Energy: The end of the oil fiesta?
By Bill Settlemyer
President and CEO, Setcom Media
What if a gallon of gas cost $10? Would that change your driving habits or affect your purchase of your next car or truck? Even worse, what if a worldwide shortage of oil led to declining access to petroleum products and gasoline was rationed? What would you do then? Would you carpool, walk or bike more, try public transportation, take fewer trips?
No one is predicting this kind of spike in gas prices, but long-term trends could move energy markets in that direction. There are many reasons why oil prices have been pushing toward the $100 a barrel threshold. Speculation by traders is one reason. The declining productivity of oil fields is another. Rising demand from newly developing countries like China and India add to the pressure, as does political instability in oil-producing countries and the decision of at least one country, Venezuela, to view their oil reserves as a political weapon to use against real or perceived enemies.
A careful reading of national press stories both in business publications and newspapers like The Washington Post make it clear that current high prices are probably driven by something more than speculation and cyclical market swings. Advocates for the “peak oil” theory say worldwide production of oil may already have peaked and will soon begin a long slow decline leading ultimately to “the end of oil” as a major energy source for the modern industrialized world.
Experts who don’t buy into the peak oil scenario (at least not for now) still foresee increasing strains on oil capacity because worldwide demand for oil will grow much faster than the world can increase oil production. As a result, shortages will occur and prices will rise significantly as demand grows without a corresponding increase in supply. That’s basic
“Economics 101,” and few experts see a more favorable scenario unfolding in the coming years and decades.
The end of the oil fiesta?
James Howard Kunstler is a writer with an apocalyptic view of the challenges humanity will face in the 21st Century. You can tell just by the title of his 2005 book. It’s called “The Long Emergency—Surviving the End of Oil, Climate Change and Other Converging Catastrophes of the Twenty-First Century.”
Where oil is concerned, Kunstler points out what we are all beginning to learn: That oil does more than just fuel our personal vehicles. Food prices are directly affected by the cost of fuel used in farming and transportation, and petroleum is also a raw material in the manufacture of food packaging, fertilizer and pesticides. A myriad of other products we take for granted depend to one degree or another on petroleum as a raw material.
So, says Kunstler, as oil production slowly falls further and further, the entire foundation on which our modern lifestyle is based will crumble. He thinks these changes will return us to an agrarian and craft-based society more reminiscent of the late 1800s than the modern world we know today. And he doesn’t think energy conservation or alternative sources of raw materials and energy can replace disappearing oil reserves as what he calls “the oil fiesta” slowly comes to an end.
Think locally!
While Kunstler’s grim view of the future is considered by many to be unduly pessimistic, there is a growing recognition in business, academic and political circles that the underlying issue is real.
That’s why I was encouraged by the views expressed during the second S.C. Agricultural Summit (AgSummit) held in Charleston last month. The summit was presented by The Palmetto Institute, the nonprofit group founded by Darla Moore to promote economic growth and prosperity in South Carolina.
While acknowledging the long-term threats from climate change, declining oil production and competition for water resources, the general theme of the meeting was that we should focus on new opportunities for South Carolina’s agricultural sector. For example, if fuel prices push up the cost of food imported from overseas or elsewhere in the U.S. (California, for example), that makes food grown nearby more competitive for local consumption.
Following the lead from the first AgSummit last year, the state’s Department of Agriculture has launched a “Certified South Carolina Grown” marketing program to encourage South Carolinians to look for and buy the bounty produced within our borders. The promotion is based not on price but on quality and the reasonable assertion that local produce and other agricultural products are likely to be fresher, tastier and healthier than food brought in from hundreds or thousands of miles away.
A second leg of the “think local” strategy focuses on efforts to develop a bio-fuels industry in the state. There are many players involved in this including our research universities and various business and nonprofit groups. The bio-fuels movement is still in its infancy and many questions remain to be answered. It’s looking more and more like corn-based ethanol is not a good solution either from an energy efficiency standpoint or the cost of production, since producers of this fuel have to compete with the demand for corn used in food products.
But there’s hope and promise in the development of more efficient ways to produce ethanol from cellulosic sources such as switchgrass and wood manufacturing byproducts. One of the big issues with ethanol is delivery to markets and distribution. Having production facilities near local urban markets could help overcome this challenge.
For example, it would be a net gain for the state’s economy if cellulosic ethanol made here could be used to fuel nearby county and municipal vehicles as well as local commercial trucking fleets. That would allow delivery to a limited number of distribution points rather than thousands of gas stations, at least partially solving that piece of the ethanol puzzle.
The title of the first chapter of Kunstler’s book is “Sleepwalking into the Future.” I think that’s pretty much what we’ve been doing up to now with regard to climate change, dependence on foreign oil, and the increasing scarcity of water resources. That loud ringing you hear is your wake-up call. Time to rise and shine, folks!
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