Peak Oil and what our response should be

Peak Oil will change the way the world works and our long-held assumptions about the world around us is going to be overturned. Peak oil will render millions of people jobless. Those who depend on food made thousands of kms away from where they stay will find food very expensive. That includes all of us who stay in big cities. So the future is a bit rocky. What should our response be? The intuitive thing that people think when confronted with the problem of oil depletion is that the answer lies in oil conservation. Oil conservation is a good idea but of little help when it comes to tackling the systemic changes that peak oil brings.

Why is peak oil missed by the mainstream?

I see two reasons. One is human nature which likes to avoid bad news and always believes in the magical power of science and technology. It is curious that the vast majority of the public never incorporate scientific thinking in their personal lives but have loads of child like faith in science and technology. This is wishful thinking. The other reason is ideological. The policies and thinking of the governments worldwide is influenced by economists who have no understanding of the concept of Net Energy. To explain net energy in simple terms, let’s do a thought experiment. If you look at two 1 litre cans of Bio diesel and Diesel, you will see that the two have similar properties with some variations in the market price. What you don’t see is the effort to make these two cans of liquid. In case of Biodiesel, you need a lot of acres of land, with lots of labour to collect the oil seeds and then you have to use a compressor which needs a lot of energy to extract oil. This is a labour intensive process. The energy input required to make biodiesel is high. In contrast, petroleum diesel requires much less energy because by drilling a hole in the ground copious amount of oil comes out. The energy required to extract oil from ground is much less. After removing large amounts of oil from ground, the capillary action of rocks prevent extraction of oil out. This increases the energy required to take oil out of ground. So after some time oil fields are abandoned, not because oil is finished but because the energy required to extract oil becomes more than the energy in the oil itself. At that point the oil field turn from an energy source to an energy sink and is thus abandoned. It becomes immaterial what is the market price of oil at that point. The economist obsess about the energy price and physics tells you about Net energy. Herein lies the crux of the conflict.

Peak oil will be devastating

The world, since it is built on high net energy oil, will find the decline of net energy availability to the economy as a world changing event. The world will look different before and after peak oil. The most visible and dramatic illustration would be the collapse of the banking sector. See this great video on peak oil and its effects

What should our response be? First instinct when one talks of oil depletion is to think about oil conservation. I believe oil conservation never works because it only drives down prices which incentivises someone else to use more oil. So the oil consumption actually increases. This phenomenon is well studied that they even have a name for it : Jevons Paradox .

Response to Peak Oil can be described in one word: Localism. Localism means that we try to produce what we need using local resources. Our needs broadly are food, clothing, housing etc. The way forward is to grow our own food, weave our own cloths, make houses using local materials like mud, bamboo etc. The miracle of fossil fuels helped us extract enormous amount of energy that was not available to our ancestors. This made mass production possible. We were able to mass produce food and ship it over long distances. We could manufacture everything in bulk and mass transportation made the whole world into a single market. This lead to centralization and overproduction. We are all familiar with the story of Industrial revolution and the subsequent development of capitalism. One other feature of our fossil fuel world is the dominance of the Banking system and the ubiquitous presence of money. The advent of fiat money predates the advent of fossil fuels, but what is different now is that after the arrival of fossil fuels, we have got fiat money to reach astronomical levels. There is now too much money in the system. This makes the present financial system very fragile. Paper money backed by fossil fuels has helped us disconnect from the real world completely. Now we build huge cities right in the middle of deserts, which is not conceivable without the use of fossil fuels and cheap credit. Our ancestors would not dream of building anything like this for the simple reason that they never had access to the amount of high Net energy the way we now have.

So in short, the task before us is to prepare for the setting up of a new system of social and political organisation. The citizens of the Post Peak world will have to learn skills that will enable them to survive the coming great change.

My favorite bet in India is Zero Budget farming as response to peak oil. Zero budget farming is based on very simple principles which mimics a forest. Forest soil is rich in microorganisms and it has biodiversity. These two things make forest an ideal climate for thriving of life. Soil microorganisms help in providing nutrition to the plants and plant biodiversity keeps the pest population under control. The same principle is used in Zero budget farming. The take Indian breed cows, which are said to be rich in microbes compared to the jersey variety. This is mixed with urine (a nitrogen source), pulses (another nitrogen source) and fruits. This creates a medium rich in microbes.

Multiple crops are used to maximize farm biodiversity. The beauty of the zero budget farming system is the optimum utilization of local resources.

There are many such local technologies to explore like Biogas, Solar water heaters, solar cookers etc. Local resources can be used for making houses like mud, bamboo etc.

To create a thriving local economy , we need to build good working local government institutions. A thriving local economy should have a thriving local government structure. The major challenge in the post peak oil scenario will be funding of local government structures. If a thriving local economy is generated then the solution is to fund it by using a local tax base. How workable that would be is something that needs to be explored.

How to start the journey from our present world of high energy economy to a more local low energy economy will be the vexing question facing humanity. This journey will not be easy but one we will have to make. By the way the world is going now (Aug 2015), peak oil will herald the arrival of more wars and political chaos around the world. Europe is already heading towards an alarming situation with migrants trying to escape poverty in Africa rushing to Europe. This is only going to get worse. Middle East is already burning and in the future Sectarian warfare is sure to increase. It is hard to think that neat theoretically good sounding “solutions” to peak oil will work as easily as it sound. Nevertheless, it is important to explore in a scientific way the best options that are present in front of humanity. This gives us a template for action. Never mind that all this “solution” may seem like Utopian dream in many parts of the world which will be inundated by war. How is one going to implement natural organic farming, biogas, solar energy, rainwater harvesting when bombs are going off everywhere. The greatest threat facing humanity in the future will be political chaos which will make every possible workable solutions unworkable. All the opportunity may get wasted if we do not find a way to deal with the political chaos that Peak oil may precipitate. How the future will pan out depends on the choices we make. They are solutions out there, but will we allow ourselves to partake of them? Only time will tell.

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