The world’s first peak-oil recession has come to a close, according to third-quarter numbers invented by the federal government. Apparently dumping trillions of dollars onto big banks, insurance companies, and automobile manufacturers interrupted the plummeting descent of American Empire. The stock markets skyrocketed expectedly. Predictably, so did the commodities markets.
In fact, the lifeblood of western civilization is bumping up against the “Goldilocks” limit of $80/bbl, as I predicted would occur under economic growth. A minimum price of $60/bbl allows oil suppliers to make enough money to justify new projects, so per-barrel prices between $60 and $80 are supposed to be “just right,” even though today’s price is four times higher than the 20-year average. The “Goldilocks” minimum price of $60/bbl matches the “Goldilocks” maximum price of 2005. As recently as 2003, OPEC had an official “Goldilocks” zone between $22/bbl and $28/bbl. For a little historical context, consider this: In 1969, the U.S. refused a ten-year, locked-in offer of $1/bbl oil from the Shah of Iran because the price was too high.
Among the many consequences of passing the world oil peak: the days of
cheap inexpensive food are behind us. And, too, every time the inflation-adjusted price of oil tops $80/bbl, we head into a recession. Most commentators think Saudi Arabia will continue to bail us out, but the kingdom clearly has reached peak extraction. Thanks to renewed growth in the world’s industrial economy, led by China’s 9% annual growth, we’re headed for triple-digit oil in the short term, and double that by 2012. If you thought $147 oil put the brakes on economic growth, it’s not too tough to imagine a full-scale meltdown of the industrial economy with $200 oil. We can hope $150 oil next year will do the trick, rapidly crashing the stock markets and transforming globalization into relocalization.
When localization is back in style, and globalization is dead, we won’t need to worry about politicians ignoring — and even mandating — torture in the name of greed. Not to mention a host of other nasties. That’ll be a nice change.
Maybe, just maybe, completion of the imperial decline will lead us to real wealth instead of encouraging us to pursue the phantom wealth of money, as described by David Korten:
So what is real wealth? We might say it is anything that has a real intrinsic value: land, labor, knowledge, food, education.
Most valuable of all are those forms of wealth that are beyond price: Love, a healthy, happy child, a job that provides a sense of self-worth and contribution, membership in a strong caring community, a healthy vibrant natural environment, peace—none of which find any place on Wall Street balance sheets or in our calculations of GDP.
Pull back the curtain, as the financial crash has done, and the truth is revealed that Wall Street acquires its power by destroying real living wealth to create phantom financial wealth. Wall Street is more than immoral, it is an institutional manifestation of evil.
I don’t think we will overcome the ideology of evil (i.e., empire) by nibbling around the edges, as most people believe, or even by restructuring the economy in the ways Korten suggests. For one thing, the people who benefit from the current economy are the ones who would need to take leadership as we make the necessary changes, and I don’t think they’re interested.
In my mind, at least, and even in my dreams, that leaves one solution: the industrial economy has to run its course. As I’ve indicated before, that’s the route we’ll need to save what’s left of the living planet, including our own species, as well as restoring our long-lost humanity.