Here's What Peak Oil Actually Looks Like

Roel sent me this excellent article http://www.energyandcapital.com/articles/peak+oil-renewable+energy-shortages/490 by Chris Nelder, who offers up one of the first comprehensive overviews of how peak oil, with its permanent rise in energy prices, is affecting the third world. In short, as has been reported several times in the past on this blog - it has effectively reduced or eliminated their ability to provide oil for basic needs.

"But the actual feeling of peak oil didn't really hit me until this week, as I perused a page on Jim Kingsdale's excellent Energy Investment Strategies site, listing countries that are currently experiencing serious fuel shortages and grid blackouts.

Here in the first world, we still have the luxury of armchair theorizing about peak oil, and paying a bit more for gasoline, but the third world is actually feeling the pain of peak oil today. Rising oil prices are acting as a regressive worldwide tax, pricing poorer countries right out of the market.

Since their experience must to some extent herald ours as peak sets in, let's see how peak oil feels to those who are undergoing it firsthand."

I think many Americans who have never visited the third world really have no idea how dependent the infrastructure of even very poor people is on energy - that is, many people envision poor nations as existing without meaningful energy infrastructure, and in some rural areas, this is true. But most of the poor people in the world live in cities right now, and even rural places depend on outside infrastructure for things like roads, vaccinations, birth control and water pumping.

The disruption of energy supplies and infrastructure makes already poor people poorer. In places like Bangladesh, that use their electricity in, among other things, hundreds of pumping stations to keep back flooding, this magnifies the effects of climate change. Estimates suggest that right now, 30% of the country is underwater, or has been in the last week.

Thousands of basic needs are going unmet because the price of energy is simply too high for poor nations to compete with the rich ones. And the price of this is measured in lives. If you don't yet see the evidence for peak oil, you aren't looking in the right places.

If there was any major doubt about the change in the order of things, the IEA's announcement today that the Middle East is in immanent danger of becoming a net fuel oil importer ought to shake us. Stop and think about how bizarre notion is - the location of the largest known oil resources on earth, 3/4 of all proven reserves is going to need to import gas. http://www.bi-me.com/main.php?id=12371&t=1&c=33&cg=4. Now some of this is a refinery shortage, but ask yourself this - with the middle east developing strong incentives to keep more and more of their oil at home, what does that mean for us?

Nelder's larger point, that peak oil is really only up for discussion in the rich world is central here. I would argue, however, that it is really only up for discussion in the richer *parts* of the rich world. For millions of Americans living near or below the poverty line, who may never have heard the term "peak oil," things are steadily getting worse. Food prices are rising, and are predicted to rise still further over the winter. If Goldman Sachs and others are right, we'll see $100 dollar a barrel oil pricing this winter, so it is little wonder that poverty abatement programs are overwhelmed with need for food supplementation, and fuel assistance programs are reporting overwhelming advance applications. Food pantries are reporting that two income families are more and more in need: http://www.sptimes.com/2007/08/12/Northpinellas/Food_banks_see_more_n.shtml

And, of course, if you are poor in the US you know that you too will pay with your life, probably well before the rich guy near you. US lifespans fell again against the rest of the world:
http://health.yahoo.com/news/178301, including against poorer nations that spend half of what we do or less on medical care. The news is worse if you focus in on specific areas - for example, residents of inner city Detroit have lifespans shorter than those in 26 poor nations:http://www.npr.org/templates/story/story.php?storyId=9105953.

The simple facts are these. Americans are prone to believe that poverty is the fault of the poor - and thus, to assume that inequity is largely a personal matter. Which means that as millions of Americans fall just a little further behind, as they lose their houses, declare bankruptcy, see their power shut off or their region's services disappear they will blame ...not the system, but themselves.

We have historically rationed things by price. Right now we are rationing energy by price in the third world and in our own country. Our problem to growing demand - the cheerily named "demand destruction." But demand destruction works two ways - in encourages the rich and reasonably comfortable to conserve a little. But it simply destroys the poor - it takes those who have no fat in their budgets, no room for accomodation, and while the rest of us are considering whether we should turn down the a/c a little, it kills people. It shuts down water treatment (which has killed millions in Iraq, mostly children), it interrupts medical treatments and disrupts roads so that needed supplies can't be transported. It disrupts society - if no one knows when or if the water will ever run again, it is very hard to decide what to do, where to go, how to move.

Demand destruction of the most ruthless type is coming our way. If you aren't poor enough to see it yet, be grateful, give a little more to your local poverty abatement programs, and wait a little bit. Our time will come too, unless we change our form of rationing.

Sharon