Here's an article from "Moneyweek," entitled "Why the End of Oil Could Spell the End of Suburbia." Nothing really new here - rising energy prices will continue to exert downward price pressures on low-density, high-consumption suburban housing tracts. This article - in a mainstream financial publication - continues to ratchet up the steady drumbeat of warnings that the American Dream is about to become the American nightmare.
Meanwhile, today's New York Times carries an article - also in its business section - raising the specter of the return of what was once called "stagflation." The cause: high oil prices. While several economists blithely opine that a U.S. recession would cause oil prices to sink (probably true), others point out that rising world demand (particularly from China and India) would put a fairly high floor under any drop in oil prices, making the prospect of further Fed cuts more unlikely and hence prolonging and deepening any such recession.
Lastly, here's a link that summarizes a recent article about rising costs of oil extraction that appeared in the Wall Street Journal. Noteworthy is that Cambridge Energy Research Association - a.k.a., industry shills - note that oil production costs have risen 80% in the past seven years. The finance firm Lehman Brothers estimates that production costs will continue to rise by $5-10 a barrel for the next several years. This is, very simply, a function of peak oil, and can be alternatively stated as EROEI: "energy returned on energy invested." Peak oil not only means that there is less overall oil, but that what remains becomes increasingly difficult and hence more expensive to extract. What we will experience as higher prices is actually a result of declining supplies of ever more inaccessible oil. We'll have less overall energy, and hence less overall wealth and less real economic growth as a result. Hence, "stagflation": economic stagnation combined with rising prices. This is something market-based economic theory doesn't account for very well, in significant part because it treats oil as just another commodity rather than the very lifeblood of the modern capitalist system. It remains to be seen whether capitalism is viable in the absence of growth, a possibility it has never had to confront since it is an economic system that has only existed during the fossil fuel age.
Most people assume we are just going to innovate our way to a new energy source and continue to live in our happy motoring paradise. Mackubin Owen - a conservative professor of National Security Affairs at the Naval War College (and sometimes contributor to "No Left Turns") - tartly dismisses this belief as "fairy dust" energy policy. Alternative, i.e., renewable energy forms simply do not carry the same energy punch as fossil fuels, and hence easily accounts for why we aren't rushing to adopt them. He writes: "The reason such energy sources need subsidies in the first place is that they have intrinsic shortcomings. Energy available from wind and solar is dispersed rather than concentrated - which means that windmill or solar-panel farms must be huge to generate much power. (Even then, clouds and/or lack of wind can slow or stop production, so utilities would need non-fairy-dust backup generators)." In short, alternative energies are both far more expensive and more unreliable than oil. At the point when these energies begin to "cost less" than oil, we will rush to adopt them. But, this means that we will actually have less overall external energy. To use adopt phrases of my colleague Joshua Mitchell, we will move back from "geologic" energy to "annual" energy. We will return to energy use provided annually by the sun and what is stored by living plants rather than the accumulated but non-renewable energy stockpiled by decaying plants over millions of years. We will return to an energy form that has been used by humans since their appearance on the earth until an exceedingly brief energy blow-out during the Industrial era.
Owen engages in a bit of wishful thinking in his own right, advancing the oil industry's fondest wish of opening up new production in the few remaining pockets of oil in the States. Even were we to pursue this strategy (and I think we will, eventually - humans don't have a good record of not extracting and consuming stuff they desperately want), it would provide only a few years worth of domestic energy at current consumption rates, and lower the price of oil only negligibly. We'd still be facing the headache of depleting resources, except that we would further exacerbate the problem by momentarily pretending that there was still plenty of oil and hence we could still build and behave delusively.
All these articles - published in mainstream outlets - suggest that Americans are going to find President Bush Sr.'s statement that "the American way of life is non-negotiable" may have been a bit premature, and that the "contract" is about to come up for re-negotiation. Mother nature is going to offer us a set of terms that we are going to find hard to refuse...