End of cheap oil, the global energy crisis and climate change
The increase in oil prices has led to protests, which have moved to the center stage of Indian politics, displacing the protests against reservations in medical and engineering colleges.
Increase in oil prices translates into higher prices of all commodities. As Hindustan Times reported oil price hike turns cereal killer (Hindustan Times, Wednesday, June 14, 2006, p.2 table). Yet the increase in oil prices in world markets is inevitable because the resource is dwindling and supplies have peaked, peak oil means the end of cheap oil, and an end to economies organized around the increasing availability of cheap oil.
Oil is a non-renewable resource. We have always known that yet the world has been behaving as if oil is in endless supply. And we in India who have lived in a biodiversity and biomass energy economy are rushing into oil addiction precisely when the global oil supply is running low and prices are running high.
The Association for the Study of Peak Oil (ASPO), an umbrella organization of oil expects, mainly geologists who helped find oil fields are now warning us that there are only a trillion barrels or less of oil left, and the supply will peak within this decade. "Peak Oil", or the topping point, is the highest amount that can ever be pumped. Beyond "peak oil", there will be an overall decline in production and an increase in oil prices. Oil that costs $5 per barrel to extract could become $ 100 per barrel when confidence in supply erodes and demand increases, and there is recognition that we are in a world of shrinking oil supplies, not growing supplies.
Why are we as a country tying our future to a resource that must shrink and become more costly? As we build more superhighways and mega cities, destroying the decentralized fabric of our socio-economic organization, we need to ask how long will this last?
There is another reason to stop this frenzy of oil addiction, and that is climate change, or more accurately, climate chaos. Climate change is caused by fossil fuel emissions, and stabilizing carbon dioxide emissions is an ecological imperative. This is why the Kyoto Protocol to the climate change convention was signed. The insurance industry, which takes over $ 2 trillion in annual premiums, and is bigger than the oil industry, is now a major player in addressing climate change since they have to pay billions out in insurance as cities flood, cyclones such as Katrina uproot entire communities and heat waves kill.
The costs of climate change to the people of India are extremely high. The 1999 Orissa super cyclone and the Bombay floods of July 2006 are just two better-known extreme events linked to a changing climate.
This winter, we had no rains during the wheat season, and heavy downpours during the wheat harvest. Heavy rains before the monsoon in the catchments of the Ganga and Yamuna destroyed crops so that farmers did not even have seeds to sow. And in Sikkim, heavy rains led to land slides, which disrupted Gangtok's water supply. I was in Sikkim during the crisis and we lived on one bucket a day.
The fossil fuel economy is based on two illusions - one, that we can keep up our oil addiction, and two, that substituting renewable energy with fossil fuel has only benefits, no costs. Climate change is very high cost of an economy based on oil. We are starting to eat oil and drink oil. Oil is at the heart of industrial food production and processing, and long distance food transport. The wheat, India is importing is not just bringing weeds, pests and pesticides. It is also carrying thousands of "food miles". Imagine a Tsunami or cyclone if our food supplies become dependent on wheat from U.S and Australia. And imagine the cost of wheat as oil prices rise, and wheat embodies more oil than nutrition.
We are also drinking oil, not water. When Coca Cola and Pepsi pump 1.5 to 2 million a day to fill their soft drink and water bottles, and transport them to the remotest part of India, water embodies oil both in its extraction and transport. It is increasingly impossible to find clean water in our wells and springs. But Aqua Fina and Kinley has reached every village, selling water which has become oil, packaged in a plastic bottle made from oil.
While the political parties protest against the hike in oil prices, society also needs to start taking a long-term view of the ecological, economic and social costs of our growing oil addition. We need to start addressing strategic issues of real and sustainable energy security in the context of peak oil, the end of cheap oil, and the climate chaos that the era of cheap oil has left as an environmental burden on the planet.
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