Peak oil and our finite world; or, in praise of waste

10 Jan 2011

“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?”)

The 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.”)

The 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.


  1. John D had this to say, on 10 January 2011 | Permalink

    I believe you are correct that there is horrendous waste in our lives. However, as somewhat of a doomer, I believe that this lack of waste will still have a negative impact on employment and the economy; pushing along the collapse, but in a slower controlled manner. Using Skype rather than flying to a meeting? Loss for the airlines. Carpooling rather than commuting alone? Less wear and tear on cars and the need for new autos. Giving up a night out for dinner? Restaurants will close. I believe we need to tie this all in with some type of reduced work schedule with more people working less hours so that the pain will be shared.

  2. Mason Inman had this to say, on 10 January 2011 | Permalink

    Thanks for your comment, John. You’re absolutely right. Politicians and economists get excited when the GDP is growing, but a lot of things that count toward GDP are really wasteful. And if we cut waste, then we’ll probably cut GDP—and jobs—in a number of ways you’re talking about. If the flow of energy and resources shrinks, then it does seem the economy will shrink too.

    I don’t think there will a shortage of work to do, though. If energy gets a lot more expensive, then probably more people will need to work in farming. (My understanding is that organic farming can rival the yields from industrial farming, but is generally more labor intensive.) Also, when energy is more expensive, people will repair things more, rather than buying new things. (I haven’t read Kunstler’s novel A World Made By Hand, but I imagine that in his scenario of life after peak oil, there’s a lot of work like this involved.) But this would mean a big shift away from certain types of jobs, as you point out, with some industries definitely doing better than others, and that would make the transition painful.

    All this, I think, is a good reason to focus on measures other than economic growth and GDP. We have to focus on other ways of measuring what a healthy country and a good life is, other than high GDP and high income. And maybe if we do, we’ll find we want reduced work schedules. If that’s the outcome of peak oil, I’m all for it.

  3. KJMClark had this to say, on 14 January 2011 | Permalink

    Krugman is making a second important point – we don’t measure economic growth the way some people think. Economic growth does *not* mean every year everyone gets the same old things a little bigger or better. It means that the dollar value of all that we produce goes up a bit. If people don’t fly to Florida, don’t buy Escalades, and don’t eat out ever again, that makes no difference whatsoever for economic growth, as long as the people spend that money on something else instead. If they buy iMacs, iPhones, and iPods; a house or timeshare on the beach of a local lake, RK surgery, and train tickets to Chicago, we still have growth. You might not be able to spend money on everything you hold dear today, and be forced to spend money on things you really don’t like, since that’s what’s available now, and that can still be economic growth.

    TEOTWAWKI != TEOTW (to steal an operation from Stuart Staniford.) For someone who grew up in the Depression and WWII, TEOTWAWKI was a *really* good thing. For someone (like me) born in the pre-PC era, this new world of ubiquitous internet is kind of nice.

    Second, I suspect the Chinese and Arab world will end up working together, and that’s the “axis” the rest of us will face. I suppose you can throw Venezuela into that axis as well. Actually, Venezuela may be where it all starts. They say democracies don’t go to war against democracies, and as far as I know that’s mostly true (Rome and Carthage come to mind as a possible exception). But everyone seems to forget that there are few democracies in the Middle East, and China is *not* a democracy. It wouldn’t be that strange for a Chinese “production agreement” to tick the US off enough to touch off the next war. We’ll be “liberating” Venezuela or something. Regardless of who wins, we’ll all have lost; except that we’ll be in a much better position to deal with fossil fuel depletion and climate change afterward.

  4. Mason Inman had this to say, on 15 January 2011 | Permalink

    If the US were to “liberate” Venezuela and take charge of its oil, as KJMClark suggested might happen, I don’t think it would put us in “a much better position to deal with fossil fuel depletion and climate change afterward.”

    Sure, if it all went without a hitch, it would in theory buy the US time to deal with peak oil. But if we haven’t done much of anything about the risk so far, why would we start then, after taking control of some big foreign oil reserves? It seems far more likely to me that a conquest like that would just encourage Americans to go on with business-as-usual, and assume that there’s no real problem.

  5. Andy Cox had this to say, on 22 February 2011 | Permalink

    An interesting article. However, you can take the analysis of waste a whole lot further if you adopt a non-market perspective. To see what I mean, go to Perservere with this long essay and you’ll get the point.

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books I've read on failure & grace

The World Without Us
The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man
A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster
Hell and High Water: Global Warming--the Solution and the Politics--and What We Should Do
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
The Tipping Point
Three Cups of Tea: One Man's Mission to Promote Peace... One School at a Time
The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization
Out of Poverty: What Works When Traditional Approaches Fail
The Little Ice Age: How Climate Made History, 1300-1850
Confessions of an Eco-Sinner: Tracking Down the Sources of My Stuff
Deep Economy: The Wealth of Communities and the Durable Future
The Geography of Bliss: One Grump's Search for the Happiest Places in the World

Mason's favorite books »