle class are going to have to really downscale or power-down their situations, such that they're much less dependent on energy.
Now, energy runs our economy. Energy makes the world go round. It also makes things go round the world! Really, if you want to take a look at transport. 90-odd % of transport is dependent on oil. So we've got a situation where we've created a global economic system that requires us to ship things from distant places all over the world to where we are, and this arrangement requires a large amount of oil to be consumed. Now, we're not prepared for a new arrangement which requires much less transport.
Right now we're relying on goods that are being shipped 6000 miles away. Our food in the United States, travels, on average, 1500 miles. A lot of our goods come from East Asia. And I believe, as we move towards a time when energy's going to be more scarce, we won't be able to rely on these 6000-mile supply chains.
There's a number of different reasons:
1) Are we sure, in the energy-scarce future that the folks that are making the goods now will still have the resources and the inputs that they need for the production?
2) Will they have the energy that they need to produce?
3) Will they be producing more than they need locally? Or, essentially, will they have excess that they'll want to sell?
4) If they do have excess, will it make sense, will it be economically viable to transport it to us? Because in the energy-constrained future, it's going to be a lot more expensive to transport things. And,
5) Will they want our currency? I'm not sure, I don't know if that last one's going to actually play out, but there are a lot of folks that are very concerned about our currency, without even thinking about energy.
So if we can't rely upon these 6000-mile supply chains, what are we going to do? It makes sense to start local production for local consumption, for us to start moving towards becoming much more self-reliant.
The magnitude of the situation is huge, it's tremendous. Oil is almost ubiquitous in our daily lives. In our normal life, we use products made out of oil, or transported by oil, almost every minute of our day. And when you get up in the morning, you brush your teeth, what's that made out of? It's made out of plastic, plastic is made from oil. The little hairs on your toothbrush, those are nylon, and those are made out of oil, as well. Nylon is just another example of a manufactured fabric -- I am wearing one, as well, this shirt happens to be made out of oil. Virtually everything that we do, we're touching some aspect of oil, whether it's the transport, or oil being a key input to the product.
So, another example: shoes. Take a look at the bottom of your shoes. If they're a tennis shoe, more likely than not, then they have some artificial rubber. Artificial rubber is made from oil, as are our tires. At one point, tires were made from rubber. They're now made from artificial rubber, which is made from oil, as well. It would be difficult, it would be almost impossible for someone living in the western world to go through their day without having any impact from oil. I mean, it's pervasive.
It's something that we completely depend on for our normal lives, and there's a lot of different reasons that our normal lives are things that we need to look at and change. For example, our normal life is ecologically unsustainable. I mean, we are destroying the life-support systems of the planet. Our normal life also creates huge disparities in health and wealth. These are both really important issues, yet I tend to believe they're not anything that's going to cause us to change society, or change the structure of the system.
Now, this whole normal life being underwritten by cheap and abundant fossil fuels, this concept right here, that could lead to change. Because we've got oil peaking, which means that oil is going to be less available, and there's going to be higher prices, this has a chance to actually impact how we do things. And the way I like to think about it is that we need to reinvent our normal lives. We need to take a look at all our notions of what health, wealth, success, mobility, shelter -- we need to reinvent these things, so that they are not only ecological sustainable, and not only socially just, but we need to make them much, much less dependent on fossil fuels, and specifically, oil.
Let's talk a little bit about shelter. We have this notion in the United States about what our housing arrangement looks like. And the dream -- which I tend to want to call the American Illusion, as opposed to being the American Dream -- the dream is that we all can have a single-family house, and by today's standards, it's palatial! I mean, the ones that they're building now, they're 2000, 3000 square feet. There's no thought into solar orientation. There's no natural materials. It's a housing situation that fits a cookie-cutter business for developing a huge number of homes in a very quick manner. In a way that creates a product that many people want.
There's a lot of problems with this, especially if we're talking about the suburban developments, because they use a tremendous amount of energy. So as we think about our concepts of shelter, and the need to reinvent them, we need to look to ways that we can provide housing that do not require tremendous amounts of energy, that do not require us to use materials that are shipped from all across the world, that do not require us to cut down our forests, our remaining old-growth forests.
We need to get an understanding, or reinvent, these ideas around sheltering ourselves, such that we can do it in a way that's much more ecologically sustainable, such that it creates good, worthwhile jobs, such that it creates community. It allows us to enhance community, because in the energy-scarce future, the real social security will be being on good terms with your neighbours. So we need to figure out how our living arrangement can support that, can support us being on good terms with our neighbours, being friends, being there, showing up for other people who live near us. It's going to be very, very important.
I actually believe that there's going to be a lot of sorrow in the world due to the mass dispersion of people. It seems to me that we've dispersed more than ever, basically chasing paycheques. I mean, people move all the time for jobs, and they're not necessarily moving within a county, or a general area, we're talking about moving across the country, or even across the world these days. And people are so spread out, it's hard to find -- at least people in my circle -- a family where everybody lives near each other. It is very, very rare.
And if I look at my current situation, if I say, How many friends can I walk to? We're talking about less than a handful. Well, I'm excluding my neighbours. My neighbours are my friends because we live right next to each other, but if I'm talking about friends that I've had for a long time, people that I've had heart connections with over the years, very, very few live within 10 blocks of here, if even a couple miles.
So, my sense is, we've come to have this notion of mobility, where we're able to go from point A anywhere in the world to point B anywhere in the world in less than 24 hours, and most of the time, less than 6 hours. So we can get up in the morning in San Francisco, and be in New York for dinner, party in New York, get up the next morning, and fly back to San Francisco, and have lunch with a friend! So we've got this arrangement going where we believe that it's this small world.
"It's a small world." This is ingrained from childhood. I mean, think back to Disneyland. Most people have been there, and go through the little tunnel, the little mechanical dolls are singing, "It's a small world after all." That gets built upon as we go through life, and we meet people. Serendipitous encounters that are probably statistically ordinary. We meet people, and we say, "Well, who do you know?" They say who they know. They say, "Well, I know so and so." And all of a sudden, you've got a connection. Like I said, statistically ordinary in a world where people are just zipping around in cars, in trains, in automobiles, in planes. In that world, you will run into people, and it will seem like, "Oh, it's a small world!" But it's only because we're able to have this hyper-mobility that's completely dependent on fossil fuels, that's completely dependent on oil.
So what's going to happen when there's much less oil? Well, it's no longer going to be a small world, the world's going to seem a lot bigger. And the problem here is going to be that people are so separated. I'm worried about people being stranded on the other side of the country, or in a different state, or even in a large state like California, southern and northern California, a huge distance between us. And that distance which we're used to traversing in such a quick and easy manner is going to seem very arduous in the future, in the energy-scarce future, in the energy-constrained future.
Our system, the global economic system in which we live, allows us to make choices, without any consideration of the impact of those choices on other peoples, or other beings on the planet. And the reason is, is we've created this layer of abstraction that hides the tremendous complexity, the amazingly complex supply chains that link all across the world to provide us with these goods that we want.
The layer of abstraction is the retail outlet. The big box, it embodies it. We just go down there and provide money, and they're able to provide us these goods. So the only decision-making criteria that mainstream America uses is price! Price, and the desirability of that specific model of the good. And by the way, there's probably 20 to 30 to 50 of that exact thing that may have a little tweak on it, because it's been done by a different company, or it's been made to fit a different market.
But the point here is that when we go in to this store, we provide our money based on price, the ecological impact of what happens beyond the layer of abstraction, that happens in the complexity of the supply chain, is unknown to us. So we're not thinking about the mountains in the eastern United States that have had their tops cleaved off, and the rubble from the mountain is pushed down into the valleys where rivers are. We're not thinking of that, when we're thinking about the coal-fired energy that we're able to enjoy by flicking the switch.
We're not thinking about the people in China and India that are working in these tremendously large sweatshops, and we're talking about the scale of a sweatsohp that you would not even imagine, football-field-sized sweatshops with thousands of people squeezed in next to each other, doing monotonous factory work, in a way that is certainly damaging to their health, and they're not getting paid for it. Besides that, it's probably not being done in a way that's ecologically sustainable. Or, let's just be clear: It's NOT being done in a way that's ecologically sustainable!
So, we don't notice any of that, because we've externalized it, and we're just looking at cost. The sad thing is that it seems like there's a global race to the bottom, with respect to production of our goods. Other countries that covet our business are aiming to provide the lowest cost production to our large companies, like Wal-Mart and Target and these other large entities that are trying to provide us with the absolute cheapest goods.
What happens is, when we go to these places, and we are looking for the absolute lowest cost, well, it means that the workers are going to be paid the absolutely lowest cost, and it means that there's going to be no consideration, or very, very little consideration, to what the impacts on the local environment are.
Now, in the future... the future's going to be a little different, because we're going to have to be a lot more local, for most of the things that we need on a daily basis. Now I'm not saying that trade's going to go away. Trade will be around, trade has been around for thousands of years. It's just the scale of trade, where we're dependent on trade for the things that we need on a daily basis, the scale of trade is going to change. Things are going to get much more local, and that's going to mean that we're going to have to move production here locally, for local consumption.
When we have production here locally, we're going to have to do it in a way that's much more ecologically sustainable. Because the impacts of our production are going to be felt by the people consuming the goods. We're going to look and see, How is the new production and manufacturing that's going on here, how is that impacting our rivers? How is that impacting our air? How is that impacting the things that are important to us?
And if it's a local business, the beauty of a local business is, I can go over there and knock on the door. and if the owner isn't there in the facility right then, he lives down the way. So there's some things that we can do when we see some soot, some smoke coming out of the stack, or there's a noxious odour in the air. We can cut those things off. This is not what's happening in the global economic system right now. We have a situation where those things are not part of our decision-making process. Now as we move forward, we can incorporate all these things that have been left out: the social treatment of the workers, the way we deal with our environment, and how we interact with the ecological systems. When we have the control of production, we can work that production into our lives in a way that works better for us.