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Gas Pains: Summer fuel prices a portent of the crisis that's here

There's no better way to get the attention of Americans than tugging on their purse strings, and with the price of gasoline likely to breach the $3 per gallon mark in some areas of the country this summer, the public is clearly taking notice. According to a national survey of drivers conducted in May by the Progressive Group of Insurance Companies--back when regular gasoline averaged just $2.22 per gallon--57 percent of respondents said that they planned to alter their driving habits because of high gasoline prices, by either driving less often or driving shorter distances. Given the scenario of gasoline reaching $3 per gallon, the number who said they would alter their driving habits jumped to 78 percent.

Moreover, 76 percent of those polled, or three out of four drivers, said they "plan to make lifestyle changes as a result of rising gas prices." No idea sums up American naiveté regarding the nightmare scenario that today's rising gasoline prices portend than this notion that we'll simply "change our lifestyle," like a new pair of designer jeans, as gas prices go up. If such experts on the subject of oil depletion as Santa Rosa's Richard Heinberg are correct, today's high prices may be a signal that our much vaunted "lifestyle" is about to disappear with potentially disastrous consequences.

That's because the continued rise in gasoline prices may be an indication that we are nearing or perhaps have even passed Hubbert's peak, the point at which half of the oil that ever existed has been pumped out of the ground. As previously reported in these pages ("Oil Gone," June 9, 2004), Heinberg and others who subscribe to the peak oil theory developed by late geologist M. King Hubbert believe that once the peak is crossed, the supply of oil will be outstripped by demand, and our petroleum-based industrial civilization, with no other plentiful cheap energy source readily at hand, will inevitably collapse. The only question is how hard the fall will be.

"People need to start taking this seriously," says Heinberg, sitting in the library at New College of California's Santa Rosa campus, where he teaches courses on energy and sustainable communities. His message has changed little since last year, when oil passed $40 per barrel on the spot market for the first time since the oil crisis of the 1970s; as of this writing, it's at $52 a barrel and rising. While more people are certainly taking peak oil theory seriously--in large part due to the efforts of Heinberg and his colleagues--there remains an astounding lack of urgency regarding an event that promises to be nothing short of a prelude to the Apocalypse.

Indeed, of the four possible responses to the pending energy crisis Heinberg details in his book Power Down: Options and Actions for a Post-Carbon World (New Society Publishers, $16.95), the governments of the industrialized world, led by the United States, seem intent on pursuing the least palatable option: a knock-down, drag-out brawl to seize control of the remaining global oil supply that will leave only the last one standing.

"I've completely given up on the federal government," Heinberg says. "It's terminally dysfunctional."

For the most part, observers on both the left and the right not aligned with the policies pursued by the industrial nations continue to cling to the second least palatable option, a fantasy Heinberg dubs the "magic elixir," the mistaken notion that some combination of alternative fuels, technological innovation and the free market will avert or at least postpone the catastrophe.

"It's not just a matter of building more fuel-efficient cars," Heinberg explains. "Where we're going is a world where it won't be possible to have millions and millions of cars."

The only two responses in which some semblance of our civilization--or lifestyle, if you will--survives the coming crisis are what Heinberg calls the "power down" and "lifeboat" options. These two options have not been ignored, but one must turn, of all places, to the tiny Mendocino County town of Willits to find a place where they are being seriously contemplated.

"Small towns seem to be more hip, maybe because they sense that they have more flexibility," says Heinberg, who has been a guest speaker for the Willits Economic Localization project, a group of some 80 citizens who have been preparing for the coming oil crunch for the past six months. "They can change policy more easily."

As Heinberg and other peak oil theorists have noted, more is at stake here than the mere passing of the internal combustion engine. Food and water supplies, health services and medicines, suburban "country-style" living--all are jeopardized by the coming oil shortage.

"People should start preparing for a Great Depression," Heinberg says. Food could become particularly scarce. "People need to ask, do they know any farmers--personally?"

No country stands to lose more in the coming global energy crisis in terms of "lifestyle" than the United States. Ernest Partridge, co-editor of the progressive blog The Crisis Papers, notes in his latest essay, "Last Chance for Civilization," that the "wasteful average American uses twice as much energy as equally affluent Europeans . . . about 50 times as much fossil fuels as the average citizen of India, and about five times the world per capita use."

Yet perversely, the Bush administration continues to behave as if the citizens of the United States have nothing to lose. As the world's sole remaining superpower, the United States could take the lead role in transitioning to a post-carbon world.

Instead, since Bush assumed the presidency, the country has embarked on a series of actions that seem specifically designed to exacerbate global tensions in regard to dwindling oil supplies.

In addition to the obvious example of the war in Iraq, there's Venezuela, another tiny but oil-rich country, where the United States has unsuccessfully attempted to topple socialist president Hugo Chavez for, among other things, daring to keep his country's oil fields nationalized. The Bush administration, despite warnings from the Joint Chiefs of Staff that the U.S. military is already stretched dangerously thin fighting in Iraq, Afghanistan and in the overall war on terror, continues to rattle its saber at another tiny but oil-rich country, Iran.

The thing is, no one likes a schoolyard bully, and sooner or later, someone was bound to stand up to America's intimidation of tiny, oil-rich countries around the globe, if only to exploit the same countries to their own advantage. Those "someones" have turned out to be the European Union and China, which have earned the recent disdain of New York Times international affairs columnist and chief U.S. apologist Thomas Friedman for cutting oil deals with countries such as Iran and Venezuela in defiance of U.S. foreign policy.

"China is looking for oil in all the same places as the U.S.," notes Heinberg. "As long as there is enough oil to go around, this can be a friendly competition." But when the oil starts running out, "it could get ugly." He sees Iran, which sits geographically between Iraq and Afghanistan, as a potential flashpoint for global conflict. The Chinese have long-term oil contracts with Iran, which has the fourth largest reserves in the world. The Russians supply the Iranians with weapons. If the United States attempts to seize the Iranian oil fields--under the guise of, say, a preemptive strike on Iran's alleged nuclear weapons program--Russia and China might pose resistance to the move, economically if not militarily. "It appears to me that these countries [Russian and China] have a contingency situation," Heinberg says. If the United States invades Iran, "they will topple the U.S. dollar."

Rest assured that China, which has been bankrolling the U.S. federal budget deficit even as it has driven our trade deficit to record heights with hundreds of billions of dollars in cheap imports (as faithful WalMart shoppers can attest) could do substantial damage to the U.S. economy if it chooses to do so. For decades, China's gross domestic product has been growing at double-digit or near double-digit rates, but it is only since peak oil theory has come into vogue during the past several years that the amount of cheap energy--that is, oil--necessary to fuel that growth has become a matter of global concern. As Heinberg notes, even normally optimistic energy experts such as Daniel Yergin, chair of Cambridge Energy Research Associates (CERA), have begun to openly express concern.

"The energy markets are dominated by the quest of demand," Yergin recently told an audience at a high-level CERA conference in Houston. "Last year, world oil demand grew faster than in a generation, and with the arrival of new heavyweights in the market, China and India, there has now been a structural change in the oil market in terms of a higher floor for oil prices. . . . People have gotten the message that what happens to China's economy has a direct impact on prices they pay at the pump."

Regardless, Americans remain generally optimistic that the coming oil shortage will somehow solve itself.

"I've thought long and worried much about fuel prices until it occurred to me that there isn't a darned thing I can do about it," writes a member of a website dedicated to U.S. recreational vehicle travel. "Fuel prices will always rise and I predict at least $5 per gallon within three to four years, but it will work itself out. If I live to be 90 years old, I don't want to think about all the things I would have done if fuel prices were lower. I'd rather just do everything I can and think about those experiences instead. I'm going to buy my big diesel and hopefully travel thousands of miles!"

The notion that good, old-fashioned American ingenuity, in conjunction with the free market, will prevail is the dominant theme of Peter W. Huber and Mark P. Wills' The Bottomless Well (Basic Books; $26), confidently subtitled The Twilight of Fuel the Virtue of Waste and Why We Will Never Run Out of Energy. Perhaps the most remarkable aspect about the book is that it contains no mention of peak oil theory in its index.

Wills, a physicist and cofounder of Digital Power Capital, and Huber, senior fellow at Manhattan Institute's Center for Legal Policy and a frequent contributor to Forbes magazine, argue that naysayers such as Heinberg have it all wrong. As oil runs out, technology and the free market will come up with a replacement energy source, as long as meddlesome government regulators stay out of the way.

For example, in regard to transportation--where most of America's oil is consumed--they posit what they call the "silicon car" that will completely replace conventional mechanical-hydraulic power trains with electrically driven units within a decade. Such replacement is already well underway, as evidenced by the hybrid vehicles already on the market. However, such hybrids still depend on internal combustion engines as the prime power source, and the authors admit that the technology to replace gasoline engines--fuel cells, hydrogen power, etc.--will not be available in the foreseeable future. Nevertheless, they conclude: "For the next decade at least, policy makers with an eye on transportation technology should have the wisdom and courage to stand aside and let the future unfold without them."

However, a recent U.S. government-sponsored report on peak oil compiled by Science Applications International Corporation for the Department of Energy paints a much more grim picture of the coming decades.

"The development of the U.S. economy and lifestyle has been fundamentally shaped by the availability of abundant, low-cost oil," the report begins. "Oil scarcity and several-fold oil price increases due to world oil production peaking could have dramatic impacts. . . . The economic loss to the United States could be measured on a trillion-dollar scale."

The report suggests three possible scenarios for the coming peak: the first places the peak 20 years from now; the second, 10 years from now; and the third presumes the peak is upon us. No matter what timeline turns out to be the actual case, the report is anything but sanguine.

"The world has never faced a problem like this," it states. "Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions were gradual and evolutionary. Oil peaking will be abrupt and revolutionary."

The 80 or so members of the Willits Economic Localization project are trying to see the silver lining in all the gloom and doom, according to project member Brian Weller. The group is approaching the coming oil shortage from two perspectives: managing the transition while preparing for the eventuality of going completely off the power grid. Its members have separated into six groups; each is responsible for developing action plans in the respective areas of energy and transportation, food, water, health and medicine, housing and local governance.

"We have an idea of what we already have, but what do we want in a post-oil scenario?" says Weller, a corporate consultant whose past clients have included such multinationals as Shell Oil. "To what degree can we become economically self-sufficient?"

Such ideas play well in independent-minded Willits, which seems to have more than its fair share of free thinkers, organic farmers and off-the-grid rustics among its 11,000 or so residents. Weller says the city council has already agreed to look into providing alternative energy sources for all government buildings. To a certain extent, his optimism smacks somewhat of Heinberg's "magic elixir."

"Whether peak oil happens or not, it turns out that what we're doing is what we all want to do anyway," he says.

Increasingly, what the members of the Willits group are now doing by choice is beginning to look like what all of us, sooner rather than later, are going to be forced to do out of necessity. The suggestions for curbing fuel demand outlined in the International Energy Agency's recent report, Saving Oil in a Hurry, may soon become commonplace: increasing incentives for car-pooling and public transportation usage; encouraging employers to allow more telecommuting; changing work schedules; reducing speed limits; and even enacting driving bans and restrictions.

Will such measures be enough to ease the transition to a post-carbon world? Heinberg, who remains in high demand as a speaker and consultant on peak oil issues across the globe, hesitates to say where he really thinks this is all going. He has crunched and recrunched the numbers and does not like what he sees. For him, optimism is no longer an option, and he prefers for now to keep his vision to himself.

"It's going to be a real horserace to see if supply can keep up with demand," he shrugs.

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