Is the scarcity of oil in the future going to be a clarion call for conservation or just an intriguing investment opportunity? This was an implied question at the sixth annual Association for the Study of Peak Oil (ASPO-International) Conference, held in Washington, D.C., last week when a lot of financial planners showed up.
Was “peak oil” finally being taken seriously?
At the earlier conferences the discussion was focused on when the peak might be reached with estimates ranging from five years to 15 or 20. Now there seems to be agreement that we are at the peak and the only reason we have not begun a descent is because of the global economic recession.
As soon as the economy picks up the descent in oil availability will kick in, meaning that supply will not be able to meet global demand. The current ratio is for every four barrels of oil used only one barrel is discovered. This may be a shock to some deniers of the peak oil claim because we are always being treated to the news of another “big oil discovery.” Such good news has to be understood against the inexorable growth of global demand, largely precipitated by China.
Notes and quotes
Following are some of the more memorable comments at the conference. “Our story has stopped working,” according to John Michael Greer, author and historian.
The U.S. “story” is based on a steady growth paradigm, no longer a realistic “story.”
“The U.S. is in a struggle. The countries that adjust to the energy situation, they will prosper. Others will fail,” said Michael Klare, professor and author. The U.S. uses twice the energy per capita that Europeans use while maintaining a similar lifestyle. The U.S. shows no serious interest in dealing with that fact.
“Will the world reach nine billion?” a question from the audience. A negative from the panelists. The earth has already surpassed its carrying capacity, meaning the ability to support even the population already here.
The appearance of Dr. Arthur Schlesinger, former secretary of state and CIA director, was a high point at the conference. At least 90 years old,
Schlesinger was in full command of the situation. His comments cut right to the heart of the deniers”™ arguments: “Supply creates demand. Some seem to believe that demand creates supply.
“A finite source is not inexhaustible.”
Meanwhile, Jeff Rubin from Toronto had a different take: “The oil crisis is not a geological one. It is an economic one.”
When the cost of a barrel of oil goes beyond triple digits it won”™t matter what”™s under ground. It will matter whether you can afford to buy oil at that price.
Chris Martenson, creator of the “Crash Course” video series, stated, “Complex systems become simpler without energy.” (Imagine life before the discovery of oil.)
“Derivatives have virtual value. Virtual value will disappear.”
Question from the audience: “Is capitalism just a Ponzi scheme?” No serious challenge to that statement from the panelists. “Energy subsidies create bubbles.” (Think ethanol).
Now what?
While we both enjoyed a glass of wine a young financial planner confessed to me he had no idea what he was going to advise his clients when he returned home. “What do I suggest a client do with his money? How should he plan for his retirement, when that client does not accept the entire notion of peak oil? Yet not to make future financial perils clear to the client would suggest that I am not fulfilling my role as an adviser.”
Several speakers were very direct in their suggestions for planning for the future:
- “Get out of stocks and bonds.”
- “Buy gold.” (Not a lot of agreement on that one.)
- “Move near mass transit.”
- “Get a fuel-efficient car.”
- “Begin to build community.”
For the business community the goal should be to shorten the supply line. If your inventory comes from China or any distant country it might be time to rethink that strategy. It won”™t be long before the costs of transit will overcome the benefits of low-cost labor in other countries. Better to be ahead of the curve, rather than struggling to catch up with sudden change.
More on the Peak Oil Conference next time.
Surviving the Future explores a wide range of subjects to assist businesses in adapting to a new energy age. Maureen Morgan, a transit advocate, is on the board of Federated Conservationists of Westchester. Reach her at maureenmorgan10@verizon.net.
