Politics

Yes, It's a Crisis

By Ryan McGreal
Published April 28, 2008

I read Saturday's editorial in the Hamilton Spectator with mounting frustration.

Gasoline prices are now reliably expected to double within four years. That could mean a $150 fill-up for a minivan and approaching $200 for some of the large SUVs. That will change not merely what we drive, but how far and for what reasons. It may change where we work and where we live.

Soaring transportation costs will also have an impact on just about everything we eat. Prices are already rising steadily on cereal-based foods - bread and pasta - and on the meats and dairy that comes from grain-fed animals.

Raise the Hammer has been writing about this since its inception over three years ago, and we're regular johnny-come-latelys compared to the brave scientists and analysts who have been warning about peak oil since the late 1990s.

Everyone seems shocked and dismayed about rising energy prices and the predictable effect that's having on the affordability of everything else - including food, which under modern agriculture is utterly dependent on hydrocarbon inputs - but it won't come as a surprise to anyone who has been paying even cursory attention to the energy situation.

For years the so-called Cassandras of energy depletion were routinely ignored, then ridiculed, and then vilified by the mainstream, all in a depressingly predictable iteration of Gandhi's maxim for social change).

Even when such esteemed economic analysts as CIBC World Markets and Goldman Sachs started warning about peak oil in 2005, hardly anyone paid attention to them. So far, it seems they have actually underestimated the impact on prices.

The city of Hamilton went so far as to hire a consultant to prepare a report on peak oil [PDF]. Aside from some window dressing [PDF], the city mostly ignored its conclusions, neglected even to study its recommendations, and flat-out refused to reconsider its enonomic development plans in the face of growing evidence that oil-dependent industries have poor long-term prospects.

Now the shit is hitting the fan and the mainstream is starting to pay attention, but it's probably already too late [PDF] to avoid a painful dislocation as our economy plays a desperate game of catch-up against steadily declining energy supplies.

The Spectator editorial concludes:

Every analyst agrees there's a "structural shift" happening - that food will be considerably more expensive, well into the future.

If we have made changes so far in how we live, in our footprint on the larger world around us, we have been driven by conscience, knowledge and perhaps some sense of impending trouble. We are about to be driven by economic and social realities. We are about to discover, unless all the experts are wrong, some serious new realities about the cost of living.

This is where my dismay reached its peak (in a manner of speaking). While the Spectator has been willing to publish commentary that challenges status quo thinking about airports and highways (and following up with status quo rebuttals), the paper itself still seems committed to supporting them.

That is, the paper's editorial board - like the city government itself - supports the principle of sustainability as long as doing the right thing doesn't mean changing specific plans to which we have committed.

Again, this seems to be a common theme in a city known for making up its mind first and then justifying its decisions through selective reasoning.

Here are some "serious new realities about the cost of living" we can no longer afford the luxury to ignore:

In the face of this reality, planning long-term economic development around air transport is sheer lunacy.

To the extent that airlines will survive the next decade or two, they will do so through ruthless consolidating: a few very large planes owned by a few very large companies flying between major centres, and mostly transcontinental at that.

Hamilton will not have a prosperous future as an air transport hub. It's that simple.

Similarly, Hamilton will not grow its economy by building more highways. The highway we just built is doing effectively nothing to grow our economy, as evidenced by the zero percent tax assessment growth the city has projected for 2008.

All the excuses we were given about the Red Hill are unraveling before our eyes. All it has done, economically, is to open up a billion dollars' worth of residential development on the east Mountain.

It has not spurred new commercial and industrial development - in fact, the city is fighting to preserve its highway accessible employment lands from residential development - and losing.

It has not taken transport trucks off downtown streets - and John Dolbec, CEO of the Hamilton Chamber of Commerce rushes to explain of why they won't any time soon.

The bottom line is that highways and airports are no longer viable economic development engines. They will not produce jobs or growth once oil prices double and double again.

The sooner the city wakes up to this, the sooner we can start developing our economy in real growth sectors: rebuilding our rail and shipping infrastructure, producing energy renewably, conserving energy and retrofitting existing buildings, and creating a centre of innovation around these ares.

The Red Hill Valley Parkway was a mistake. The Airport Employment Growth District is a mistake. The Mid Peninsula Highway is a mistake. These business models have run their course. They're past achievers, operating in a bygone economy, one that is being supplanted by the "structural shift" about which the Spectator editors so gloomily write.

The question is whether the entrenched people in power are willing to admit reality and change course.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By Hummerblog (anonymous) | Posted April 29, 2008 at 08:31:12

Oh hum!

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By jason (registered) | Posted April 29, 2008 at 14:47:31

you still have to search very high and very low to find any mention of peak oil in the mainstream media. As for governments...well, as usual they'll ignore the issue until peak oil starts being included in history textbooks in the future. Dealing with reality doesn't get anyone re-elected does it?

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By Undustrial (registered) - website | Posted April 29, 2008 at 21:05:35

This is only the beginning.

The kind of chaos which is now appearing in food markets worldwide is a perfect example of where this is headed. Fertilizer is made from oil. Who knew? I certainly found out from dire predictions made by the peak oil crowd. It's also where I first heard biofuels critiqued as a net drain on food and energy resources.

Lots of random commodities have major petrochemical inputs. Fertilizer, asphalt, plastics, medicines...what will be hit next? What about industries? Tourism? Manufacturing? And it isn't just oil-rich products which will go up in price...anything which competes with one will also likely spike, as have prices of coal, natural gas and uranium in the last year. When the two combine, as they did with food (both driving up the cost through last year's 80% increase in fertilizer's costs, plus additional demand from biofuels), prices will simply explode.

With families paying more for gas, more for food, more for heating and electricity, how long before consumer spending starts to drop as a result? And how long after that, will masses of layoffs (first in the high-wage first-world, then in newly promising economies in the third) take that momentum to all new economic lows, as is happening right now in the auto sector?

The price of oil has gone up to six times what it was a decade ago. Six months ago, the same figure was four. Since December, oil prices have been gaining roughly a dollar a week. Sure, strikes in Scotland and rebel bombings in Nigeria come and go, and as tensions ease in those areas, we may see today's price come down somewhat (or explode fiercely if something happens in Iran, Saudi Arabia or Venezueala), but the overall picture remains the same, more people using more and more of less oil. Unless that changes, we're fucked.

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By peter (anonymous) | Posted April 30, 2008 at 07:14:51

^no! no! no! the plateau in oil production simply reflects current world demand. whatever...

we're seriously screwed and as per usual, nobody seems aware of it. it's gonna hit us in the face like so many cream pies.

great read. thanks much.

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By Hummerblog (anonymous) | Posted April 30, 2008 at 08:08:19

We had an oil crisis in the 70's. It too was manufactured by the powers that be to try to squeeze every petro penny from the consumers. The world adjusted.
This one, albeit different, has so many similarities. Some federal MP's and journalists have been describing the real reasons behind the hikes, as well as global demand, and the reasons sound surprisingly like they did in the '70's!
Peak oil?

There is enough oil to outlast many generations, unless we blow ourselves up in its pursuit.
By the time it really does diminish as a commodity we will be onto something else that will create huge wealth for the megabillionaires.

So, sorry all of you who love doom and gloom as a way to change the world....the world IS changing without your pessimism, or mine for that matter!

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By Ryan (registered) - website | Posted April 30, 2008 at 09:17:06

"There is enough oil to outlast many generations"

I'm not sure where you did your research, Hummerblog, but every study I've seen indicates strongly that the global rate of production probably cannot exceed around 85 million barrels per day, and that this rate will only decline as conventional oil sources - like the supermassive Ghawar oilfield in Saudi Arabia - go into decline.

There may be plenty of non-conventional sources - oilsands, shale, deep offshore, arctic etc. - but the limiting factor in all these cases is rate of production. It doesn't matter how much petroleum equivalent there is if the industry can't get it to market fast enough to meet ever-growing demand.

It's simply not possible to extract oil from a source like the Alberta oilsands - even using the most current in situ methods - anywhere near as quickly as it is to extract oil from a conventional oilfield.

It's certainly not fast enough to offset the declines we're already observing in conventional wells, like the North Sea, which has been declining at around 8-9 percent a year since 2001, or Saudi Arabia, which peaked a couple of years ago and declined by 8 percent last year.

I think CIBC chief economist Jeff Rubin put it best when he recently said, "You know you are at the bottom of the ninth when you have to schlep a tonne of sand to get a barrel of oil."

Finally, it's ironic that you write about "all of you who love doom and gloom". That derisive, dismissive mentality is precisely why we are in a crisis right now and scrambling to catch up with events, rather than having planned ahead so we would be prepared for the predictable peak in global oil production.

We wouldn't be in a crisis if we had spent the past decade reducing our dependency on oil and investing in a more sustainable economy and way of life.

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By Thomas F. (anonymous) | Posted May 01, 2008 at 00:38:29

If you base your knowledge of what is happening on the tube, mainstream news, on the "what is popular", or on an analysis of some financial scenario of the past, you are probably wrong. Fear keeps most of the population from inquiring into the really scary scenarios. A case of treason? Find out what Daniel Estulin, Richard Gage, Alex Jones, Greg Palast are trying to say. Given some understanding by Carl Yung, Erich Fromm, David R. Hawkins, my bet is most will continue in denial. Unfortunately some of those that at least see some of the coming tidal wave are just posturing themselves to get rich on those that perish. The epitaph for America could read, sucker punched by those entrusted while remaining too ignorant to even realize they are on the floor!
Too bad!
Tom

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By Randy Park (anonymous) | Posted May 01, 2008 at 09:38:08

At our Post Carbon Toronto steering committee meeting last night, we were discussing the "visibility" that Peak Oil is receiving in the media and other places recently. In some cases, it is almost like a switch has flipped; where in the past, there was avoidance of the mention of Peak Oil, energy decline, or tight oil supplies; now it is almost passed off as not needing mention. Things like "of course, the tightness of oil supplies" are mentioned in passing, along with more transient causes such as country-specific events.
Yet - thought it's nice to hear some recognition of the situation - in all our experiences people still don't get the seriousness of the situation. I think it's a combination of:
1. It's never happened before
2. It's too scary to consider
3. It's too complicated.
So our job has changed from getting the phrase "peak oil" and its equivalents into the discussion, to explaining the true implications - which I think this web site is doing very well for the city of Hamilton.

Randy Park
Chair, Post Carbon Toronto
www.postcarbontoronto.org

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