Friday, March 6, 2009

The Peak Oil Economic Depression Has Arrived

A headline from Chicagotribune.com states: "Jobless rate bolts to 8.1 percent, 651K jobs lost in February."

"The net loss of 651,000 jobs in February came after even deeper payroll reductions in the prior two months, according to revised figures. The economy lost 681,000 jobs in December and another 655,000 in January," based on U.S. Department of Labor statistics."

But the real unemployment rate is now more like 12 or 13 percent, according to analyst Lee Adler, writing in "The Wall Street Examiner." Adler concludes that, "today’s deterioration is at least as rapid, and probably more rapid, than the beginning of the Great Depression."

Dow Jones concludes that today's stock market decline mimics the Great Depression.

Thus, both increasing unemployment and declining stock values indicate that we are entering an economic depression similar to the Great Depression.

Although it is difficult to determine how much of this economic depression is caused by Peak Oil impacts and how much stems from mismanagement of the economy as well as from business and government corruption, ASPO-Ireland explains that Peak Oil plays a major role.

But the current economic depression is permanent, due to declining global oil production, according to a recent post on EnergyBulletin.net.

We are entering the "Greatest Depression."

In the Great Depression of the 1930s, government programs and the build up for World War II stimulated the economy. The East Texas oil boom powered the factories, highways, trucks, tractors, trains, transportation, and infrastructure to make it possible.

Now, the problem is declining oil production, and there is no energy boom to help us pull ourselves up by the bootstraps.

There is no plan for developing energy alternatives that will power trucks, trains, ships, tractors, and combines, nor is there time or capital to develop alternatives. Capital is scarce due to declining oil production. Chris Shaw explains that energy is the source of capital, and hence, capital declines as oil production drops.

A review of government and scientific studies indicates that regardless of the time or capital available, no alternatives will begin to make up for declining global oil production.

Whatever alternative energy we attempt to develop will consume valuable oil (mining, manufacturing, and transportation) and not deliver the liquid fuels that we need. Chris Shaw call this the "quicksand effect."

The Congress and president will be at a loss of how to manage this ever-worsening economic collapse. They would be wise to commission the National Academy of Sciences (NAS) to provide the nation with advice. Chaos will result from the advice of contradictory interest groups, organizations, bloggers, and individuals. The NAS is the most credible source for such advice. The NAS and other scientific sources have already undertaken the basic research needed for a policy study to advise the nation. The NAS could provide an energy policy study within a year and could then provide advice on a continuing basis.

The best advice for individuals and organization is to prepare for Peak Oil impacts. No federal or state agencies are studying Peak Oil impacts and contingency planning. A few local governments and organizations are beginning to make plans.

This is what we must plan for. With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances. With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, water distribution systems, waster water treatment, and automated building systems.

8 comments:

David said...

Doomsday advice: if the economy collapsed (op, did I say that?) and you couldn’t buy toilet paper what would you do? Get a bathroom bidet sprayer from www.bathroomsprayers.com and you won’t have to worry about it. The water will still be running long after the toilet paper stops reaching the store shelves and in the mean time you’ll be saving money that you can use to stock up on canned soup.

Clifford J. Wirth, Ph.D. said...

Good humor, but maybe the water won't be running after the last power blackout. Much community water is pumped up to a tower using electric motors or diesel. When the highways fail so will the power grid.

Sebastian Ronin said...

Re "But the current economic depression is permanent, due to declining global oil production, according to a recent post on EnergyBulletin.net."

I find this to be such a major blind spot to break through when discussing Post-Peak Oil with others. I usually attempt to frame the situation along the lines of, "The good times are gone and they're not coming back." The stares and comments I get are merely further proof that the notions of progress, unlimited growth, technological determinism, etc. all constitute ideological threads. Unfortunately, the only thing that will shatter these perceptions is when the actual hurt of the Post-Peak Oil condition settles in...softly, much like a sledge hammer.

Anonymous said...

Such lucidity !

Thank you for making something simple... simple!

"The average age of the world's great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage."
(attributed to Alexander Tyler)

streamfortyseven said...

when the highways fail, there'll still be railways. The US began to have realistic city to city highways in the mid to late 1920s, but most people took the trains until the 1960s. About 1965 or so, more goods and people started moving by car, bus, and air, and by 1973, there'd been a large fall-off in train traffic, so that most goods moved by semitrailer (except really large and heavy items). Of course, that was 35 years ago, really out of the memory of most people today, who think that if the roads go, it'll be back to the Stone Age. I wouldn't count on collapse, I'd count on adaptation and change. Provided proper stimuli, people will do what is necessary to live their lives more comfortably than the scenarios of doom predict.

Anonymous said...

so remember ...

tuesday is for soylent green .

Anonymous said...

It won't be a radical decline in Western Civilization, at least for the US. Remember that we *have* radically altered our work habits now and our service based economy requires less and less time in the office. Home energy is much more adaptable to green sources that can be added to the grid.

And if you disagree with me, remember that I'm not contradicting peak oil, or saying it's not a big deal, but... it's not the end of the world.

Clifford J. Wirth, Ph.D., Professor Emeritus, University of New Hampshire said...

Peak Oil is the reason for continued economic malaise. Eventually state and local governments will lack the resources to maintain the highways -- which support maintenance for the power grid. Federal assistance to states will decline as federal revenues decline. Some 70% of federal revenues come from income taxes. Read more HERE: http://survivingpeakoil.blogspot.com/2009/03/peak-oil-economic-depression-has.html

Read here and you will see that conservation won't help much, as whatever we conserve will be used up elsewhere. Once oil production falls more it will always be less than demand: http://www.peakoilassociates.com/POAnalysis.html