Monday, April 21, 2008

It's a Big World After All

Paul Krugman writes in his op-ed in today's New York Times that it's starting to look "peak-y" to him - peak oil, peak agriculture, peak everything. Considering the options to explain the recent spike in commodity prices - including another all-time high for a price of oil today - he is forced to conclude that many signs point to a permanent state of material constraint. He concludes his essay with the not-very-cheering reflection that we may not face "Mad Max" anarchy (though some countries, I would submit, already are), but that "rich countries will face steady pressure on their economies from rising resource prices, making it harder to raise their standard of living. And some poor countries will find themselves living dangerously close to the edge — or over it. Don’t look now, but the good times may have just stopped rolling."


Cranky theories
about the end of the oil age and their apocalyptic outcomes seem to have migrated from the oddball conspiracy theorist internet websites to the pages of the likes of the New York Times, the Wall Street Journal, the Economist - and the list can and will go on. Evidence continues to mount all around us that "the good times may have stopped rolling," meaning, in particular, that the great build out and expansion everywhere may be teetering on a literal peak, about to start sliding down the other side as we are forced to begin moving closer to things of value, and closer to each other in order to acquire those things.

A recent report on NPR disclosed that airline carriers - now being forced to merge simply to stay in business - will be "limiting flights to rural airports," while those routes that continue to be flown are costing more for passengers. As reported in yesterday's Chicago Tribune, these rising costs are due most fundamentally to rising fuel prices. "American Airlines' annual expenses are increasing at a rate of about $1 million per hour because of out-of-control fuel costs, estimates analyst Kevin Crissey of UBS. The 12 largest U.S. airlines will have to raise revenues by $15 billion this year as flying demand is slowing, just to keep pace with the cost of oil at $110 per barrel, according to market research firm AirlineForecasts LLC. And there's no assurance that oil prices will stop rising." Another NPR report acknowledges that consumers may be in a bind: even as costs for flying rise, so too the cost of driving becomes increasingly prohibitive and there is no well-developed rail system to pick up the slack.

From the myopic perspective of most "consumers," this seems just one further inconvenience, yet another annoying and seemingly inexplicable cost of the price of being a modern human being. But, viewed in light of Krugman's acknowledgement of "Peak Growth," the market is indicating that there is "less" travel even as demand remains steady and even growing. Higher prices are the signal of a dearth of the capacity to move easily. In effect, we will be having to spend more of our time in place - to grow accustomed to less movement. This is because the world is not getting smaller - as all the assumptions of globalization would instruct us - but is, in fact, getting bigger.

Every day, in one way or another, the leaders of my educational institution - like that of many others - tell us that we are driven by the imperative to prepare our students for a world of globalized commerce, a world in which they will need the skills of a vagabond or an itinerant vandal. In the throes of a dogma, they are unable to see the evidence before their eyes that suggests that their belief in historical inevitability may be at least slightly out of touch.

If so, we are preparing our students for a future that has no future. In light of these pieces of "evidence seen" which militate against our curious and touching faith in a globalized future, it is worth revisiting an uncharacteristic graduation speech that was delivered about a year ago at this time. In his address at Bellarmine University, Wendell Berry asked the graduates whether they were prepared for a very different future than the one so many of our elites believe to be awaiting us. No doubt, he suggests, they have been sold a certain bill of goods (and ones at a very high price): "You will be told that you and your community are now ruled by a global corporate empire, to which all the earth is a 'third world,' against which you have no power of resistance or self-determination, and within which you have no vocational choice except a technical and servile job which will give you a small share of the plunder. You will be told also – ignoring our permanent dependence on food, clothing, and shelter – that you live in a “knowledge-based economy,” which in fact is deeply prejudiced against all knowledge that does not produce the quickest possible return on investment....

Then he asks, what about a real education for real times? "What more than you have so far learned will you need to know in order to live at home? (I don’t mean “home” as a house for sale.) If you decide, or if you are required by circumstances, to live all your life in one place, what will you need to know about it and about yourself? At present our economy and society are founded on the assumption that energy will always be unlimited and cheap; but what will you have to learn to live in a world in which energy is limited and expensive? What will you have to know – and know how to do – when your community can no longer be supplied by cheap transportation? ...

"Even to ask such questions, let alone answer them, you will have to refuse certain assumptions that ... the predestinarians of the global economy wish you to take for granted."

Our elite institutions continue - in the words of Jeremy Beer - to stripmine our brightest students away from their homes to prepare them for lives as itinerant meritocrats, giving them skills that will allow them to do anything but to be prepared to live in one place and contribute to a particular community. Yet, there is growing evidence that this may be the future for which we should be preparing them, not the one that we imagine. The inability of our "leaders" to acknowledge these facts, much less to begin reconsidering our perilous course, is yet further evidence of the abject failure of education in our time. Education is doing the opposite of what it should be doing - preparing the young for a future of responsibility and gratitude in which we take in what those before us have given us as inheritance and in which we prepare to leave behind so generous a legacy.

How much longer will it be before our young look at us - seeing the plundered world we bequeath to them and the debts we leave behind - and ask us, "what in the hell do you think you were doing?"

11 comments:

Peter said...

Ominous news from today's 'Sun,' glossing yours and Krugman's take:

http://www.nysun.com/news/food-rationing-confronts-breadbasket-world

Oengus Moonbones said...

Quote: How much longer will it be before our young look at us…and ask us, "what in the hell do you think you were doing?"

When I read or listen to the news, it seems that the words of Psalms 9:15-16 are being enacted right before my eyes.

Patrick Deneen said...

Peter -
Thanks for this; and since the link doesn't show well on the comment site, I've linked it above with the words "peak agriculture." Pretty chilling stuff, and particularly the sense among angry consumers that we are entitled to food because of our purported wealth. As Wendell Berry has written, "Educated minds, in the modern era, are unlikely to know anything about food and drink or clothing and shelter. In merely taking these things for granted, the modern educated mind reveals itself to be as superstitious a mind as ever existed in the world. What could be more superstitious than the idea that money brings forth food?" ("In Distrust of Movements," pp. 47-8 in "Citizenship Papers").

David said...

Quote: "Our elite institutions continue - in the words of Jeremy Beer - to stripmine our brightest students away from their homes to prepare them for lives as itinerant meritocrats"

I'm not sure I'm entirely there yet on the peak component. I've been spending a lot of time studying the 1970s.

However, this quote is undoubtly true and has probably done more damage to the broad swath of American society than the long list of items usually trotted out.

I'm not sure where we are headed next, but higher education is entirely complicit in the ways modern society fly apart. My hope is that the shift will occur without great numbers of deaths.

Zak said...

I fear that we're going to hear a lot more about the importance of "family planning" in response to increasing food costs.

mark said...

My suspicion of whats going to happen over the next 50 year, is that as cheap energy runs out, human ingenuity will prevent the worst from happening, but over time we will just not travel so much, food will start being grown closer to home, more products will be made locally, etc. But this will happen in such a subtle way, that we won't notice a lot of it, as it happens. We will just come to the realization, one day, that the whole society has been relocalized around us.
Most changes in society are like that. One day we woke up, and found our agrarian, localized world had become industrialized. Now we are about to see it go into reverse. And much of what happens, we won't even notice much. That how I see it happening. For instance, desktop computers have changed the world. But I am 45, and I remember a world where computers were not such ubiquitous part of our lives. The change occured over much of my life, one day I noticed that every desk had one, every store used one, and so on. There are kids today, who can't even imagine such a world, without computers, X-boxes etc. But I do.

Dad29 said...

All in preparation for the Next Big Thing: the drive to de-populate. You know, the Club of Rome, the Malthusians, etc.

Featured soon at a Theatre (of the absurd) near you. In fact, the Milwaukee newspaper has already started running letters-to-the-editor on just that theme. (See: http://moderncommentaries.blogspot.com/2008/04/eco-sterilization.html )

Is it just a coincidence that there is a Presidential election coming soon, and that the Gore "warming" theory is hitting the rocks?

Marc said...

In some ways I find this view of new limits persuasive, but in some ways not.

I am old enough to remember the 70's, double digit inflation and unemployment and record oil prices. Jimmy Carter in his cardigan saying America needed to accept a new age of limits.

Then Reagan's landslide, "morning in America," new sources of oil, collapsing oil prices, and a huge economic expansion.

My understanding is that there is more oil in the shale of N. Dakota than in Saudi Arabia, and more yet in the sands of Colorado and Canada. It has not been economical yet to prospect and produce, but it will be soon, and if it is, it will be got by the ingenuity of the oil men.

An example of that is here in Fort Worth. For years it was known that a formation known as the Barnett Shale had trillions of cubic feet of natural gas, but no one could get it out. An oil man named George Mitchell spent 15 years trying to crack the problem, and sure enough, using ever new drilling and fracturing technology, he did.

He, of course, is a multi- billionaire, (he was rich beyond most of our imaginings even before he even started in the Barnett, so he wasn't doing it for the money.) Thus we don't think of him as a great genius or a hero, but he is both. And the Barnett will produce it's trillions because of his and his colleagues ingenuity and back-breaking hard work.

In the same way, isn't it fair to think that other geological formations, previously locked, will be unlocked, and billions of barrels of oil and trillions of cubic feet of gas will be produced. As in the 70's, it takes awhile, but people figure it out.

Patrick, how can you say that the "limits" of "peak oil" now are different than the "limits" then? There have been so many "oil crunches" in the "oil age," and so many doomsday predictions: "you better believe it, the oil will run out in 1896, 1913, 1924, 1956, 1984" etc. But it never happens because of the dynamic nature of freedom and a free economy to transcend previous limits.

Now this may be bad for our souls, spurring greed. But in my experience greed is one of those sins that only others our guilty of, never ourselves. The person with one Honda thinks the person with 2 Cadillacs is greedy, while he thinks the person with the Bentley and Ferrari is greedy, and someone who takes the bus thinks the person with the Honda is.

I have sympathy for your position. I am a melancholy, pessimistic person myself. But I read Virginia Postrel too, and I think she has the weight of history behind her.

Patrick Deneen said...

Marc -
The limits of the 1970s are different from those now - as best I can understand - because the oil shortage we experienced in the 1970s was the result of a political embargo, not depletion of the worlds' largest oil fields. You are quite right to point out that there is plenty of petroleum locked in the ground, or probably in locations beneath the oceans, to continue to power our lifestyle for a long time to come - if it weren't so costly to extract it. Our lifestyle isn't powered by "energy" per se (though of course it is); it's powered by CHEAP energy. What makes extracting some of this petroleum "economical" (e.g. the tar sands of Alberta) is the prospect of permanently high prices. The supposed flood of new petroleum from these sources will not lower prices, because the cost of extracting them are so high. We need to keep in mind "EROEI" - "energy returned on energy invested." In its heyday, the energy returned on oil was 100:1 (100 barrels for every barrel expended retreiving them). That has dropped now to 10:1, and drops further when one begins extracting from deep seas. Canadian tar sands is lower still, and comes too with a pricetag of large quantities of natural gas and water that are used (the water which is no longer usable, and has to be sequestered in huge, toxic retaining tanks) and hellish environmental degradation. Corn-based ethanol's EROEI is close to -1:1, meaning that we are getting no actual energy from ethanol once we calculate the costs of petroleum inputs (yes, I know you're all shocked that it's a gigantic farm subsidy, and one that is inducing starvation worldwide). Hydrogen? Also about 1:1. You have to use energy to separate the hydrogen molecules from oxygen - e.g., by running an electric current through water. Once you figure in the energy cost of the electricity, there's practically no energy gain.

So, yes, there's oil in the ground, but it will remain expensive to produce it. We will produce it, but it will mean that there is less overall energy in the world, once we add in the cost of production. People like Postrel have lauded the modern ingenuity of humankind without ever accounting for the actual costs of our brilliance. If we start to do a stricter accounting (a necessity in an age of indebtedness), we'll find that we've been living on borrowed time, and borrowed everything else.

Howard J. Harrison said...

Why not gasoline from coal, among other possibilities? Its extraction ratio is rather better than 1:1, isn't it?

It seems to me that Mr. Krugman unnecessarily discounts the existence of backstop energy technologies, already developed but---only because crude oil has heretofore been so cheap---not yet deployed.

Howard

Patrick Deneen said...

Howard -
Coal is yet another non-renewable petroleum source, with its EROEI less than oil. According to relocalize.net, "At current usage rates, there is enough coal left in the ground to supply us for 200 years. But if the United States starts increasing coal consumption at 2% per year it reduces the 200 years supply to 100 years, and if we also start liquifying coal for motor fuels it reduces the supply to less than 50 years. Coal mining operations, machinery and transportation all run on fossil fuels. Coal currently has an EROEI (energy return on energy invested) ratio of 8 to 1, meaning 8 units of coal can be produced using the energy produced by one unit of coal. Compare that to oil’s current EROEI of 10 to 1 (10 barrels of production at the energy cost of one barrel of oil) and, with oil supplies depleting and coal resources becoming more difficult to mine, coal’s EROEI estimate for 25 years from now is 1 to 2, meaning it will take the energy equivalent of two units of coal to produce a single unit of coal. When it takes more energy to extract a substance than that substance can produce, it is no longer an energy resource, rather it is an energy drain. And let's not forget that coal is one of the dirtiest fossil fuel energy sources. Unless carbon sequestration can be made effective, use of this energy source will pose an extreme danger to the Earth's biosphere through additional global warming." Hardly a silver bullet, it seems to me. We have to face the fact that nothing will replace the enormous EROEI advantage we enjoyed for the past 150 years, and even some combination of alternatives will nevertheless mean there will be less usable energy in the world. Alas - this means we'll have stronger communities, we'll be less obese and we'll have to be more attentive to how we care for the world. It's this awful prospect we seek to avoid, at all possible costs....