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[Good news from the best oil/environment writer, Heinberg. The current economic crisis is easing pressure on the planet and its resources, ecological danger is decreasing. This is hopeful. I particular enjoy this statistic: "in the first four months of 2009, more bicycles were sold in the US than cars and trucks put together (over 2.55 million bicycles were purchased, compared to fewer than 2.4 million cars and trucks)."
Lately i've become convinced that hope is our greatest ally in working for a better world. If this article doesn't inspire you, look at what's happening in Iran at this moment. - alex]
Richard Heinberg
Originally published by Post Carbon Institute, June 5, 2009.
Recently I’ve begun compiling a list of things to be cheerful about. Here are some items that should bring a smile to any environmentalist’s lips:
- World energy consumption is declining. That’s right: oil consumption is down, coal consumption is down, and the IEA is projecting world electricity consumption to decline by 3.5 percent this year. I’m sure it’s possible to find a few countries where energy use is still growing, but for the US, China, and most of the European countries that is no longer the case. A small army of writers and activists, including me, has been arguing for years now that the world should voluntarily reduce its energy consumption, because current rates of use are unsustainable for various reasons including the fact that fossil fuels are depleting. Yes, we should build renewable energy capacity, but replacing the energy from fossil fuels will be an enormous job, and we can make that job less daunting by reducing our overall energy appetite. Done.
- CO2 emissions are falling. This follows from the previous point. I’m still waiting for confirmation from direct NOAA measurements of CO2 in the atmosphere, but it stands to reason that if world oil and coal consumption is declining, then carbon emissions must be doing so as well. The economic crisis has accomplished what the Kyoto Protocol couldn’t. Hooray!
- Consumption of goods is falling. Every environmentalist I know spends a good deal of her time railing both publicly and privately against consumerism. We in the industrialized countries use way too much stuff — because that stuff is made from depleting natural resources (both renewable and non-renewable) and the Earth is running out of fresh water, topsoil, lithium, indium, zinc, antimony…the list is long. Books have been written trying to convince people to simplify their lives and use less, films have been produced and shown on PBS, and support groups have formed to help families kick the habit, but still the consumer juggernaut has continued — until now. This particular dragon may not be slain, but it’s cowering in its den.
- Globalization is in reverse (global trade is shrinking). Back in the early 1990s, when globalization was a new word, an organization of brilliant activists formed the International Forum on Globalization (IFG) to educate the public about the costs and dangers of this accelerating trend. Corporations were off-shoring their production and pollution, ruining manufacturing communities in formerly industrial rich nations while ruthlessly exploiting cheap labor in less-industrialized poor countries. IFG was able to change the public discourse about globalization enough to stall the expansion of the World Trade Organization, but still world trade continued to mushroom. Not any more. China’s and Japan’s exports are way down, as is the US trade deficit.
- The number of vehicle miles traveled (VMT) is falling. For decades the number of total miles traveled by all cars and trucks on US roads has relentlessly increased. This was a powerful argument for building more roads. People bought more cars and drove them further; trucks restocked factories and stores at an ever-growing pace; and delivery vans brought more packages to consumers who shopped from home. All of this driving entailed more tires, pavement, and fuel — and more environmental damage. Over the past few months the VMT number has declined substantially and continually, to a greater extent than has been the case since records started being kept. That’s welcome news.
- There are fewer cars on the road. People are junking old cars faster than new ones are being purchased. In the US, where there are now more cars on the road than there are licensed drivers, this represents an extraordinary shift in a very long-standing trend. In her wonderful book Divorce Your Car, Katie Alvord detailed the extraordinary environmental costs of widespread automobile use. Evidently her book didn’t stem the tide: it was published in the year 2000, and millions of new cars hit the pavement in the following years. But now the world’s auto manufacturers are desperately trying to steer clear of looming bankruptcy, simply because people aren’t buying. In fact, in the first four months of 2009, more bicycles were sold in the US than cars and trucks put together (over 2.55 million bicycles were purchased, compared to fewer than 2.4 million cars and trucks). How utterly cool.
- The world’s over-leveraged, debt-based financial system is failing. Growth in consumption is killing the planet, but arguing against economic growth is made difficult by the fact that most of the world’s currencies are essentially loaned into existence, and those loans must be repaid with interest. Thus if the economy isn’t growing, and therefore if more loans aren’t being made, thus causing more money to be created, the result will be a cascading series of defaults and foreclosures that will ruin the entire system. It’s not a sustainable system given the fact that the world’s resources (the ultimate basis for all economic activity) are finite; and, as the proponents of Ecological and Biophysical Economics have been saying for years, it’s a system that needs to be replaced with one that can still function in a condition of steady or contracting consumption rates. While that sustainable alternative is not yet being discussed by government leaders, at least they are being forced to consider (if not yet publicly) the possibility that the existing system has serious problems and that it may need a thorough overhaul. That’s a good thing.
- Gardening is going gonzo. According to the New York Times (“College Interns Getting Back to Land,” May 25) thousands of college students are doing summer internships on farms this year. Meanwhile seed companies are having a hard time keeping up with demand, as home gardeners put in an unusually high number of veggie gardens. Urban farmer Will Allen predicts that there will be 8 million new gardeners this year, and the number of new gardens is expected to increase 20 to 40 percent this season. Since world oil production has peaked, there is going to be less oil available in the future to fuel industrial agriculture, so we are going to need more gardens, more small farms, and more farmers. Never mind the motives of all these students and home gardeners — few of them have ever heard of Peak Oil, and many of the gardeners are probably just worried whether they can afford to keep the pantry full next winter; nevertheless, they’re doing the right thing. And that’s something to applaud.
[T]he items outlined above suggest that we’ve turned a corner. Read the rest of this entry »
[Below are excerpts from Kevin Carson of the P2P Foundation responding to someone who claimed, "post-capitalism talk is largely Utopian fantasy". I agree with the thrust of Kevin's argument, capitalism faces collapse on a global scale - but the key social question of our age will not be "can capitalism survive?" but "what new social system(s) will outlive it?"
There are powerful forces seeking to deny us the possibility of relocalizing and democratizing our own economic networks, and which favor a re-nationalization of economic organization and a more brutal resource imperialism. In short, using the State to protect wealth and privilege from the economic chaos, commonly referred to as fascism. Social change is not deterministic, we are faced with widely diverging paths. How we win this struggle and create a post-capitalist world worth living in is the subject of my work. - alex]
“Is post-capitalism a fantasy?”
P2P Foundation, June 7, 2009.
Quotes by Kevin Carson.
I believe that within a generation we’re going to see a radical shortening of supply and distribution chains from Peak Oil, a combined relocalization of most production and an explosion of LETS and barter networks as official money and wage employment dry up for a major part of the population, and a collapse of the old corporate proprietors in the culture and software industries.
…
The growth of the financial sector compared to physical assets is a major symptom of the problem. Given corporate capitalism’s chronic tendency toward overproduction and overinvestment, you can’t invest the surplus in plant and equipment that will generate even more goods when people can’t consume existing output. So you pile up the surplus investment capital in a FIRE sector that only works until the ponzi scheme collapses.
…
[O]ne reason for the growth of the FIRE economy from the ’90s on was that the export of industrial capital had reached its limits as a strategy for solving the crisis of overinvestment. China is saturated with more industrial capital than there is a market for. And second, there’s not much future in shipping goods overseas from Chinese factories when fuel costs two or three–or more–times what it did this time last year.
…
Had oil stayed at its summer 2008 prices indefinitely, some 20% of airline routes would have shut down and a comparable percentage of long-haul trucks left the market. And this was indeed a “hiccup” compared to what we can expect from Peak Oil in the future. Even a supply shortfall of a few percent can cause prices at the pump to double. What can we expect when supply falls by half or two-thirds over the next generation? I expect we’ll see a total collapse of intercontinental supply chains except in vital minerals, and an order of magnitude of reduction of continental supply chains for most manufactured goods.
The factories in China and Vietnam will become useless for anything but producing goods for people in–well, in China and Vietnam. Production of spare parts and modular accessories will grow massively at the expense of production of new goods, and the growth in such production of spare parts and modular accessories will occur mainly in flexible manufacturing nets in relocalized industrial economies. In-season produce will be almost entirely relocalized by backyard gardening and market gardening, and a much larger percentage of our diets will be either in-season or canned local stuff.
We’re barely two years into the real crisis: two years from when real estate prices began to slide, a year from when Peak Oil first became a household word, and nine months since inventories and employment began a free-fall.
To say “everything’s OK so far” this early in the process is IMO about like saying, immediately after Alaric’s first repulse from the gates of Rome, “Well, the system’s still got a lot of life in it.” Or the old joke about the optimist who fell off a 100-story skyscraper and shouted to the people on the 99th floor, “OK so far!”
To say that things look good for capitalism except for Peak Oil is a bit like saying your uncle is just like your aunt except for his testicles.
In 1995, multinational oil corporation Shell conspired with the Nigerian government to brutally suppress a popular nonviolent social movement that called for environmental justice in their polluted land. A key moment in this campaign of violence was the military show-trial of Ken Saro-Wiwa, leader of the Ogoni people and nonviolent advocate, which led to his execution.
Shell is currently facing trial in New York in a lawsuit brought by the Wiwa family, charging the oil company with “requesting, financing, and assisting the Nigerian military which used deadly force to repress opposition to Shell’s operations in the Ogoni region of the Niger Delta.”
This short video tells the story of Ken Saro-Wiwa and how corporate and state power merge to violently suppress grassroots social movements in order to protect the exploitation of the environment and workers.
More and more people are using the language of peak oil and becoming aware that the future we once took for granted is now being foreclosed (not incidentally, by the same folks who are foreclosing a lot of our homes). It is increasingly clear that we stand at a cross-roads, and that neither road leads anywhere similar to the global capitalist era we just passed through.
Here are some excerpts from a good article that acknowledges the reasons why the future will be nothing like the past, and lays out the 2 paths we can now head down. I wrote some thoughts at the end to inspire us to think realistically and demand the impossible. [alex]
Time to Deliver: No Turning Back, Part I.
by Sara Robinson
April 7, 2009
Originally published by Campaign for America’s Future
..[T]he two dominant scenarios about the American future that progressives seem to be wrestling with right now [might be described as]:
1) Permanent Decline — Due to Americans’ native hyperindividualism, political apathy, and overweening willingness to accept personal blame for their country’s failures, the corporatists finally succeed in turning the US into Indonesia. This time, we will not find the will to fight back (or, if we do, it will be too late). As a result, in a few years there will be no more middle class, no upward mobility, few remaining public institutions devoted to the common good, no health care, no education, and no hope of ever restoring American ideals or getting back to some semblance of the America we knew.
2) Reinvented Greatness — Americans get over their deeply individualistic nature, come together, challenge and restrain the global corporatist order, and finally establish the social democracy that the Powers That Be — corporate, military, media, conservative — have denied to us since the 1950s. This happens in synergy with a move to energy and food self-sufficiency, the growth of a sustainable economy, a revival of participatory democracy, and a general renewal of American values that pulses new life into our institutions and assures us a much more stable future.
Conservatives and the mainstream media, of course, are also offering a third scenario:
3) Happy Face — Prop up the banks, keep people in their houses, and by and by everything will get back to “normal” (defined as “how it all was a few years ago.”)
[Sara recognizes that this third "road" is an illusion, for the following underlying realities which cannot be ignored any longer. -alex]
1. Energy regime change
The first reason there’s no going back to the way it was is that there’s simply not enough oil left in the ground — or carbon sinks left in the world — to sustain America as we’ve known it. We may well be able to sustain some semblance of that way of life (or perhaps, find our way to one even more satisfying); but we won’t be running it on oil or coal.
And when the oil goes, so goes the empire. Read the rest of this entry »
Below I’ve reposted a new article by Roger Baker, former ’60s SDSer and current peak oil activist in Austin, TX, linking the Economic Crisis with Peak Oil. There is more evidence mounting that last year’s global economic downturn was to some degree a direct result of the unprecedented oil price spike that immediately preceded it.
For example, this article (“Jeff Rubin: Oil Prices Caused the Current Recession”) explains that Europe and Japan (which are both more vulnerable to oil prices because they produce less oil than the US but consume plenty) entered recession before the financial subprime crisis hit global markets.
Quote: “Higher oil prices started four of the last five world recessions; we shouldn’t be too surprised if they started this one also.”
Keep in mind the unprecedented nature of this recent oil price spike, where the price of oil went to all-time record levels of nearly $150/barrel. This chart suggests that the economic effects of past price rises will likely pale in comparison to this much greater recent spike, at the end of the day.
Finally, we have this telling quote from Gail the Actuary: “It seems to me that the problem with non-availability of credit, particularly long-term debt, is ultimately tied in with peak oil. It is difficult to have more than a tiny amount of long term debt once an economy is no longer growing.”
My book, The End of Capitalism, will explore this theme in more depth, but it’s worth conjecturing: If the global economy literally cannot grow any more, because of real and unavoidable limits on vital resources such as oil, how can we anticipate the multi-layered global consequences?
We have arguably begun witnessing the first wave of financial consequences, but this is just the tip of the iceberg. How might the economy as a whole system have to transform, and if growth as the paradigm of industrial capitalism is literally behind us, what kind of economy will the paradigm shift towards? Will we see a new sustainability rooted in democracy and freedom, or an even greater tyranny than what capitalism has wrought?
[alex]
Some Economic Implications of Peak Oil
World oil production probably peaked in 2008. Liquid fuel production, including oil, is indicated by the OPEC data [1] to have reached a peak in July 2008 at about 86 million barrels per day, with its price peaking at about the same time. ASPO International agrees, as indicated on the chart page of their recent newsletters [2].
Peak oil has profound economic implications, most of which are unwelcome. There is good evidence indicating that peak oil triggered the global economic crisis; that oil price was the limiting factor that broke the momentum as the global economy tried to keep expanding. [3,4].
Predictably some factor like the end of cheap oil must limit the ability of global investments to expand exponentially, while paying interest on the global debt bubble. The risk was evenly spread by instruments like credit default swaps, so the collapse was global.There is scholarly confirmation of the role of the 2008 oil shock on the global economy should see the April 2009 Brookings paper “Causes of the Oil Shock of 2007-08″, by UC San Diego economist Dr. James Hamilton: [5,6].
“…Whether we would have avoided those events had the economy not gone into recession, or instead would have merely postponed them, is a matter of conjecture. Regardless of how we answer that question, the evidence to me is persuasive that, had there been no oil shock, we would have described the U.S. economy in 2007:Q4-2008:Q3 as growing slowly, but not in a recession.” Read the rest of this entry »
Anatoly Karlin at Sublime Oblivion has compiled some provocative graphs which suggest that the global peak of oil production has played a large causative role in the global economic meltdown of the past few years. Right off the bat we should look at how skyrocketing oil prices caused global food shortages and price inflation for other necessities, but also how the rising gas prices hurt US Real Estate markets and burst the subprime mortgage bubble. We know how that damage was compounded into the financial crisis and got us where we are, but what hasn’t been studied is the role of oil in originating the breakdown, not to dismiss the role played by lax regulatory oversight, financial mismanagement or straight-up theft by large banks and speculators.
I look forward to this argument on the role of oil being expanded and enriched by an anti-capitalist framework. [alex]
Excerpts from Oily Origins of the Economic Crisis.
Anatoly Karlin, February 18, 2009.
In an article some months ago I suggested that “perhaps this crisis is simply an unconscious recognition of this inconvenient truth?” – namely, the peaking of oil extraction and all that it implies for the continued survival of a financial system built on assumptions of continuous economic growth. In other words, the fashionable approach of focusing on exotic financial instruments, regulatory failures, etc, if a case of mistaking the forest for the trees.
The Oil Drum had a nice graphical summary. According to the author, Gail the Actuary, the chain of causation runs thus:
This explains the extreme severity of the crash – record GDP growth at a time of plateaued oil extraction in the 2005-2008 period was patently unsustainable, so a very big “correction” could not have been unexpected.
And it is quite a correction.
As of the September-November average, global industrial production was plummeting at an annualized rate of -13% and merchandise trade by a truly remarkable -43%. And it is obvious the collapse accelerated since then…
Already far worse than during even the worst month of 2000-2001, the last and only global slowdown for which the IMF has data.
…
Another Oil Drum blogger, Phil Hart, wrote about the dramatic rise and fall in oil prices in terms of simple supply and demand curves…
Oil demand and supply.
His thesis is that because of the geological limits to oil supply, the marginal cost of providing ever more oil is generally low until it reaches some point – say, 85mn barrels a day – and then veers off into the sky (i.e. becomes very inelastic). Demand is also inelastic, since modern society basically runs on oil. Hence there comes a time when the demand curve reaches a point when its intersection with the supply curve – i.e., the market price – starts rising exponentially. Read the rest of this entry »
A massive wave of layoffs was announced yesterday by 12 major US corporations, including Caterpillar, General Motors, Home Depot, Sprint Nextel and Pfizer. Microsoft also announced its first-ever mass layoffs of 5,000 workers. Overall, more than 75,000 jobs are being cut from the workforce after Unemployment levels were reported as 7.2% in December, the highest level in over 16 years, with no end to the bleeding in sight.
As more and more workers fill the unemployment rolls, it’s time to ask: where will future jobs come from? While government and corporate bigshots plan yet another “economic stimulus” and bailout of the banks, what long-term jobs can we realistically create right now?
Lots of answers present themselves if we look through the lens of peak oil, and start replacing our oil-based economy with a people-based economy. Instead of relying on greenhouse gas-producing fossil fuels, we can tap into the power of human labor, which happens to be our greatest renewable resource.
Certainly there is a need to employ millions to weatherize homes and build and install solar panels and wind turbines (which Obama may address), but there is also a huge need to re-tool Detroit automakers to STOP producing gas-guzzling individual cars, and start making buses, trains and other forms of public transit. Bicycles are also desperately needed, so we need workers to build them and more to repair them too.
We also need lots more doctors and nurses if we make health care universally available, and social workers and therapists to help deal with the psychological trauma our population has suffered from militarism and soulless consumerism. Since many of these jobs require education and training, we need to hire lots more teachers, and we also need education to be a lot more affordable to so more people can access these kinds of careers.
Perhaps the largest gains in the job sector can be achieved by shifting food production away from mega-scale agribusinesses and fossil-fuel intensive monoculture and factory farms, towards community-based, local, organic, family farming and free-range livestock raising. By breaking up the huge corporate farms into family-size and community-size plots, we can repopulate rural America (and stop suburban sprawl), produce better, healthier food, respect animal rights, and create millions of new landowners. Simultaneously we can follow the example of Cuba and turn our blighted inner-cities into gardens, by utilizing permaculture and organic community-run agriculture, which would reduce crime and poverty in our decaying urban areas, bring quality food to places currently plagued by malnutrition, and create millions upon millions of rewarding and meaningful jobs.
How will we finance it? Simple. Disassemble the huge financial firms and multinational corporate banks whose greed caused this economic crisis and create thousands of local banks and credit unions, run by people in the community (even more jobs!) Taxing the rich would help a lot too, and we can cut tons of wasteful government spending on things like the wars in the Middle East, excessive prisons, and nuclear, biological and chemical weapons. The money is right there, we just need to redirect it to things that actually help people instead of killing them.
This of course requires a revolutionary change in the economic and political structure of the United States, which means average people like you and me having control over the decisions affecting our lives, instead of remaining at the whim of wealthy elites who in the current crisis have shown themselves unable to run a lemonade stand, let alone the global economy.
[alex]
Deluge of layoffs hits U.S. economy
January 27, 2009
By Jerry Hirsch and Maura Reynolds
Scott Olson, Getty Images
A worker walks between Caterpillar earth-moving equipment at a road construction site near Joliet, Ill. The company has announced that it will cut nearly 20,000 jobs as the recession reduces demand for its products.
Companies including Home Depot, Caterpillar, Pfizer and Sprint plan to cut nearly 60,000 jobs, adding urgency to the need to agree on a stimulus plan.
U.S. companies slashed nearly 60,000 jobs Monday, adding impetus to the Obama administration’s efforts to reach agreement on a plan to pump $825 billion into the economy over a two-year period.
But it’s unclear whether even that massive influx of funding and tax cuts would be enough to get companies hiring again in the near term.
The cuts by firms including Caterpillar, General Motors, Texas Instruments, Home Depot, Sprint Nextel and Pfizer brought the total of jobs shed so far this month to 187,550, more than November or December and well over double the number of January 2008, according to employment firm Challenger, Gray & Christmas Inc.
Analysts believe that Obama’s strategy of pouring money into state and local governments could prevent layoffs and furloughs of public sector employees, including teachers, police officers and other government workers.
Economists have estimated that the plan will protect or create 3 million to 4 million jobs in the next two years.
But the U.S. economy lost 2.6 million jobs last year and could lose 2 million more during the first half of this year. Read the rest of this entry »
“The Tyranny of Oil: The World’s Most Powerful Industry and What We Must Do to Stop it”
by Antonia Juhasz
2008 HarperCollins
Ever wondered why the US government spends trillions of dollars to launch massive wars against Middle Eastern nations that have never attacked us, but refuses to do absolutely anything about the ongoing climate crisis? This book is for you.
The Tyranny of Oil is an exposee of “Big Oil”, meaning Exxon-Mobil, Chevron, BP, ConocoPhillips, and Royal Dutch Shell, the largest oil corporations in the world (and some of THE largest corporations in the world). The book exposes how these enormous oil octopi have gained virtually total control over the US government, and use their money and political power to make big profits at the expense of the public and the planet. (For example, Exxon Mobil in 2003 posted the largest profits of any corporation in history, then proceeded to beat that record each of the next 5 years).
It all starts with the origin of Big Oil, the mother, Standard Oil. Juhasz stresses the importance of monopolies and corporate mergers, in a sense missing the deeper analysis of capitalism, but nevertheless we come to understand how enormous companies wielding enormous profits can and do undermine democracy.
The book progresses to tell a story about Big Oil’s development and control over the government agencies that are supposed to be regulating it, and finally Big Oil’s plans for the future (War and Trashing the Planet, basically), before an inspirational chapter on What We Can Do. (There’s also a shoutout to SDS here and to our No War No Warming action in DC last year! Cool!)
This is essential reading for all US citizens, because if you aren’t familiar with the concepts she lays out, you frankly have no understanding of the country you live in. Environmental racism, corporate lobbyists and corrupt government agencies, the criminal behavior of Cheney’s Energy Task Force, deregulation and Enron-style fraud, tar sands, and the list goes on.
My only major complaint of the book was the virtual silence on the looming and imminent reality of Peak Oil and how this will transform everything. Juhasz does recognize the scarcity of oil and the likelihood of oil peaking, but chooses to essentially overlook its importance, instead blaming oil companies and speculators for driving up the cost of oil.
This is not just a minor quibble, because the BIG TRUTH is that we’re not just in a struggle against Big Oil, we’re in a struggle against capitalism, and it’s a fight that is reaching perhaps its final act. Peak Oil will challenge the dominant for-profit institutions of power, and can create an opening for social justice activists and organizers to push for much more radical change than appears possible within the current system. Nevertheless, this is probably a subject for another book (mine!), and Juhasz treads on steady ground by appealing to a more mainstream audience and demonizing the oil companies exclusively. This is a very effective book, highly recommended!
Finally, my favorite quote (pg. 325):
“As Paul Wolfowitz said in 1991, ‘The combination of the enormous resources of the Persian Gulf, the power that those resources represent – it’s power. It’s not just that we need gas for our cars, it’s that anyone who controls those resources has enormous capability to build up military forces.’”
Richard Heinberg (author of the seminal work The Party’s Over: Oil, War and the Fate of Industrial Societies) lays out a clear program for Obama, to move the US away from its current suicidal path and towards a green economy. However, the danger may be that Obama has surrounded himself with people who are telling him to do the exact opposite of each of these recommendations. Our job, as a movement, is to move the country away from fossil fuels by blocking the construction of more death machines (coal plants, oil-guzzling cars, the military…), and by simultaneously creating irresistible alternatives. [alex]
Memo to the President-elect on Energy Realism and the Green New Deal
MuseLetter 200
December 2008 by Richard Heinberg
Executive Summary
Our continued national dependence on fossil fuels is creating a crippling vulnerability to both long-term fuel scarcity and catastrophic climate change.
The current economic crisis requires substantial national policy shifts and enormous new government injections of capital into the economy. This provides an opportunity for a project whose scope would otherwise be inconceivable: a large-scale, coordinated energy transition away from fossil fuels and toward renewable energy.
This project must happen immediately; indeed, it may already be too late. We have already left behind the era of cheap and plentiful fossil fuels, with a permanent decline of global oil production likely underway within three years. Moreover, the latest research tells us we have less than eight years to bring carbon emissions under control if we hope to avoid catastrophic climate change. Lacking this larger frame of understanding and action, a mere shift away from foreign oil dependence will fail to meet the challenge at hand.
The energy transition must not be limited to building wind turbines and solar panels. It must include the thorough redesign of our economic and societal infrastructure, which today is utterly dependent on cheap fossil fuels. It must address not only our transportation system and our electricity grid, but also our food system and our building stock.
Our 21st century nation’s dependence on 20th century fossil fuels is the greatest threat we face, far more so than the current financial crisis. A coordinated, comprehensive transition to an economy that is no longer dependent on hydrocarbon fuels and no longer emits climate-changing levels of carbon—a Post Carbon Energy Transition—will be the Obama Administration’s greatest opportunity to lead the nation on a path toward sustainable prosperity.
Overview: Need and Scope
As a new Administration prepares to take the reins of power, America’s economy is descending into a recession or, quite possibly, a depression. Read the rest of this entry »
I recently posted Dmitry Orlov’s great essay ‘Closing the Collapse Gap‘, and here is his latest piece, which he delivered to the 5th Conference on Peak Oil and Community Solutions. I am only reposting excerpts, because the original is very long and somewhat repetitive. I also must warn that although I find Orlov’s insight useful, I have a much more positive view of the collapse of US Imperialism, mainly because I think he is overlooking the benefits of this process for the planet’s ecosystem as well as the possibility of freedom for the majority of the world’s people who are currently suffering under US dominance. Iraqis certainly will have a different view of the collapse of the US Empire than those in the Pentagon.
How about for Americans? Is the collapse of the US better for people who live here? Orlov’s conclusion actually indicates that it may be, especially in terms of rebuilding the social fabric that has been worn away by individualism and consumerism. But he also overlooks the reality of social oppression in the US. Not everyone lives the same “middle class” lifestyle he seems to be taking for granted. There are already millions of Americans on the brink of poverty, or deep in poverty, who don’t worry about losing their SUVs.
The best outcome is for not just a collapse, but a transformation, so that nobody has to go hungry or work their life away just so that the wealthy can take cruises or visit the spa. The current Bailouts are the most striking example of the government having the exactly opposite priorities. Instead of bailing out homeowners, or the poor who lack access to public transportation, they are dumping money into the hands of the real estate and automaking profiteers! We must continue to oppose this nonsense, from Obama or anyone, and make sure that our money is used for the benefit of the majority, not the wealthy few. In a world of shrinking wealth, there should be no rich, and there doesn’t have to be any poor either. [alex]
The Five Stages of Collapse
by Dmitry Orlov
Originally published by Energy Bulletin, Nov. 11, 2008.
1.
Hello, everyone! [...] My specialty is in thinking about and, unfortunately, predicting collapse. My method is based on comparison: I watched the Soviet Union collapse, and, since I am also familiar with the details of the situation in the United States, I can make comparisons between these two failed superpowers.
I was born and grew up in Russia, and I traveled back to Russia repeatedly between the late 80s and mid-90s. This allowed me to gain a solid understanding of the dynamics of the collapse process as it unfolded there. By the mid-90s it was quite clear to me that the US was headed in the same general direction. But I couldn’t yet tell how long the process would take, so I sat back and watched.
I am an engineer, and so I naturally tended to look for physical explanations for this process, as opposed to economic, political, or cultural ones. It turns out that one could come up with a very good explanation for the Soviet collapse by following energy flows. What happened in the late 80s is that Russian oil production hit an all-time peak. This coincided with new oil provinces coming on stream in the West – the North Sea in the UK and Norway, and Prudhoe Bay in Alaska – and this suddenly made oil very cheap on the world markets. Soviet revenues plummeted, but their appetite for imported goods remained unchanged, and so they sank deeper and deeper into debt. What doomed them in the end was not even so much the level of debt, but their inability to take on further debt even faster. Once international lenders balked at making further loans, it was game over.
What is happening to the United States now is broadly similar, with certain polarities reversed. The US is an oil importer, burning up 25% of the world’s production, and importing over two-thirds of that. Back in mid-90s, when I first started trying to guess the timing of the US collapse, the arrival of the global peak in oil production was scheduled for around the turn of the century. It turned out that the estimate was off by almost a decade, but that is actually fairly accurate as far as such big predictions go. So here it is the high price of oil that is putting the brakes on further debt expansion. As higher oil prices trigger a recession, the economy starts shrinking, and a shrinking economy cannot sustain an ever-expanding level of debt. At some point the ability to finance oil imports will be lost, and that will be the tipping point, after which nothing will ever be the same.
This is not to say that I am a believer in some sort of energy determinism. If the US were to cut its energy consumption by an order of magnitude, it would still be consuming a staggeringly huge amount, but an energy crisis would be averted. But then this country, as we are used to thinking of it, would no longer exist. Oil is what powers this economy. In turn, it is this oil-based economy that makes it possible to maintain and expand an extravagant level of debt. So, a drastic cut in oil consumption would cause a financial collapse (as opposed to the other way around). A few more stages of collapse would follow, which we will discuss next.[...]
I don’t mean to imply that every part of the country will suddenly undergo a spontaneous existence failure, reverting to an uninhabited wilderness. I agree with John-Michael Greer that the myth of the Apocalypse is not the least bit helpful in coming to terms with the situation. The Soviet experience is very helpful here, because it shows us not only that life goes on, but exactly how it goes on. But I am quite certain that no amount of cultural transformation will help us save various key aspects of this culture: car society, suburban living, big box stores, corporate-run government, global empire, or runaway finance. Read the rest of this entry »
Now I hope people don’t see this article as ‘support for the Soviet Union’ or something ridiculous like that, but I think this is a very insightful and amusing article, based on a powerpoint presentation. The question is, was the USSR more prepared for the economic collapse it suffered than the US is for the collapse it will soon suffer? Orlov lived through the former and seems to think that it was.
Also note that I strongly disagree with his recommendation to abandon politics – he’s right that politicians are swine but i think he’s wrong in overlooking people’s ability to build a resistance movement that can make real changes to our society, despite politicians best efforts to derail it. So with that, enjoy the article! [alex]
Closing the ‘Collapse Gap’: the USSR was better prepared for collapse than the US
by Dmitry Orlov
Originally published be Energy Bulletin, December 4, 2006.
Good evening, ladies and gentlemen. I am not an expert or a scholar or an activist. I am more of an eye-witness. I watched the Soviet Union collapse, and I have tried to put my observations into a concise message. I will leave it up to you to decide just how urgent a message it is.
My talk tonight is about the lack of collapse-preparedness here in the United States. I will compare it with the situation in the Soviet Union, prior to its collapse. The rhetorical device I am going to use is the “Collapse Gap” – to go along with the Nuclear Gap, and the Space Gap, and various other superpower gaps that were fashionable during the Cold War.
Slide [2] The subject of economic collapse is generally a sad one. But I am an optimistic, cheerful sort of person, and I believe that, with a bit of preparation, such events can be taken in stride. As you can probably surmise, I am actually rather keen on observing economic collapses. Perhaps when I am really old, all collapses will start looking the same to me, but I am not at that point yet.
And this next one certainly has me intrigued. From what I’ve seen and read, it seems that there is a fair chance that the U.S. economy will collapse sometime within the foreseeable future. It also would seem that we won’t be particularly well-prepared for it. As things stand, the U.S. economy is poised to perform something like a disappearing act. And so I am eager to put my observations of the Soviet collapse to good use.
Slide [3] I anticipate that some people will react rather badly to having their country compared to the USSR. I would like to assure you that the Soviet people would have reacted similarly, had the United States collapsed first. Feelings aside, here are two 20th century superpowers, who wanted more or less the same things – things like technological progress, economic growth, full employment, and world domination – but they disagreed about the methods. And they obtained similar results – each had a good run, intimidated the whole planet, and kept the other scared. Each eventually went bankrupt. Read the rest of this entry »
On President-elect Barack Obama’s first trip to the White House yesterday to meet privately with his predecessor, lame duck George W. Bush, reportedly the first and most pressing message Obama delivered to the man in charge was “bail out General Motors.”
Cartoon by The Rag Blog
The American taxpayers are sick and tired of their money being doled out to corporate crooks like the carbon-polluting, oil-guzzling auto industry, or banks like AIG who apparently weren’t satisfied by the first two bailouts and now want another. (They apparently spent too much of their last check on trips to the spa.)
Is this really Obama’s highest priority? Giving public money to private companies that will use it to pollute the planet?
If YOU had the opportunity to sit down with President Bush for an hour and have him actually listen to you, what would YOU ask him to do?
Why not instead bail out homeowners by ending foreclosures to keep people in their houses?
Why not bail out the poor, sick, and elderly, by instituting single-payer universal health care like every other industrialized nation does?
Why not bail out Iraqis, military families and soldiers by pulling U.S. forces out of Iraq and ending a bloody occupation? (or Afghanistan, or the 100+ countries where the US military is stationed)
Why not bail out human rights by ending torture, closing Guantanamo and allowing all prisoners a trial by jury?
Why not bail out civil rights by ending anti-immigrant raids and the criminalizing of immigration?
Why not bail out students, who are suffering from the greatest debt crisis in history as education becomes increasingly unaffordable?
Why not bail out the planet, by investing heavily in renewable energies controlled by local communities, urban gardens, home weatherization and create 5 million new Green Jobs?
Barack, if you’re going to be a president worthy of the immense praise and expectation placed on you, you’re going to need to stop palling around with terroristic industry and corporate lobbyists, and listen to the people.
[alex]
Sources: Obama pressed Bush for auto industry bailout
Originally published by CNN, November 11, 2008
Jessica Yellin, Candy Crowley, CNN’s Ed Henry
(CNN) – At their private Oval Office meeting on Monday, President-elect Barack Obama urged President Bush to support billions of dollars in aid for the struggling auto industry during the upcoming lame-duck session of Congress, according to three officials briefed on the meeting.
The officials said Bush privately expressed skepticism about taxpayer money for automakers on the heels of a string of government bailouts for other industries, and the president also urged Obama to help push through a free trade pact with Colombia Read the rest of this entry »
This is a new article written by my friend and mentor, Jerry Silberman. I helped him edit it, so if anyone wants to discuss these issues, i’m available! [alex]
The Last Recession? Or Our Best Opportunity for Hope?
by Jerry Silberman
Originally published by Energy Bulletin, November 7, 2008.
As the drama of the bursting bubble of Wall St. gives way to a slower, but steady and painful, economic decline, the first and most important question we should ask is “Should we try to blow another bubble, or should we reject bubble culture values for something entirely different?”
If we agree that we need a new culture, this leads to the question “Can we take advantage of the opportunity afforded by this collapse, by the exposure of a failed system, to establish new “rules for the house” (the root meaning of “economy” from the Greek)?”
If the house, metaphorically, is Planet Earth the way we have enjoyed it for millennia, then making the choice now to change to a sustainable economy is the best way to turn the apparent lemon of this economic contraction into the best lemonade in history. Read the rest of this entry »
[There are many articles (including one I wrote in college), and even whole books written about Petrodollars - the way that US dollars dominate the world economy by their crucial involvement in all global oil trades. This just happens to be a very clearly written and accessible essay, so I'm reprinting it despite slightly out-of-date numbers. The extent to which the fragility of petrodollar hegemony affects US foreign policy is probably the biggest question mark, but it seems plausible that the much-threatened aggression against Iran has a lot to do with that country's moves to abandon the dollar for their oil trades. - alex]
Oil prices and the dollar
C. P. Chandrasekhar
Jayati Ghosh
Originally published by Business Line, February 26, 2008.
| The depreciation of the US dollar has been closely bound up with the movement of oil prices, as world oil trade is typically denominated in dollars. Yet this relationship may now be under threat as the dollar continues to depreciate and the US economy tips into recession. In this edition of Macroscan, C. P. Chandrasekhar and Jayati Ghosh examine how oil prices have changed with different numeraires, and consider the implications for the future of the oil-dol lar nexus. |
The relationship between oil and the US dollar has been at the heart of the way international economic relations have been organised for more than half a century.
International capitalism has relied on the US dollar as the basic reserve currency, and has therefore granted it an essential degree of stability for several decades despite the large external deficits run by the US and the periodic swings in its valuation in currency markets.
More than half of aggregate world exports are denominated in dollars; more than 80 per cent of all international currency transactions similarly involve dollars.
Loans made by the IMF and other multilateral institutions are denominated in dollars. More than 60 per cent of the foreign exchange reserves held by central banks of all countries are in dollar assets.
This has obviously meant huge advantages for the US. It has allowed the US economy to benefit from access to imports that can effectively be paid for simply by printing dollars, and has therefore allowed the US to run enormous current account deficits for prolonged periods. It has encouraged the rest of the world to finance these deficits by providing its savings to be held in US or dollar-denominated financial assets, to the point that all the developing regions of the world are also building dollar reserves that directly or indirectly find their way to the US economy.
Dollarisation of oil markets
A key feature of this entire process has been the dollarisation of world oil markets. Oil is the central commodity of industrial capitalism, absolutely essential for the production of essential and widely used goods. All industrial economies, and most developing ones, would grind to a halt with even a moderate disruption of oil supplies.
Most of the world oil trade has operated and continues to operate in dollars, even when the US is not the trade partner. Oil prices are defined in dollars for most oil exporters. As a result, oil importing countries also pay in dollars. The oil-exporting countries accumulate dollar reserves, which have been preferentially invested back in the US because of the zero currency risk involved in this.
Indeed, this recycling of petrodollars has been very significant as a source of finance for US trade deficits in several periods, including in recent times. Other countries also hold dollars for future oil purchase.
The dramatic increase in the price of oil in the past few years could be argued to have accentuated this tendency. As Chart 1 indicates, oil prices have increased dramatically in dollar terms especially from 2003, going up by nearly 2.5 times between 2003 and 2007.
This has obviously contributed very significantly to the wealth of oil exporters, and allowed them to generate balance of payments surpluses and build foreign exchange reserves, which have then been invested dominantly in dollar assets in US markets.
However, this is also the period that the US dollar has been depreciating, especially with respect to some of the other major currencies such as the euro and the Japanese yen. As a result, the change in oil prices has been less striking in terms of these currencies than in terms of the dollar.
The currency factor
Read the rest of this entry »
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