“A great book which should wake up humankind!” –Klaus Schwab, World Economic Forum
Chapter 2. Deteriorating Oil and Food Security: The World Beyond Peak Oil
Few countries are planning for a reduction in oil use. Indeed, the projections by both the International Energy Agency and the U.S. Department of Energy expect world oil consumption to go from roughly 85 million barrels or so a day at present to close to 120 million barrels a day by 2030. How did they come up with these rosy forecasts? Apparently they focused primarily on demand and then simply assumed that the needed supply would be forthcoming. To use the words of Thomas Wheeler, editor of the Alternative Press Review, many analysts and leaders are simply “oblivious to the flashing red light on the earth’s fuel gauge.” 65
Even though peak oil may be imminent, most countries are counting on much higher oil consumption in the decades ahead. Indeed, they are building automobile assembly plants, roads, highways, parking lots, and suburban housing developments as though cheap oil will last forever. Thousands of large jet airliners are being delivered with the expectation that air travel and freight will expand indefinitely. Yet in a world of falling oil production, no country can use more oil unless another uses less. 66
Darrin Qualman, Director of Research for the National Farmer’s Union of Canada says, “The problem isn’t simply Peak Oil....The problem is the combination of Peak Oil and an economic system in which...‘no one is in control.’ Ours is a system where it is no one’s job to look past next year’s profits, to take stock of how this year’s production might affect next decade’s weather, ...where we become ever more dependent on energy despite the fact that no one is keeping an eye on the fuel gauge.” 67
Some segments of the global economy will be affected more than others simply because some are more oil-intensive. Among these are the automobile, food, and airline industries. Stresses within the U.S. auto industry are already evident. General Motors and Ford, both trapped in a heavy reliance on sales of gas-hogging sport utility vehicles, have seen investment analysts reduce their corporate bonds to junk bond status. 68
Modern cities are another product of the oil age. From the first cities, which took shape in Mesopotamia some 6,000 years ago, until 1900, urbanization was, with a few exceptions, a slow, barely perceptible process. When the last century began, there were only a few cities with a million people. Today there are more than 400 such cities, and 20 mega-cities have 10 million or more residents. 69
The metabolism of cities depends on concentrating vast amounts of food, water, and materials and then dispersing the resulting garbage and human waste. This takes vast amounts of energy. With the limited range and capacity of horse-drawn wagons, it was difficult to create large cities. Trucks running on cheap oil changed all that.
As cities grow ever larger and as nearby landfills reach capacity, garbage must be hauled longer distances to disposal sites. With oil prices rising and available landfills receding ever further from the city, garbage disposal becomes increasingly oil-dependent. At some point, many throwaway products may be priced out of existence.
Cities will be affected by the coming decline in oil production, but it is the suburbs that will take the big hit. People living in poorly designed suburbs, in the sprawl of housing developments, are often isolated geographically from their jobs and shops, forced to use a car even to get a loaf of bread.
Suburbs have created a commuter culture, with the daily roundtrip commute taking, on average, close to an hour a day in the United States. Although Europe’s cities were largely mature before the onslaught of the automobile, those in the United States, a much younger country, were shaped by the car. While city limits are rather clearly defined in Europe, and while Europeans only reluctantly convert productive farmland into housing developments, Americans have few qualms about this because of a residual frontier mentality and because cropland was long seen as a surplus commodity. 70
This unsightly, aesthetically incongruous sprawl of suburbs and strip malls is not limited to the United States. It is found in Latin America, in Southeast Asia, and increasingly in China. Flying from Shanghai to Beijing provides a good view of the sprawl of buildings, including homes and factories, that is following new roads and highways. This is in sharp contrast to the tightly built villages that shaped residential land use for millennia in China.
Shopping malls and huge discount stores, symbolized in the public mind by Wal-Mart, were all subsidized by artificially cheap oil. Isolated by high oil prices, sprawling suburbs may prove to be ecologically and economically unsustainable. Thomas Wheeler observes, “There will eventually be a great scramble to get out of the suburbs as the world oil crisis deepens and the property values of suburban homes plummet.” 71
The food sector will be affected in two ways. Food will become more costly as higher oil prices drive up production and transport costs. As oil costs rise, diets will be altered as people move down the food chain and as they consume more local, seasonally produced food. Diets will thus become more closely attuned to local products and more seasonal in nature.
Air transport, both passenger travel and freight, will suffer as jet fuel prices climb, simply because fuel is the biggest airline operating expense. Although industry projections show air passenger travel growing by some 5 percent a year for the next decade, this seems highly unlikely. Cheap airfares may soon become history. 72
Air freight may be hit even harder, perhaps leading at some point to an absolute decline. One of the early casualties of rising fuel costs could be the use of jumbo jets to transport fresh produce from the southern hemisphere to industrial countries during the northern winter. The price of fresh produce out of season may simply become prohibitive.
During the century of cheap oil, a vast automobile infrastructure was built in industrial countries, and its maintenance now requires large amounts of energy. The United States, for example, has 2.6 million miles of paved roads, covered mostly with asphalt, and 1.4 million miles of unpaved roads to maintain even if world oil production is falling. 73
National political leaders seem reluctant to face the coming downturn in oil and to plan for it even though it will become one of the great fault lines in world economic history. Trends now taken for granted, such as rapid urbanization and globalization, could be slowed almost overnight as oil becomes scarce and costly. Economic historians writing about this period may routinely distinguish between before peak oil (BPO) and after peak oil (APO).
Developing countries will be hit doubly hard as still-expanding populations collide with a shrinking oil supply to steadily reduce oil use per person. Without a rapid restructuring of the energy economy, such a decline could quickly translate into a fall in living standards, with those of the poorest falling below survival levels. If the United States, which burns more gasoline than the next 20 countries combined, can sharply reduce its use of oil, this could buy the world time for a smoother transition to the post-petroleum era. 74
The peaking of world oil production raises questions more difficult than any since civilization began. Will world population growth survive a continuing decline in world oil production? How will a shrinking oil supply be allocated among countries? By the market? By negotiated international agreements? By war? Can civilization itself survive the stresses associated with falling oil production at a time when food prices are rising and the stresses from climate change are mounting? And the list goes on.
65. IEA, op. cit. note 3; 2030 from DOE, EIA, International Energy Outlook 2007 (Washington, DC: May 2007), p. 29, and from IEA, World Energy Outlook 2006, op. cit. note 19, p. 86; Thomas Wheeler, “It’s the End of the World as We Know It,” Baltimore Chronicle, 3 August 2004.
66. “Table 1–12: U.S. Sales or Deliveries of New Aircraft, Vehicles, Vessels, and Other Conveyances,” in BTS, National Transportation Statistics 2005 (Washington, DC: DOT, 2005).
67. Darrin Qualman, “‘Peak Oil’: The Short, Medium, and Long-Term,” Union Farmer Monthly, vol. 56, no. 4 (August 2005).
68. Oliver Prichard, “SUV Drivers Reconsider,” Philadelphia Inquirer, 1 June 2005; Danny Hakim and Jonathan Fuerbringer, “Fitch Cuts G.M. to Junk, Citing Poor S.U.V. Sales,” New York Times, 24 May 2005; Fitch Corporate Ratings, at fitchratings.com, viewed 8 August 2007.
69. U.N. Human Settlements Programme, The State of the World’s Cities 2004/2005 (London: Earthscan, 2004), pp. 24–25; U.N. Population Division, Urban Agglomerations 2005, wall chart (New York: March 2006).
70. U.S. Census Bureau, “American Spend More Than 100 Hours Commuting to Work Each Year, Census Bureau Reports,” press release (Washington, DC: 30 March 2005).
71. Wheeler, op. cit. note 65.
72. Micheline Maynard, “Surging Fuel Prices Catch Most Airlines Unprepared, Adding to the Industry’s Gloom,” New York Times, 26 April 2005; “Revealed: The Real Cost of Air Travel,” The Independent (London), 29 May 2005; DOT and FAA, FAA Aerospace Forecasts—Fiscal Years 2006–2017 (Washington, DC: 2006), p. 63.
73. “Table 1–4: Public Road and Street Mileage in the United States by Type of Surface,” in BTS, National Transportation Statistics 2007 (Washington, DC: DOT, 2007).
74. Gerhard Metschies, “Pain at the Pump,” Foreign Policy, July–August 2007.
Copyright © 2008 Earth Policy Institute