Sunday, September 6, 2009

My longest blog post ever.

Uh oh, I think I'm on a crusade. You've been warned. I just finished reading “$20 Per Gallon” by Christopher Steiner, who is a civil engineer and senior staff writer for Forbes magazine, and it has me in a tizzy. I'm about to evangelize, so grab a mug of your favorite drink and pull up your chair....Ready?

I won a copy of this book a few weeks ago, (it had actually been on my library list for awhile, since I heard an interview with the author on NPR) and I'm enthralled.
The book deals with what our world might look like as the we run out of oil and the price of gasoline climbs steadily higher. It's broken down into chapters that address how each new raise in price, in increasing increments of $2/gallon, will change our world and our lives. The book starts out with what life might be like when gas reaches $6/gallon, which seems to be just around the corner.

First, let me say that Christopher Steiner has really done his homework. He's traveled all over the world and interviewed so many different people and accumulated a whole bunch of data. He's not some nutter going off with half-baked ideas....this is a well-reasoned, well-thought out, well-researched book. Let's begin:

He details exhaustive research which supports the idea that our world's supply of oil is going away. Steiner thinks that world oil fields are either at the peak of production (meaning the only way to go is down) or are already in decline. There are no more mega-fields left to discover, and the enormous explosion of the middle class around the world (for example in China, India, and other emerging economies) means demand for oil is only going to go up and up and up. People who are becoming middle class and who have more money to spend want cars and cheap plastic goods and oil to heat their homes, just like we in the US have, and their numbers are multiplying exponentially. The world has less oil, yet demand for oil will only go higher. All of this means prices are going to go steadily up, and we'll probably be seeing $6/gallon in the next few years (in fact, Jeffrey Rubin, an economist and chief strategist/managing director for CIBC World Markets, has predicted we'll see $7/gallon by 2010) Many refineries and wells around the world are old and in bad condition—they need fixing and retrofitting. The cost of upgrading old, breaking down refineries and extraction wells and squeezing every last drop of oil from the earth is VERY expensive. Guess where that cost ultimately goes? Yep, to the consumer, making the price of oil go up. The mega-fields, like in Saudi Arabia, are not as expensive to extract oil from, but Steiner believes that those fields are either at peak production now or are already in decline.

Currently, we rely on oil for heating our homes, for making all the cheap plastic goods that litter our lives, for transporting goods and people, for keeping our military running (the military spent more than $7 BILLION on jet fuel in 2008) for making asphalt*, etc.; our modern society is pretty much built on and around oil (amazing to think this has really happened in the last 75 years or so....we've become so utterly dependent on oil, which is a very finite resource, in a breathtakingly short amount of time). We will find new ways to deal with some of these issues.....but probably not until we have to, because people do not change until forced, as any quick glance at history can show you.

The most obvious result of high oil prices is going to be no more cars as we know them. However, the more interesting changes will be ones many people haven't thought about:
People will want to move back to urban centers where they can walk, bike, or take public transportation to where they need to go. (In 2008, when gas hit $4/gallon, public transport systems in the US had 300 million more uses than the year before. That happened at only $4/gallon! ) All of the trips and errands that make up our daily lives will have to be easily accessible without using a car. Grocery stores, restaurants, doctors offices, nail salons, schools, gyms, liquor stores.... all of these places and more will have to be easy to get to without using a gasoline-fueled car.** Suburbia will mostly disappear, thinks Steiner, because that kind of lifestyle will be unsustainable. I can believe him. Where we live now, in a heavily suburban area outside of Denver, it's over a mile to the nearest grocery store and restaurant. After that, it's about 5 miles to the town center where most of the shops and offices are located. When gas gets to $6/gallon and above, it will be VERY expensive to sustain our lives will simply cost too much to get around to all the places we need to go. We have a light-rail train that can take us into Denver, but other than that, there is no public transportation system to speak of-- certainly nothing we could rely on to get us where we need to go around town. Putting something like that in place would take lots of time and loads of money, neither of which are in abundance.

More changes: we'll have to get used to no more air travel, except for very special occasions (although the very rich will still be able to afford it). All but a very few airlines will become extinct in a very short time--they almost couldn't survive @ $4/gallon last year, and even when prices fall below $4, most are not profitable.*** How we make plastic goods will have to change---current plastics are made from petroleum. There are new, biodegradable plastics (bioplastics) made from bacteria and sugar that are already on the market, in fact. They are expensive to make and produce, but once gas hits about $10/gallon, they will be the plastics of choice. The foods we eat will largely be locally farmed and raised (sushi will be a treat of the past for many people, and when sushi is splurged on in one of the dwindling remaining restaurants, it will be filled with fresh local fish instead of ahi or bluefin caught and shipped from halfway across the globe). Wal-Marts and other big box stores will either become extinct or will change so much we'd hardly be able to recognize them in their new forms—no more cheap plastic junk, no more crap throwaway furniture made in China. We'll be thinner and healthier, our air will be cleaner, we'll take high-speed trains and ships for long distance travel and public transportation or walking and riding bikes for shorter distances, we'll be forced to find alternate methods to heat our homes, and on and on and on. (oh, and hey all you sail-boaters, kayakers, and'll be getting your lakes back! Noisy motorboats, jet-skis, speedboats and the like will be gone.)

One small tidbit that might demonstrate how quickly these changes could start occuring:
In 2007, the Houston Police Department spent $11 million on gasoline. (Its budget for gasoline that year was “only” $8.7 million.) For the sake of argument, let's say that the average price of gas for that year was $3/gallon. When gas goes to $6/gallon in the next few years, Houston will have to spend $22 million on gasoline--I doubt they'll be able to afford it. More officers will have to walk or ride bikes. Now think about that on a large scale....what a HUGE change that will be for our police departments and our cities, and that's just talking about how police will patrol!

(As a side note, one of the things the author mentions will happen will be the rise of clean diesel. Diesel can get about 50% more mileage out of a gallon than gasoline can. This can't last for a long time because diesel is made from oil, but in the very short term we'll see a huge rise in clean diesel cars and trucks. Just last week, I saw a commercial for new clean diesel Volkswagens, and watching ESPN2 today I saw a commercial for BMW's new line of clean diesel cars. It's happening now!)

But this is not a gloom and doom, “the sky is falling” book. Steiner is saying things are gonna change and change big, but it's nothing to be afraid of. Thousands of less deaths from car accidents will occur each year, much less pollution will fill our air and water and lungs, we'll be thinner and healthier, and we'll be witness to the flourishing of so so many new inventions, research fields, and technologies. We'll invent a new future because we'll have to. Hopefully by the time gasoline reaches $20/gallon, we won't be relying on oil. We'll have changed how we live. New industries and technologies and inventions will have sprung up everywhere because of the enormous void left by oil. Human ingenuity will rise to the task! Of course, Steiner is going to be wrong about some stuff...he's not psychic. However, I think he'll be correct about a lot more than he's wrong about. All in all, I'm left with feelings of excitement and anticipation....the future picture that Steiner paints looks great to me.

*Asphalt is made from the crud left at the bottom of the container once oil has been refined and mined for gasoline, diesel, etc. Most houses are shingled with roofing tiles made from asphalt, which is cheap (for now) but inefficient—it needs replacing ever 10 to 15 years and is awful at insulation. Our roads are covered in asphalt; 94% of all roads in the US are covered in it---that's more than 4 million miles.

** Christopher Steiner seems to think that electric cars are the most likely option for our future. They allow us to retain the things we like about our cars, meaning the little luxury items like power locks and stereos and heaters and such. Some of the other alternative-fuel cars that are being invented, like a French inventor's car that's powered by air, will be too small and not workable enough for US car consumers. It, and others like it, will probably find a niche market but won't sell millions of units. However, electric cars can fit comfortably with what we like. One major problem: there's no network or infrastructure in place to accommodate re-fueling of electric cars, and putting one in place is insanely expensive. That problem will have to be worked out before we become a nation filled with electric car drivers.

***Most airlines' budgets are comprised of a staggering 60% allocation for fuel. Money for insurance, unions, advertising, etc....all of that is included in the 40% left in the budget after fuel costs. It is easy to see how these giants will fall, and fall fast.

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