A tragic thing about the environmental movement is that it has been hijacked by the CO2 scare shysters. Most environmental care discussions now center on CO2 emissions and global warming. I'm a skeptic on anthropomorphic global warming. My environmental focus is on resource management, water management and deforestation. I care more about finite things that we cannot produce or replace. In the last decade, my concerns for resource management or even where to invest my money revealed to me the dark, dystopian subculture of the 'peak oil' community. These worried individuals and a few salesmen are onto something, but they are just a bit off. It is not peak oil we have to worry about, but the era of peak cheap oil, which we have left behind us. How we manage this new era is of the greatest importance.
Reading peak oil websites can give you nightmares. Massive die offs, Mad Max scenarios, the destruction of civilization. It's not just visions of a return to pre-oil days (late 1880s), but a reversion to the middle ages. After some fact checking, you find that the writers are either playing on reader fears to sell books and book speaking fees or have been wrong on twenty or so predictions before they latched onto the newest peak oil prognostication. One thing that they have right, and it's not just a function of oil but of money and nations, is that the era of cheap oil is over.
The world is not going back to $20/bl oil. This is partly due to money printing by the FED as they printed money starting after the Dot Com crash to prevent a proper clearing of debts and partly due to US government deficits. These twin factors made the dollar worth less, and oil is priced in dollars, therefore more dollars were needed to buy the same amount of oil. Another factor was the destabilization of the Middle East due to rising Islamofascism and US intervention in Iraq. We're still dealing with these US government created factors. The other nation state factor is the increasing number of resources that are now behind unfriendly state lines or nationalized by foreign countries. The foolish peak oil chicken littles in the mid 2000s would look at stagnant oil production numbers but never recognize that Venezuela's production of oil dropped significantly after Chavez required oil workers to swear an oath to him. Nationalization has an impact due to the large number of reserves behind borders with less than stellar relationships with private companies with expertise. I'd also add the financial TBTF banks playing around with commodities after the year 2000 Commodities futures deregulation has added a layer of corruption to market pricing and inflated prices.
The other problem with supply is that there is demand to meet. We have little to no slack in the global supply and demand equation for oil. Promising developments have been the finds off the coast of Brazil as well as CO2 injection in old wells and the game changer that is shale oil + gas revolution in North America. If the US properly pushes the shale capabilities and maybe get around to re-opening the Gulf leases that got shut down after the BP incident as well as drill in ANWR, we could steadily grow daily US oil production. We're not going back to $20/bl oil, but if we're going to have to pay $80-100, we might as well use less foreign oil so that our trade balance situation can improve. We're going to have to find a way to alter our transportation system as over 50% of our oil use is devoted to transportation. Whether this is through more efficient vehicles, using nat gas where possible for transportation, or more telecommuting, we will have to alter our way of life to adapt.
The answers to this problem will most likely start at the individual level as well as corporations making decisions which affect the bottom line. The reaction has started amongst drivers as the total miles driven by Americans is lower now compared to our mid 2000s peak. Types of vehicles purchased, carpooling, and vacations are decisions in the hands of families. Companies might have to become smarter about how they do business. A potential long term trend change in shipping could be the use of rail for long haul freight compared to trucking. This happened a bit in 2008 when diesel cracked 4.50/gal. How fast can car manufacturers produce good hybrid cars, how fast can electric battery technology improve to provide cost effective alternatives to the internal combustion engine? These economic decisions are critical in the era of expensive oil. The best thing the government can do is encourage the offshore Gulf drilling, drilling in ANWR, and CO2 injections in old oil wells. I’d add that an increased gas tax with an offsetting increased income tax standard deduction. If this tax hits people unfairly due to driving habits, ask smokers and drinkers how they feel about unfair taxes. Cutting back on oil imports will help our fiscal position, which would strengthen and stabilize the dollar. My trust and faith in our current leadership with regards to this problem is so low that I do not believe we will handle this situation well. As dastardly as Bush and Cheney were, it was their work with oil companies that led to our shale boom. I'd trust them with an oil problem, but not the global warming folks of the left. Restricting energy leads to the need for favors, which makes people dependent and subject to your power. I actually think this problem will help push the US ever closer to the brink and lead to its dissolution.