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Power = Power

America is, after all, the world's most powerful nation.

This sentiment has been boinging around the major media lately, especially in stories and columns about the health of the dollar. But what does it really mean?

We have the world's biggest nuclear arsenal for sure. We could vaporize every world city if it came to that. But Russia has enough nuclear warheads and ICBMs to stop the world's clock, too (while standards of living and life expectancy there continue to decline). For that matter, Britain, France, Israel, and China have enough atomic military juice to seriously fuck up the current order of things.

What America definitely doesn't have is enough oil and natural gas to run the nation's economy as it currently exists -- as a chain of realtors driving SUVs to tanning booths to impress house-buyers borrowing money from lenders who flip the mortgages to government sponsored entities who can't add up a column of figures, even with the help of computers.

Speaking of math, I did the oil figures a couple of weeks ago, and it's worth repeating. Of the the 80 million barrels a day the world burns, we burn one quarter of that, or 20 million barrels a day. Every five days we burn a hundred million barrels. Every fifty days America burns one billion barrels of oil. Every year we burn seven billion barrels. The US has 28 billion barrels of oil left. If we burned every last drop of our own oil, and somehow lost access to foreign imports, our oil would last four more years.

Four more years of easy motoring, bargain shopping, RV vacations, and trading up to bigger houses farther out in the rural gloaming.

If I was a young economist, I would reflect on this situation and perhaps conclude that the American economy doesn't have great long-term prospects. In fact, I'd have to imagine the American standard of living falling of a cliff within the lifetime of a TV sitcom. I'd have to wonder about American "power" and the actual value of the dollar.

It's a good thing that friendly nations like Saudi Arabia, Russia, and Venezuela are willing to sell us oil. That way, we don't have to use up all our remaining oil in four years. And its a good thing we can pay for that oil in dollars. What else could we trade for it? Tanning booth hours? Back episodes of "Sex in the City?" Free day passes to Six Flags?

Of course, the global oil peak implies that all the nations of the world will have less total energy to divvy up. I just don't see where the United States is in a particularly favorable position on this. Have you heard of any plans to reduce our extreme dependence on cars? I don't think our supreme leader has even uttered the world "railroad" since he came on the national scene. Are we going to subcontract the Jolly Green Giant to go around America moving things closer together so we don't have to burn so much gasoline?

Excuse me for saying this, but I don't think we have any idea what we're going to do. It causes me to wonder how powerful we really are, apart from our ability to blow things up.

Editorial Notes: Steven Roach of Morgan Stanley expresses similar doubts about US predominance (though without mention of Peak Oil) in The Pendulum of Global Leadership:
I strongly suspect that a test is looming for America’s global leadership. On the surface, this leadership seems secure -- especially now, as a lopsided world economy salivates over the possibility of another spurt of US-centric growth. Yet Paul Kennedy’s historical perspective urges caution in presuming that little can disturb Pax Americana.
-BA

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