National Commentary

The Peak Oil Crisis: Leadership

We are having an election for Governor in Virginia this year and, as could be expected, inboxes and mail slots are already filling with messages from the candidates.

Most of the messages, naturally enough, concern the economic downturn and promise to increase jobs and restore economic growth – for running on anything less upbeat this year is likely to be a surefire looser. There is no way that people are as yet ready to vote for prophets who talk about increasing troubles ahead and peak anything. Talk of the end of the American dream and the need to hunker down and prepare for hard times ahead is just not in the cards at the minute.

However, we are living in one of those rare occasions when foretelling the future – at least in a general way — seems unusually easy. All indicators say the global economy will continue to spiral down. This could last for a year, or two or three, but also could last for decades. Think about the South after the American Civil War – it took nearly a century to get going again. If we are lucky some of the “stimulating” that is going on might make things look better for awhile, but this is bound to be short-lived. Without major structural changes to the world’s economy, the increasing demand for oil and other forms of energy will send energy prices right back through the last summer’s highs and the downward spiral will start all over again.

A year or so ago, the world was consuming some 31 billion barrels of oil and oil-like liquids annually. Even if the current economic troubles cut this to 28 billion, or 25 billion or 20 billion, we will still be going through our hydrocarbon heritage at a prodigious rate. At some point a decline in world oil production for geologic reasons (a euphemism for running out) is inevitable. The decline may be delayed for a few years by a recession-induced drop in demand, but it is as inevitable as the sunrise. New supplies of expensive crude are costing $90 or $100 a barrel to produce and bring to market. It is doubtful that even a deep depression will bring down the costs of new production below economy-wrecking levels. It seems even more likely that at some point an inflationary spiral will be set off by our massive deficit spending so that even worse things are going to happen.

There are many things that governments can do to slow or mitigate what is going to come, but for the time being, most are political poison. Heavy taxes on energy and emissions, mandatory car pools, lower speed limits, forced weatherization are simply yet politically possible as so few understand the problem. Tax cuts currently believed by some as the panacea for nearly everything will win out every time over wrenching government-mandated lifestyle changes until things get a lot worse.

So what is the responsible course for a candidate or politician that is ahead of public in understanding the problem, who sees that there are life altering troubles ahead, and wants to do the right thing for the grandchildren? Tell it like it is and you will be outside looking in after the election, or tell the voter what the polls say they want to hear – a few well placed tax cuts and the American dream, SUVs and all, will come roaring back in full force.

The choices do not have to be that black and white, for many voters clearly are beginning to sense there is some kind of unprecedented problem out there, even it is thought of as melting poles and reliance on foreign oil. While they may not understand all the forces that are at play, soaring unemployment, falling home values and collapsing equity markets are getting their attention. With every downward tick of the economy more and more will come to ponder the difference between effective action and demagogy.

It is much too early to tell if the Obama administration can thread this needle. They seem to understand the problem is the relationship among the economy, dwindling supplies of conventional energy, and global warming, but it likely will be years before the returns are in on the effectiveness of their solutions.

In the past year there have been great strides in the public’s understanding of global warming and the need to take action even it if proves to so expensive that it hurts economic growth. The collapse of last summer’s gasoline spike, while widely believed to be the work of speculators provided the first hint of what unaffordable energy prices will be like some day.

Somewhere in all this, there is a place for true political leadership. Politicians do not need to expound gloom and doom, but rather the urgent need to respond to rapidly changing times. Talk of return to rapid economic growth is no longer appropriate – as it is unlikely to happen in the foreseeable future. Neither is talk of reviving the American dream of material riches, SUV’s and suburbia.

For the immediate future, energy conservation and energy efficiency should be watch words of sensible policy. The Obama administration’s proposals are on the right track, but they do not go nearly far enough to prepare for an energy short-future. Every structure in the country that currently consumes energy of any kind needs to be rebuilt to consume much less. Every means of transport of people and goods has got to be replaced or rebuilt to consume much less energy.

The only question is: “How long do we have to wait until this is recognized by a critical mass and we can get going?” Forming and guiding this objective will be the job of political leaders at all levels. Anything else is demagoguery.

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