WHY THE OIL CRISIS MAY BE GOOD FOR HUDSON VALLEY BUSINESS:
An Interview with Julian Darley of the Post Carbon Institute
By Owen Lipstein
Editor's Note: You don't have to wear sandals with socks to
bake bread, shop at farmers' markets, or be scared to death of global warming.
Regardless of our political, cultural or social point of view, many of us are
getting the feeling that we just may have to make a move back to the land.
This
new column, an update on our Money column, will take a look at living a greener
life in our fair valley. To lay the groundwork, we are opening with a
three-part series, an interview with Julian Darley — founder and director of
the Post Carbon Institute, and author of books like "Relocalize Now!
Getting Ready for the End of Cheap Oil" (New Society Publishers, 2007) —
who describes the problems and solutions with striking clarity.
If you would
like to get involved and know of cutting-edge technologies, grass-roots
movements, particularly devoted or intriguing people, or a new take on the
locavore trend, write us a note. We would love to hear from you
InsideOut: Let's start at the beginning. Are oil prices so
high because we're running out?
JD: The trouble with saying that we are going to run out of
oil is that sometime in the next hundred or so years, I think [we] absolutely
[will], but it’s the flow which is about to start declining.
Since the Russians started doing a better job in Baku [in
Azerbaijan] about 180 years ago, the amount of oil flowing has more or less
increased every year, with a few minor bumps, and the same thing with natural
gas, with a few minor bumps. Since 2005, we have more or less plateaued. For
all intents and purposes, we are more or less flat. Sometime between now and
2010, it looks like we will go into decline.
The petroleum companies have got some last possibilities
which they are bringing on-stream this year, which may hold things flat or even
slightly above. We'll just have to see. But after this, there is just basically
no way. We can see the pipeline of new supplies coming on six years out, and there
is just no way on the planet that we can keep this going. There just aren't
enough new projects coming on. The point is that we will start going into
decline.
Bear in mind, we have never had so much oil flowing into the
economic system as now. [But] the supply is always limited. It doesn't matter
whether you are being supplied with 85 million barrels a day or 185 million
barrels a day. There's a limit somewhere on the supply of oil, gold — you name
it — and there's a limit because these are molecules, but there's no limit to
the amount of desire or demand. We could easily desire five times what we've
got now.
If the Chinese and the Indians were to reach the level of
American consumption, we would need staggering increases in the amount. That is
what, among other things, is pushing the price to above $100 [a barrel]: Demand
is clearly above where easy supply is.
IO: With the coming development of India and China, and all
the other global factors you know, how high in the next couple of years do you
expect oil to go?
JD: One of the very difficult-to-predict parameters, which
will be an important factor, is whether there is a big economic crash or not.
Were there to be no economic crash in any large or industrial country, then the
sky is but the limit. I don't run these kind of economic models. There are
people that do. Their numbers always seem to be completely wrong, unbelievably
wrong. Not many people were saying that we would get S100 oil on January 2nd
[of this year].
IO: No, not many people were. In the absence of a
jaw-dropping economic collapse, is it reasonable to suppose that we will go as
high as $150 or $175 in the next couple of years? It seems to me that that
would be the case.
JD: Could do. We've doubled since last year. We dropped below
$50, and then we hit $100 on January 2nd. That was already a doubling. I won't
be at all surprised. We went through $111 in the last couple weeks. I will be
really, really, really surprised if the price of oil falls very much. I could
be wrong, but I think we are going to be terribly unlikely to ever see $80 oil
again. But could it happen? Again, if there is enough of an economic
contraction, but it does seem unlikely.
IO: Economic depression or recession isn't going to decrease
demand.
JD: Yeah. It's very difficult to say. The heartening thing
is that everybody is hopelessly wrong in all of their predictions. Just
beyond-belief wrong, which is why I tend to shy away from that, but [I do]
agree that very unusual numbers seem to be possible. [We're] seeing $101 oil
with no particular supply problems.
That's what is extraordinary. There are all these other
weird factors going around, and speculation, and hot money flowing in and out
of different commodities. Gold staged an interesting crash last week, which is
one reason why I advise people to be very careful of gold. I have two words of
warning when anybody asks me, "What should I invest in with regards to
energy?" Be careful. I've seen a lot of things fall apart.
IO: One of the premises of your talks is that we really do
have to live in a world of limited growth. Talk to us about that, and how it
frames an inversion of going from a global to a local economy.
JD: In terms of the entire world economy, at least in terms
of the total amount of energy flowing in the economy — to a very considerable
extent, the economy is the flow of energy, money being a proxy for that flow.
Just thinking purely in terms of energy flow, it seems to me
that in the coming decades, the total amount of energy that humans have
available for their economic and other operations is going to decline. So at
least in terms of the energy economy, I don't see a slowing of growth. I see a
reversal of growth.
We will have what can be called sub-zero growth, or, in more
honest terms, contraction. Whether [or not] that actually means the total
economy contracts is an interesting question. If you still have more money
flooding around but chasing less energy, there's only one [way] out from that.
That is inflation or hyperinflation. That's an interesting risk.
I think the clearest thing to do is to start planning for a
supply-chain system, which has less total energy globally. What that definitely
can mean, and the upside to this — amongst many other things — is that local
economies could grow. [However], they will have to do that growth using as much
local energy as possible, local direct-solar and local indirect-solar.
All that new energy comes from solar anyway. It seems to me
that the sensible thing would be to have global economic contraction included
in monetary terms, and look around for a greatly increased local economic
resilience — some of which would be in the federal money economy, some of which
would be mediated by local money systems, and some of which would not be
mediated by money at all.
I see a different mix, and I think we should try to re-understand
what it is that we really need: warm clothes, good food, good health, and so
forth. These things are not necessarily mediated by money.
IO: You talk about localizing economies, making the farmer
the new hero, and the return to manual work. Conjure, if you will, that local
world and the merits of it.
JD: Some of what it would look like would be that we would
be going to great efforts to capture as much solar radiation coming in as we
could, while, if we were sensible, balancing that with what the rest of the
ecological system also needs. [We also need to] be careful to capture more of
it for ourselves, while leaving even more for nature. It seems possible to do
that. That would involve land-use changes and other kinds of changes.
What that picture might look like is a difference in the way
we grow crops. Some of the crops would be different. We would be thinking very
carefully about which crops we might be bringing in from elsewhere, and which
crops we should be trying to grow locally. Much of the straw we use is coming
from 1,000 miles away. We have to try to do something about that, so where are
we going to get straw and hay from, for instance?
It's the same conversation as where are we getting our
micro-chips from, and our solar PV [photovoltaic] panels from? Many of our PV
panels are coming from the Far East. Is that a secure supply? Is that wise?
Yes, it's cheaper. [But] should our dollars be flowing out from America to all
these other places, leaving Americans unable to make things?
Tune in next issue for some of Julian's answers to these and
other questions.
