Has Peak Oil Awareness Finally Hit the Mainstream? Expect Economic Turmoil and Panic Among Leaders.

There are increasing signs that awareness of peak oil – the rather simple and obvious idea that someday the world will run out of oil – has hit the mainstream. In the last few months there have been mentions in various major media, starting with George Monbiot’s widely-read column “When will the oil run out?“, and now in Forbes, Canadian Business, and many other outlets. Even Saudi Arabia has finally admitted that its oil and world oil will soon peak. The result is likely to be panic at the top.

Monbiot’s column really brought the conversation from the fringes, where peak oilers have been discussing reality for some time, into the mainstream. In that column, Monbiot did what journalists are supposed to but rarely do these days – he dug out the truth, which turned out to be none too comforting. It seems the International Energy Agency (IEA) was basing their predictions about future oil supply on…well, primarily wishful thinking. Considering that the IEA is the standard reference used by most governments, that’s a serious problem. As an aside, it also shows the degradation of our political-economic system: The IEA is staffed by very well-paid bureaucrats who failed to do the most basic and obvious check that any science or engineering student would be expected to do: check their assumptions.

While many have not fully put the pieces together yet, I suspect the push to alternative energy is going to accelerate greatly. (Green energy is one of my recommended career choices.) In fact, there may well be a sense of panic as more and more people in high places start to realise just how important oil is to their business model. 

Two Immediate Peak Oil Concerns

There are going to be two immediate casualties of peak oil that everyone should be concerned about: global capitalism and food production. There will be many other victims, such as the travel industry, but the loss of vacations in the sun does not compare to the effect the first two will have on you.

First, today’s global corporations are…global. Their business model requires extracting raw materials from various countries to be manufactured into finished products in yet more countries to be sold in further countries still. As currently done, resource extraction, manufacturing, and all transporting of goods are heavily dependent upon oil. Those giant dumptrucks used in tar mining don’t run on solar power. Wal-Mart’s goods don’t arrive by sailing ship.

As oil prices go up, global capitalism with all its transporting here, there, and everywhere gets more costly – and local production gains an advantage. That means more items consumed locally will be made locally, which no doubt sounds good to unemployed Americans. But it also means that prices for everything will go up.

Second, in the developed nations, our food supply is utterly tied to oil. Tractors and combines for planting and harvesting, many irrigation pumps, the trucks to move food from farm to processor to market…all run on oil products. The entire concept of industrial-scale farming – the whole Green Revolution – is oil-based. Most pesticides are petroleum based, and nitrogen fertilizer comes almost exclusively from natural gas (also in decline).

This moves prices of industrially-grown products closer to those of organic, which means more people will switch to organic – but even organic food still has to be transported, which is currently only available by oil-fueled trucks, trains, ships, and aeroplanes. Unless all food production becomes local – which will be difficult – even organic food is also going to rise in price – and how many can afford a doubling of their food budget?

Panic Among the Elite

What does this mean? Whole books have been written on the subject (and you may want to read one or two to get an idea of the problems we face), but essentially: From food to iPods, the rising tide of oil prices will lift the prices of everything currently floating on oil, which is almost everything. This will cause panic among those at the top. Nothing brings on a revolution faster than hungry, unemployed people who realise they’ve been lied to.

It’s going to be a bumpy ride. As CEOs realise the implications, they will realise that their business models, which were never sustainable, are about to get priced out of the market. Wise big business leaders will attempt to re-localise operations. Foolish leaders, the majority, will suckle for bailouts, subsidies, and favourable laws. That will only work for so long; no government can subsidise $200+/barrel oil for very long.

“Climate change is a result of the greatest market failure the world has seen,” and peak oil is right up there with it. A severe and essentially permanent depression will do great damage to the credibility of American-style capitalism, which is underpinned by utopian Libertarian ideals about unregulated markets and their imagined infallibility.

One of the reasons for panic among those most benefiting from the current economic system of global capitalism is that the unsustainability of the system they have been promoting is about to be revealed – by a major economic contraction. Many unemployed and destitute people with little hope of ever reaching the middle class are going to be open to a change in the economic system, and they will no longer pay much heed to multimillionaire CEOs.