Building a world of
resilient communities.

MAIN LIST

 

A crash course

Biology professor David Ehrenfeld mulled over a question from his medical school teacher for decades. He and a small group of other students met with a celebrated cardiologist, who was then in his 80s. One of the students exclaimed that heart disease was the No. 1 cause of death in the United States. As Ehrenfeld recounts in "The Arrogance of Humanism," "Our teacher thought about this for a while and answered, 'What would you prefer to have as the No. 1 cause of death?'"

Death is inevitable, the cardiologist seemed to suggest, not a "problem" to be solved by preventing its No. 1 cause.

A variation of the cardiologist's question seems relevant to the current financial meltdown. Treasury Secretary Henry Paulson has earnestly explained this past week that bad lending practices are the No. 1 cause of the collapse of the U.S. financial system. What would he prefer to have as the primary cause of the collapse of the U.S. financial system?

Unlike human death, economic collapse is not an inevitability. However, the U.S. economy has long been on a trajectory toward such massive change that "collapse" is not too strong a word.

Our country has squandered its post-World War II prosperity, much of it on investments unsuited to the 21st century. The United States overextended itself, building a system of interstate highways and smaller roads and bridges that neither the states nor the federal government can seem to find the money to maintain. When we're lucky, locally vital bridges like the Route 2 bridge in Middlesex or the bridge in downtown Richmond are closed before they collapse. When we're unlucky, as they were in Minneapolis last year, an 8-lane bridge collapses while filled with rush-hour traffic.

James Howard Kunstler, author of "The Long Emergency," has called post-war sprawl "perhaps the greatest misallocation of resources the world has ever known." Suburbs, and the isolated country homes that we have so many of in Vermont, require large infusions of oil. Oil moves people back and forth to work, play, shopping and worship. Oil brings in food and goods and carries away garbage.

As world oil production reaches a peak and then declines, Kunstler expects sprawl to leave a legacy of ghost suburbs and radically altered living arrangements. Those suburbs that are not abandoned will be sparsely occupied, with lawns turned into mini-farms. Proud family McMansions will be subdivided into apartments by owners who can't afford to live in them alone. People will be concentrated along rail or bus lines, and those left living in the countryside will be isolated, their trips to town infrequent at best.

The collapse of the housing bubble and high energy prices are already starting to realize Kunstler's expectation. Subdivisions are being abandoned, half-built. And home values are dropping faster in outlying areas than in or near city centers.

Robert Hirsch has a very different background than Kunstler, yet he's arrived at similar conclusions. Kunstler's background is in theater, journalism and writing novels and non-fiction books. Hirsch is a technocratic Washington insider, having worked for the Atomic Energy Commission, the U.S. Department of Energy, and prominent government contractors. He first became aware of peak oil while on contract to the Department of Energy, researching what causes oil price changes.

Hirsch carried out a more detailed study of peak oil's economic effects, and his reaction was untechnocratic. When I listen to him describe his feelings during the research, it sounds like he came near to despair.

Hirsch and his co-authors tried to figure out in a 2005 study how the United States would adapt to peak oil under three scenarios: if we start investing in a transition 20 years before the actual peak in world oil production, 10 years before or the year of the peak. Their economic models showed that the United States could adapt smoothly only with a crash program starting 20 years before the peak. Since it was apparent then that peak was likely much closer than 20 years, and there was no sign of a crash program on the political horizon, Hirsch foresaw a rocky road of dislocations as the country lurches past peak oil.

Kunstler and Hirsch disagree on the historical inevitability of an oil crash. Kunstler sees our use of oil as a one-time splurge of stored energy that could not be sustained, no matter what. As he puts it, no combination of renewable fuels is "going to run the interstate highway system, Walt Disney World, and Wal-Mart." Hirsch seems to believe that we could have found a way to keep all of that running, but we blew the chance.

Either way, they agree that, as Hirsch says, "We're headed for very serious trouble very quickly." He refers to the stagflation and hardships from the oil shortages of 1973 and 1979 as harbingers of the effects of future shortages. Except that "those were both very brief events, and peak oil will not be brief."

The current financial crisis may be closely linked to peak oil and energy costs. Rising energy costs have been caused by flat global oil production at a time when demand has risen. When home values drop faster in places where longer car commutes are necessary, the popping of the housing bubble seems linked to the rapid rise of gas prices. Homes that were heavily mortgaged quickly became worth less as collateral than the owner owed the bank. It set up an incentive for the owner to simply walk away from the mortgage, which exerted further downward pressure on prices.

It may be, however, that the toxic dynamics of a poorly regulated and poorly managed banking industry were sufficient themselves to cause the current crisis, through the following series of steps: Banks made subprime loans with a number of years of low payments followed by a booby trap of ballooning monthly payments. Local banks sold the loans to Fannie Mae and Freddie Mac, which repackaged them into inscrutable financial instruments and sold them to other institutions. When the booby-trapped clauses were triggered, homeowners could no longer afford monthly payments. Defaults on the mortgages dragged down the value of the securities into which they were repackaged. No one understood the paper the institutions were holding well enough to confidently place a value on it, which meant it could not be used as collateral in further loans. And so credit markets froze.

Regardless of the role of energy in the current financial crisis, oil price hikes and shortages due to peaking world oil production are bound to bring about the sort of broad changes in the economy that Kunstler foresees. Right now, for example, gas pumps are largely closed in many parts of the southeast. Hurricanes Gustav and Ike shuttered both oil production and refining, leaving pipelines from the Gulf low on fuel. The shortages are forecast to continue for weeks. They're likely both to retard the economy in the Southeast now and further push down prices on homes located far from businesses, schools, and churches.

One of the key questions the country faces is whether we will use our remaining wealth and fossil fuel to prop up the past or to transition to a different future. There's no shortage of ways to fritter away the rest of our fortune:

  • The Bush administration demands unfettered access to $700 billion in the U.S. Treasury to bail out poorly managed banks.

  • U.S. automakers are trying to pry $25 billion or more from the Treasury to insulate themselves from the consequences of investing heavily in gas-guzzling vehicles that buyers are rejecting.
  • The military and its contractors in the United States gobble up as much wealth as in all other countries combined.
  • New Orleans is being rebuilt, below sea level, next to a Gulf lashed by more intense hurricanes. The city is sinking, and sea levels are rising.
  • In Galveston, Ike rendered 75 percent of homes uninhabitable, or simply washed them to sea. There will be demands to rebuild that poorly located city, too.
  • The Vermont Agency of Transportation is building new highways (like the Bennington bypass) and widening existing ones (like Route 2 between Danville and Marshfield) at a time when traffic is dropping and existing roads and bridges are falling apart.

Our energies are better spent on investments that will pay off as the 20th-century economy crumbles:

  • Efficiency, efficiency, efficiency. Wasted energy costs the state billions. (Unfortunately, the Douglas administration declines to fully invest in Efficiency Vermont and drags its feet in helping Vermont home owners and businesses make their buildings more efficient.)

  • Converting from fossil fuels to wind, solar, small-scale hydro, wood and other biofuels.
  • Local agriculture. The United States has under 2 million farmers now, and a post-oil economy is estimated to require 50 to 100 million farmers. We need more training of future farmers and local food purchases.
  • Better rail and other public transit.
  • A stronger social safety net and anything that builds stronger communities. We're going to need to look out for each other as neighbors a lot more.

Personal investment in preparedness is important, too. Warren Buffet thinks this is the time to invest in Goldman Sachs. Me? The financial meltdown of the last couple weeks has prompted me to finally order that cider press I'd been eying. I'm thinking of joining the co-op formed by some East Montpelier neighbors for a small-scale dry bean thresher and winnower. And I'm learning local wild edibles at Wisdom of the Herbs School and using permaculture design principles to turn our yard into a woodland garden.So what do I want the primary cause of U.S. financial collapse to be? I can better answer the question of how I prefer to see the collapse happen. I'd like to see it happen slowly, with enough small scares to wake people up to the scale of the problem while we still have significant resources to invest in a transition to a post-oil economy.

I'd like to see financial collapse treated as an opportunity for neighbors to help neighbors, for communities to meet the challenge of providing essential goods and services for themselves. And I'd like to see us sing and dance and laugh together as we make the transition. If we're going to change almost everything about our lives, we might as well have fun doing it.

Carl Etnier, director of Peak Oil Awareness, blogs at vtcommons.org/blog and hosts radio shows on WGDR, 91.1 FM Plainfield and WDEV 96.1 FM/550 AM, Waterbury. He can be reached at EnergyMattersVermont(at)yahoo.com.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Make connections via our GROUPS page.
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.


Livestock: more than meat

Beyond the debate about meat in our diet and the environmental impact of …

Making Good Food Affordable

I'm always stunned at how uninformed many people are regarding the …

Our watershed moment

We humans need water for life, we love it for leisure, we make art out of …

Going Soil-Friendly

This is one of the most exciting developments I’ve heard about in a …

Three Weeds You Can Eat

When I’m out weeding, I’m foraging as well.

The Art of Fermentation

One way to reduce household energy use associated with food is to adopt …

Crops of the past and future

Developing perennial varieties of grains, legumes, and vegetables can help …