Wednesday, September 16, 2009


Oil and the Downhill Slide

Business/finance writers and especially bloggers are often a good read because they tend to be more honest and frank than journalists who write general news articles. After all, they’re interested in telling investors and businesspeople how to make money and avoid getting a haircut.

This Financial Post article, “Oil prices mean perpetual recession,” is worth reading in that respect. I’m glad to see that financial journalists understand the implications of expensive oil. Even at around $70/bbl the world is struggling (which many people would attribute exclusively to the financial crisis, but imagine how different things would be if oil were $10/bbl).

This is bad enough, but actually the situation is worse. We might be able to temporarily stave off collapse by taking measures such as those recommended in the article, but any savings are going to be readily eaten up by expansion in developing countries.

Then there are “efficiency improvements.” But as Jevons paradox and insatiable global consumer demand show, any energy saved through efficiency will be handily offset. For example, think of how the advent of digital audio players and small, inexpensive cars is fueling and satisfying consumer demand around the world, even among those with little economic wherewithal.

And if you read the piece I recommended in the previous post, you know that our socioeconomic systems keep getting more complex, and that added complexity demands more and more energy. We often hear people wonder how much energy it takes to power the internet, and a good answer to that is “more and more.” New data centers (also known as server farms) are continually being built, and one of the prime considerations in siting a data center is whether it will be able to get enough power.

And then there is recycling. To deal with our trash problem, we decided to recycle, which in itself is laudable, but look at what we ended up with: Many countries now have recycling system comprising armies of specialized bins for different kinds of recyclables, temporary storage facilities for recyclables, fleets of trucks hauling the collected items around, recycling plants, an administrative apparatus, and what have you. Clearly, we are expending a lot of resources and energy for recycling!

So, we aren’t going to have just a perpetual recession, but a slide (or rather, collapse) whose speed, incline, and ultimate results can be influenced by what steps people and governments take now to mitigate the harmful impacts and steer societies in a more desirable direction. But since governments are doing essentially nothing, I guess it’s up to us.

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