Peak Oil and the New Administration
By Michael Payne
There is a distinct uneasiness in America today. The confidence of the people in our nation has been shaken by a series of serious problems that seem to have descended upon our society at the same time. The housing bubble, sub-prime mortgages, foreclosures, massive Wall Street financial problems, the threat of recession and, at the same time, inflation. But the problem with the greatest possibility of lasting damage to our society and our economy is the specter of Peak Oil looming over us.
America is now becoming more aware that we are all caught up in an unexpected nightmare called Peak Oil, the point at which the demand for oil on the world market overwhelms world production capacity and this condition becomes irreversible. Currently world petroleum production is remaining relatively stable at about 87 million barrels per day while world demand is expected to grow to almost 88 mbpd in 2008. The price of a barrel of oil reached as high as $139.89 on June 16, 2008 and there are dire predictions of further escalation. Before long, many analysts expect demand to overwhelm production in an irreversible trend, and when that happens, every nation will experience extreme shock to their economies. But no nation will experience the shock that will impact America, for no economy in the world is so overly dependent upon petroleum than this nation.
Whether we call this condition Peak Oil or something else matters little. Various analysts argue that OPEC (the Organization of Petroleum Exporting Countries) is manipulating supply to jack up prices; that American oil companies have formed some sort of cartel that is conspiring to limit production and fix prices. Others say that Wall Street speculators of all types are manipulating the process. And some say that it is simply a short-term bubble that will blow over before long and everything will revert back to the status quo, but that is just not going to happen.
That speculation is based upon wishful thinking, that these so-called manipulators will somehow be brought under control to alleviate this nightmare so we can once again just return to our wasteful habits in the reckless and selfish use of this precious, non-renewable source of energy. Congress has on several occasions held public congressional hearings where oil industry executives, under oath, have not even blinked an eye or taken any responsibility for the mess we are in, saying "sorry, but we are not the problem". Congress would like to reinstate an excess profits tax on the oil companies but can't reach accord on it yet. In short, all the blustery talk, veiled threats and speculation about who the real culprits are has done nothing whatsoever to remedy the situation. And that is because Congress is simply not addressing, nor do they comprehend the underlying causes of this petroleum emergency.
What are the root problems, the underlying causes? Who exactly is primarily responsible? We can answer this question by making an honest assessment of the lifestyles that we have been maintaining. In our hearts we really should realize that the major underlying cause of this predicament is the American lifestyle, our excessive, wasteful habits. While the entire world also contributes to these problems, America continues to be the outright leader when it comes to overindulgence, as evidenced by the fact that this nation, having 5% of the world's population consumes about 25% of world oil production or 22 million barrels per day. We currently import 60% of this total.
We in America must stop procrastinating, admit we are primarily responsible for the dangerous conditions that we are facing, and get serious about coming up with solutions to this real problem. It is simply not going to go away. It is here to stay and we must face up to it or the future of America will be very bleak indeed. A problem cannot be solved unless it is directly faced and addressed. So far we have not begun to address it. However, we are in the beginning stages of experiencing a significant motivating factor that will finally get this process underway.
The motivating factor of which I speak is PAIN. We Americans seem to have a habit of letting certain problems or conditions continue to grow and fester, to a point that the impact upon us becomes unbearable; only then do we rise to the occasion and take corrective action. While I could cite numerous examples of this, one of great significance was the Vietnam War that went on and on, causing immense pain and destruction, until America could stand no more pain and finally said, "enough is enough". We are currently experiencing a similar scenario with the Iraq War, where America is involved in a massive national struggle between opposing factions that can't agree on how to exit that quagmire. But when the pain becomes unbearable, we will find a way.
America is already experiencing sharp pains at the gas pump where prices have now shot up to more than $4.20 gal. for regular and $4.90 and more for diesel fuel. This pain is spreading to all facets of our lives and our economy. Independent truckers are finding it impossible to make ends meet; many have declared bankruptcy, others are near. The airline industry is besieged by massive cost increases for jet fuel that are sending their operating costs out of sight. They are now taking corrective action by passing much of this burden to their customers through increased fares, reducing schedules to smaller cities, and even charging extra for baggage handling. Spokespersons for the industry say that reaching $130 barrel was a tipping point and that operations cannot be sustained under such escalation.
I am no fan of SUV's because I thought they were a bad idea from their inception. They are a major contributing factor to our gasoline supply problems, an example of the excessive habits that I have referred to. While they may be absolutely necessary for very large families and businesses, we have become a nation that is glutted with these overly large, gas-guzzling vehicles that are totally unnecessary for the typical American family. Now the pain of owning an SUV is causing great distress to many families that cannot afford to own them because of their miserable gas mileage. There has been a rush by many Americans to trade them in for standard autos. Dealers who sold hundreds of thousands and millions of SUV's do not want to take them for trade since they would just sit on their lots. They are offering owners ridiculously low trade-ins that people cannot accept, so they are stuck. In the worst cases many Americans now owe more on their SUV's than they are worth, a situation so similar to homeowners who got caught in the sub-prime mortgage problems.
The continuing failure to bring this situation under control affects every facet of our lives and economy. Our inaction, if we continue to fail to address these problems, will put us on a course that will change our lifestyles very radically. We are running out of time but we can still begin the critical process of arriving at solutions. The Bush administration is so involved with the oil industry that there is no chance that they will make any attempt to promote alternatives to petroleum energy. Therefore, it will be up to the incoming President and a new Congress to turn America in a completely new direction. The Dept. of Energy must become a major force in any new administration. The new President must think deeply and appoint a person with the knowledge and intense passion about developing energy alternatives, one who will initiate a massive program akin to the birth of our space exploration program of the 60's; one who enlist the best minds in America to develop new energy sources and end our severe addiction to petroleum.
In the very near future Americans will see a dramatic increase in smaller vehicles on our highways, as is commonplace all over Europe. While SUV's and recreational pick-ups are beginning to disappear, bicycles, scooters, and motorcycles will abound. We will watch suburban sprawl come to a halt as massive commutes to work will become prohibitive. Mass transit will rapidly grow in popularity as commuters begin to realize that it's a terrific alternative to bumper-to-bumper gridlock. Solar panels will begin to appear on our roofs. The railroads, having lost much of their freight hauling to interstate trucking in years past, will once again experience rapid growth and will once again prosper.
We won't take as many vacations and, when we do, the distance we travel will be much less than we normally have done. Air fares and schedules will present problems for the traveler and so the entire airline industry will be scaled back. World business travel, as well as vacations abroad, will also see sizable declines. The current rapid move to globalization and increased world trade will not be sustainable because of energy costs and availability. I believe America will experience a great reversal of the outsourcing of jobs as this nation will be forced to drastically give up its reliance on imports and return largely to domestic production.
All of these events will actually be positive moves for the future good of this nation. Yes, there will be pain, discomfort and necessary changes to all of our lifestyles. But it will be very good for our future welfare because we will not be subjected to the disastrous impacts to our economy and our daily lives that we would face if we did nothing. Best of all, these changes to our lifestyles will contribute directly to offset our escalating energy problems and buy us some time to begin the ongoing development of alternative energy sources.
While many in America may have feelings of dread and fear as they continue to personally experience the increasing impact of these serious problems, they should not; for the future of America will be better assured as we face up to these problems and seriously address the great challenge of Peak Oil.
Michael Payne resides in the Chicago area. He considers himself an activist. His writings deal mainly with political issues, American foreign policy and climate change. His articles have appeared on the websites, Online Journal, Information Clearing House, Foreign Policy, Peak Oil and others.