Oil And Resources: Change You Won’t Believe
Dec 19th, 2008 | By James Howard Kunstler | Category: Featured, Macro Economics, Oil
The peak oil story has not been nullified by the scramble to unload every asset for cash — including whomping gobs of oil contracts — during this desperate season of bank liquidation. The main implication of the peak oil story is that we won’t be able to generate the kind of economic growth that defined our way of life for decades because the primary energy resources needed for it will be contracting.
Just as global oil production peaked, our economy evolved into a morbid hypertrophy, and the chief manifestation of it was the suburban sprawl-building fiesta that has now climaxed in the real estate bust. By the early 21st century, when so much American manufacturing had been swapped out to Asia, there was no business left except sprawl-building — a manifold tragedy which wrecked the banks that financed it, and left the ordinary people mortgaged to it with ruinous liabilities.
That economy is now in its death throes. The “normality” it represents to so many Americans is gone and can’t be brought back, no matter how wistfully we watch it recede. Even so, it was obviously not good for the country. The terrain of North America has been left scarred by unlovable objects and baleful futureless vistas that, from now on, will shed whatever pecuniary value they once had. It represents the physical counterpart to the financial mess that has been left to the young generations to clean up — and the job will take a very long time.
We have to, so to speak, get to place mentally where we can face the kinds of change that are now necessary and unavoidable. We’re not there yet. It’s not clear whether the elected new national leadership knows just how severe the required changes will really be. Surely the public would be shocked to grasp what’s in store. Probably the worst thing we can do now would be to mount a campaign to stay where we are, lost in raptures of happy motoring and blue-light-special shopping.
The economy we’re evolving into will be un-global, necessarily local and regional, and austere. It won’t support even our current population. This being the case, the political fallout is also liable to be severe. For one thing, we’ll have to put aside our sentimental fantasies about immigration. This is almost impossible to imagine, since that narrative is especially potent among the Democratic Party members who are coming in to run things. A tough immigration policy is exactly the kind of difficult change we have to face. This is no longer the 19th century. The narrative has to change.
The new narrative has to be about a managed contraction — and by “managed” I mean a way that does not produce civil violence, starvation, and public health disasters. One of the telltale signs to look for will be whether the Obama administration bandies around the word “growth.” If you hear them use it, it will indicate that they don’t understand the kind of change we face.
It is hugely ironic that the US automobile industry is collapsing at this very moment, and the ongoing debate about whether to “rescue” it or not is an obvious kabuki theater exercise because this industry is hopeless. It is headed into bankruptcy with one hundred percent certainty. The only thing in question is whether the news of its death will spoil the Christmas of those who draw a paycheck from it, or those whose hopes for an easy retirement are vested in it. But American political-economy being very Santa Claus oriented for recent generations, the gesture will be made. A single leaky little lifeboat will be lowered and the chiefs of the Big Three will be invited to go for a brief little row, and then they will sink, glug, glug, glug, while the rusty old Titanic of the car industry slides diagonally into the deep behind them, against a sickening greenish-orange sunset backdrop of the morbid economy.
A key concept of the economy to come is that size matters — everything organized at the giant scale will suffer dysfunction and failure. Giant companies, giant governments, giant institutions will all get into trouble. This, unfortunately, doesn’t bode so well for the Obama team and it is salient reason why they must not mount a campaign to keep things the way they are and support enterprises that have to be let go, including many of the government’s own operations. The best thing Mr. Obama can do is act as a wise counselor companion-in-chief to a people who now have to leave a lot behind in order to move forward into a plausible future. He seems well-suited to this task in sensibility and intelligence. The task will surely include a degree of pretense that he is holding some familiar things together and propping up some touchstones of the comfortable life. But the truth is we are all going to the same unfamiliar new territory.
The economy we’re moving into will have to be one of real work, producing real things of value, at a scale consistent with energy resource reality. I’m convinced that farming will come much closer to the center of economic life, as the death of petro-agribusiness makes food production a matter of life and death in America — as opposed to the disaster of metabolic entertainment it is now. Reorganizing the landscape itself for this finer-scaled new type of farming is a task fraught with political peril (land ownership questions being historically one of the main reasons that societies fall into revolution). The public is completely unprepared for this kind of change. We still think that “the path to success” is based on getting a college degree certifying people for a lifetime of sitting in an office cubicle. This is so far from the approaching reality that it will be eventually viewed as a sick joke — like those old 1912 lithographs of mega-cities with Zeppelins plying the air between Everest-size skyscrapers.
The crucial element in the transformation underway will be emotion. The American experience for a few generations has produced an adult population with very childish instincts, increasingly worse each decade. For instance, the desperate power fantasies among the younger tattooed lumpenproles — those with next-to-zero real economic power — suggest a certain unappetizing playing-out of resource competition when the supply of Cheez Doodles and Pepsi starts to dwindle. But even the heretofore gainfully employed middle classes are pretty lost in fantasies at least of comfort and convenience. For years now, I have wondered how their sense of grievance and resentment will be expressed when the supermarket shelves run bare and the cardboard signs get taped over the local gas pump and the cable TV gets cut off for non-payment. You wonder, to put it bluntly, how far gone we really are.
Regards,
Jim Kunstler
December 19, 2008
Hello.
I like your site and wanted to know if you would be interested in exchanging blogroll links.
Thanks in advance
We have a great deal of coal and we need to figure out ways to get it to pollute less. We need to be thinking about obtaining more energy from solar, wind, biofuels that do not come from food crops, ocean waves, geothermal, and other things. We need to be thinking obtaining more drinking water from the oceans and rain water.
The federal government and state governments should care more about small local farms. Sugar subsidies should end. If the federal government and state governments subsidize farming, most of the money should go to small farms. They should be encouraging more organic farms. They should be encouraging many more farms not to use antibiotics in cows and chickens. They may want to consider encouraging deer farms. Deer farms could produce meat and leather products. They could encourage farmers to make hemp paper, hemp ropes, hemp clothing, hemp shoes, and other hemp products in our country. I would like marijuana, heroin, and cocaine to be legalized, regulated, and taxed for people who are at least 18 years old.
We should want to bring in skilled immigrants and wealthy immigrants who are able to help us solve our problems. Brain power matters for solving problems.
We should be encouraging cooperative education in our junior high schools, high schools, and colleges similar to what takes place at Northeastern University. We should be allowing students to use vouchers to attend private schools including private religious schools. “free exercise” (Amendment One) of religion would be easier for many students if they are able to use vouchers to attend religious schools. The federal government, state governments, and businesses should consider funding free education websites that use video, audio, and notes that have top teachers and top students teaching k-12 subjects, college subjects, and graduate school subjects. The teachers and students could be compensated
The federal government and state governments should care more about energy transmission, energy development, buses within cities, buses between cities, passenger rail, and freight rail.
I think it makes sense for the federal government to loan money to the automobile companies. If they do well, economic growth and per capita in many States may increase. We should be encouraging the production of electric powered cars, electric powered cars that have fuel as a backup power source, and other types of cars that reduce our need for foreign oil via more tax incentives and other things.
The federal government should consider loaning money to many manufacturing companies in our country that make products in our country. Economic growth and per capita income may increase. We may be better able to pay off our national debt that is more than 10 trillion dollars. Our companies that make products in our country may cause a lot less air pollution, water pollution, and land pollution on our planet than companies in China.
Congress should seriously consider backing our currency with gold, silver, and other commodities.
If the federal government is serious about growing the economy and creating jobs, it should stop taxing capital gains, interest from savings accounts, and dividends. Businesses will have an easier time obtaining loans and investments. People will have an easier time saving for college tuitions and retirements.
The federal government should sell a lot of the land it owns to raise capital, reduce the national debt, and do other things. Some of the money the federal government obtains from the sale of the lands should go to State governments.
I graduated from the University of New Hampshire in 1992 with a BA Degree in Political Science and a minor in Economics.
I ran for United States Senate from New Hampshire in 2002.
My website is http://www.myspace.com/kennethstremsky
Re Jim’s article Change You Won’t Believe
In many ways I agree totally with what you write and think perhaps the change coming will be greater than you all envision.
Personally, I began reorganizing my life to prepare for the changes I see coming over a year ago. That said, I think your concerns of peak oil are over blown in order to promote you own agenda.
The Energy Policy Act of 2005 required that the Dept. of the Interior prepare a comprehensive inventory of outer continental shelf (OCS) oil and gas resources for Congress.
The report states, for “technically recoverable oil and gas on the OCS, 2006″ total total endowment (mean estimate) is 115.43 billion barrels of oil, with a cumulative production to date of 14.12 billion barrels. And for gas, 633.62 trillion cu. ft, with a cumulative production of 153.57 trillion cu. ft. So we have used, in the last 150 years, about 12% of our OCS oil and about 24% of our OCS natural gas.
This is hardly a crisis of the epic proportions that some, including yourselves, propose.
Further, oil is not only found on the OCS but on dry land as well… and then there is all the coal we have. And then there is nuclear energy.
What we have is not a shortage of energy supplies but rather a shortage of the will to do what is needed to gain access to what is in the ground.
Seems to me that this is a classic example of the old saw that figures don’t lie but liars do figure. And in this case, the apparent end is more control over most people’s lives by an elite, like Mr. Obama, and peak oil is the means to that end. Thus your comment about land ownership. The USSR and others proved, many times, that land for food production must be privately held or else people will starve Yet you still suggest this time it will be different. That is pure BS because human nature has not and will not change and as is always the case, the attempted implementation of utopian dreams will be a nightmare. Far far worse than our current minor problems.
Regards
You mentioned Zeppelins. The only thing offering a person more personal freedom and transportation safety than a car would be the personal air vehicle. Unlike me, you don’t seem to like cars, but in an earlier article you mentioned being concerned about being attacked in the manner of zombie monsters in a recent Sci-FI movie. Recall that the way the protaganest played by Wil Smith got away from them in his car. I would suggest that you try to broaden your visionary horizen to emcompass the larger idea of personal transport that takes you where you want to go, when you want, unlike, say, a train.
Anyway, since everything may be going retro, what could be better than a hydrogen based personal Zeppelin. It’s upper skin could be coated with thin film solar and the hydrogen resevoir could run a small engine for the propeller(s). Solar would also provide a tiny amount of requisite power for the entertainment system which will be needed because it will take you a while to get where you are going. Also, you would not be disposed to travel on windy days, but we can foresee nobody being in so much of a hurry anymore. There’s also no need for the cabin to be small, just light weight. It can be roomy and comfy with an easy chair.
Think about it. No need for so many roads, and there you are, nice and safe up in the air with a nice view of the countryside. No need to concentrate on driving, which could be largely automatic, plenty of room up there, and, if you happened to bump into another balloon, you would just bounce off.
The flames you see in the Hindenburg films is actually the skin burning. The Germans came up with a protective coating and inadverdantly invented thermite by mistake which is why it kept burning like an incendaiary bomb. Hydrogen is so much lighter than air that if released, any combustion goes safely straight up and is over in a couple of seconds. Much safer than liquid fuels which tend to spread all over the ground.
The vistas you mention remind me of a 1920’s SciFi robot movie that was way ahead of its time: “Metropolis”, and let’s not forget H.G. Wells’ conceptual electric airship. Maybe their time has finally arrived.
I had a longer thoughtful comment entered but it disappeared, possibly because I didn’t know what to put in the “website” fieldof the “submit comment” section. Consider this a test comment.
The sad thing about our fiat money system is that it would have been possible for government to “print” just enough to meet constitutional functions and that would have meant no taxes, save the current invisible tax of currency inflation. Now the people in charge have killed the goose that laid the golden egg. If people had voted more libertarians in ten years ago, the current fiasco wouldn’t be happening since, for years, most have been warning about the dangers inherent in having the Federal Reserve, a cartel of banks, “safeguarding” the currency. Without the prior “easy” money policies the Chinese as manufacturing powerhouse would have risen more slowly and naturally, and all the various economic bubbles would have been avoided. Bad banks that got too wacky with engineering innovative “financial technology” (now there’s a good one) would have gone bust here and there. But there would be no systen=mic failure, and people would have re-developed the traditional mistrust of banks. The business cycle of boom and bust would have gone on, weeding out bad allocation of capital. Looks like the Keynesians have finally eliminated the gyrations of the business cycle, unfortuneately it is now stuck in the down position.
Evidently, people won’t vote for anyone who is not first screened by the mass news media. And they only cover Keynesians. Which they cover lavishly. Every time one makes a face at the other, it is a news story. A candidate could spend a billion on political ads and not achive a fraction of the free publicity given to “annointed” candidates. I like Obama’s personality better than McCain but I voted for Bob Barr, what might be called a “moderate” Libertarian. Like Ron Paul he has been previously elected to US Congress. So the argument of a wasted vote for LP candidates because they are “unelectable” isn’t valid. People have been conditioned to think that they can get something for nothing and Keynesian economics seemed to do that. It seemed to work for a while like the proverbial penny in the fuse box. Old screw-in fuses could be bypassed by putting a penny under the blown fuse and screwing it back in. This would keep the lights on at extreme risk of fire since there would no longer be anything to prevent a short-circuit from getting out of control.
Well, things are now out of control. We’ll have to wait and see how bad the fire is going to be.
Who wrote this story?
This sounds like the fall-out of a Nuked Society. That those not harmed by the initial blast are suffering severe consequneces from the effects of radioative fall-out.
First, we have a society in contraction, true. The causes of which are many. Loads of them from repeated past mistakes. Over-building, Greedy Bankers and Politicians, High Cost of Gasoline/Oil.
All makes for a disasterous end, I would agree. However, it is not the end of the line. And any good General would tell you to re-trench. That is to say, step back take a look at what has been going on, rethink our position and then either move forward or stay put, for the next level of the game.
And it is a game to most who play it. My thoughts are this on the banking matter – I have never seen an industry so intent on putting itself out of business other than the financiers of the world, it’s ludicrous. Is their greed so immense that they forget their good judgment?
And while politicians have the power to stop this financial suicide mission along the way, they don’t; because, they too become greedy and look for whatever gold parachutes they can get.
Builders on the other hand are going to build – they will build theirselves into oblivion, if you let them. Another business model on the verge of stupidity. Carmakers ditto. They will produce heaps of scrap metal until they are blue in the face. Never once considering the fact that the people to buy, are not there.
For years I walked around in wonder, asking myself who in the world is going to buy all this?
On the matter of oil and gasoline – look we lived in caves for christ sake. We are not going to run out of ways to heat our food, nor power our electricity, clean our water or our air, nor are we going to go without powered transportation. It was ingenuity that brought us out of the caves, it will be this same genius that will take us through this passage of time.
The revolution will not be mobs of people on the streets yeilding any conceivable weapon, but mobs of people working their asses off to complete the next level of the game. What will bring us through this is new industry and independence of foreign oil. The financial industry must be regulated to the extent they are more than nothing less than mere criminals; politicians can not look the other way anymore, either.
The late great John F. Kennedy asked the question, “Ask not what your country can do for you, but what you can do for your country? Make note of this: Make it perfectly clear, we will not stand for this type of happenstance any longer. OUR FUTURE MUST BE A SECURE ONE! Anyone tethering on the brink of anything less than this, will not be tolerated and eliminated from the game.
I said this before “any politician who takes a bribe, whether it be for money or a job position once they leave government, should be placed in the soup kitchen, in the penitentiary”. And this should be a clear statement by the American Public. So clear, that we show our intolerance at the polls. The slightest indication of an indifference to the Public Trust should be met with the most powerful of all messages – JAIL TIME!
Leaving you with this message: Butanol is a form of alcohol that can be made from just about anything. It is made currently as an industrial solvent. It is more environmentally friendly than gasoline. It is more compatible with automobiles and requires only one pump to distribute it, that is the grade of butanol can be set at 99 octane and that’s it. Butanol production is an industry long overdue to be developed and brought into existence.
It will spawn other industries like yard waste collection and facilities or general waste collection and recycling; compost or fertilizer production, charcoal production, etc.
And these are the things to ponder, not the end of the world.
Nick
Compare and contrast with 1946. Europe in ruins, millions dead, two Japanese cities nuked……….the end of the civilized world some thought with WW2 coming so close after the then unbelievable destruction of WW1, the Flu pandemic, the the Great Depression. Gosh, we now have a debt crisis, we may have 10% unemployment, and the prices of our homes may fall to 1999 levels, we may even (horrors) have reached Peak Oil……OMG…….buy gold, buy guns, and hunker down!!!!!!!!
premeditated long term goals & plans carefully thought out & implemented with a great deal of malice towards the citizens of the USA is what has brought us here. Woodrow Wilson, Pres during WW1, who knew better than anyone what REALLY went on in politics lamented the fact that we were no longer the land of the FREE nor even of majority votes but rather under the DICTATES & RULES of a handful of dominant men. Theatrical performances do NOT change what has really happened: #1. this country’s leaders have NEVER kept 1 single promise or treaty signed to any Indian (American Indian) tribe; the “I hate war!” speech written for & practiced to be delivered to the American people was a direct lie which is confirmed by documents that they tried to hide: they WANTED the war; & in fact, deliberately provoked & fed the information to the Japanese to hit the citizens of the USA at Pearl Harbor. Day of Deceit, is but 1 book written which took the man 16 years to do; more telling is that the Sec of St recorded that when he visited the Pres he stated to him that he hoped we didn’t get hit to badly on Monday. (Fri prior to bombing of Pearl Harbor); the plans are are laid out & easy to find what they are TRULY about & doing this time if you care to find out.
The only reason for a shortage of carbon based fuels will be supply restriction by the Environmentalists and the collectivists. Peak Oil is a myth just as anthropogenic Global Warming is a myth. It’s all politics. We have plenty of oil, coal and natural gas to last for thousands of years. Nuclear energy will last for millions of years, and yes I know it has been demonized by that false pagan religion we currently call Environmentalism. Whatever happened to separation of church and state? Have you ever heard of the Russian/Ukrainian Oil theory or methane clathrates or coal gasification? We are the first society in the history of the world to burn its food for fuel. The only good thing about corn to ethanol is it’s not as bad as wind and solar.
Stremsky for Senate!
Congratulations as always for your contributions Jim. Right on bat!.
Cheers from Ecuador
Ricardo