“Peak oil has arrived,” says economist Paul Krugman in one of his columns late last month—a watershed moment, since it makes him one of the most widely read people to have uttered such words.

In this column, “The Finite World,” he points out that “Oil is back above $90 a barrel. Copper and cotton have hit record highs. Wheat and corn prices are way up. Over all, world commodity prices have risen by a quarter in the past six months.”

Is this from speculation, or inflation? No, and no, he writes.

“What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices.”

But he’s no peak oil doomer—the kind of person who comes up with an acronym like TEOTWAWKI, to avoid having to write out, over and over in their rants, the phrase “the end of the world as we know it.” (The TEOTWAWKI blog, for example, reviews knife sharpeners and considers questions such as “how much ammo do you really need?”)

Image RemovedThe rise in commodity prices, Krugman says, “won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.”

I think he’s too blithe here about everything working out just fine. (And some people—including none other than former Federal Reserve chairman Alan Greenspan—worry about a lack of oil causing the end of economic growth. More on that later.)

But still I’m going to side with Krugman and say that things could work out better than many doomers expect. It’s not because I’m some kind of free market fundamentalist. (Krugman had another good post recently on “zombie economics“—the ideas that have are undead. They’ve been killed over and over, but keep on stalking us and eating our brains. Seriously—his column really did talk about how “the zombies end up eating your brain.”)

Image RemovedThe reason why Krugman is right is that there’s tremendous waste in everything that we do, especially in rich countries. Tristram Stuart’s fantastic book Waste details the scandal of all the food thrown out at every step in the system, from perfectly good food that’s chucked in grocery store dumpsters to the carrots rejected just after picking because they’re slightly misshapen or bent. Depending on whose numbers you believe, and how you define “waste,” something like half of all the food that’s grown gets wasted.

And of course we don’t need to drive to the grocery store in SUVs. We don’t need to have heated pools that leak all that energy—which was most likely ancient sunlight stored in natural gas, coal, or oil, and then burned to make electricity—back into the sky after we’re done taking a dip. Californians don’t have to fly to Hawaii to enjoy beautiful beaches. And so on.

The same point shows on in a blog post with the charming title “Confessions of an Ex-Doomer“: “doomers tacitly assume that anything short of our current energy consumption level would be catastrophic…. Truth is, there is tremendous waste in our current use of energy…. We could cut back a lot and not miss it. In an emergency, we could cut back even more, just like we did to win World War Two. It wouldn’t be much fun, but it would be possible, and no one would have to starve.”

I’ve been reading Sucking Eggs, a book about rationing and austerity programs in WWII-era Britain, and it’s fascinating how much people knuckled down and pitched in. It was, by all accounts, not fun. But it also wasn’t as miserable as some might suppose. They found there was a lot of waste, a lot of slack. Instead of importing so much stuff from abroad, something they’d got used to—they were in charge of a vast empire, after all—they could make a lot more at home. Not only did it save resources, but it made them more resilient, so they weren’t as reliant on shipments that could be sunk by U-boats, for example.

You might say WWII was an unusual situation, in which people banded together because of a common enemy. Nonetheless, I think we could do it again. Maybe many in the “West” will end up seeing Muslims as enemies, since Muslims already hold a lot of the world’s oil, and they will likely be a fast-increasing share of the world’s oil production. (I’ll have an article coming out soon that talks more about this issue.) I would hate to see that happen, but that’s one way in which peak oil might unite people—but in the wrong way.

If we waste our energy—literally and figuratively—fighting wars over oil, then we’ll be squandering an opportunity to change for the future. Of course, some would say that we’ve already started down that path, with the war in Iraq being “largely about oil,” as Alan Greenspan put it in his memoir. (I’m not a fan of Greenspan, but the fact that he mentioned this as an aside, toward the end of his memoir, it suggests this was the commonly accepted idea in the upper echelons of the government, even if they wouldn’t say it.)

Instead of wasting our energy in some spasm of vengeance, if we put our energy toward fighting waste, we’ll go a long way toward dealing with the reality of our finite world—and avoid having to count Mel Gibson as our fashion guru.