Wednesday, September 3, 2008

Signing Off

It's been a lot of fun, but my time in New York is finally over. A few days ago I moved to the Mount Vernon neighborhood of Baltimore to begin a new job as managing editor for Agora Financial's Whiskey & Gunpowder e-letter. I've mentioned their Daily Reckoning site before and now more than I ever I recommend you check it out and Whiskey & Gunpowder as well. Thanks for reading!

Friday, July 11, 2008

It's So Hard Being So Right So Much of the Time (plus some quick advice on protecting and increasing purchasing power as our fiat currency dies)

A segment on ABC News tells us that the airlines are so desperate that they are scrapping in-flight movies in an effort to shed some pounds and save some fuel. The savings for doing this add up to millions of dollars so I guess it's worth it. They are also begging their customers to support legislation to reign in those wicked "speculators" who are "adding as much as $30 to $60 to each barrel of oil." The segment mentioned that experts predict at least one major carrier will go under soon. No shit. I believe they're all going under soon. The actions of the airline industry as a whole are like the thrashings of a man with his head held forcefully in a tub of water, frantic and futile.

Meanwhile not many people are talking about investing in rail. The collective aim is still to keep doing things as they've been done. That means democratized (read: relatively cheap) airline travel along with the 30-mile-or-more one-way commute in a motorized chariot. Talk about rail and living close to work in a traditional (pre-industrial town) smacks of insanity or treason. But keep watching the news. The masses will be catching on quickly. They already are. That's part of the joy I get in monitoring the Great Unwinding of Industrial Civilization and crowing about it on this blog. U.S. Americans are using less oil, driving smaller cars, driving less, consolidating car trips. It's not enough. Oil's "demand permanently outracing supply" thing is going to rip apart the megalopolis and shove North American lives into painful new configurations. People are not going to believe what's going to happen to them and the built environment assembled this past hundred years.

Speaking of crowing: I'd like to point out that, per the prediction I've made at least once in these pages, oil retreated almost $10 (although in truth I allowed for as much as $20) and then shot right back up to new records. I'd also like to take this time to reflect on something else I've said in private many times over the past five years. Stocks, bonds, the dollar and houses were bound to go down. Commodities and commodity money were bound to go up. That doesn't seem like a prediction to you readers because I never typed it here because frankly I wanted to keep that kind of thing to myself. A few years ago everyone thought I was crazy to sell my suburban co-op, get rid of my car, rent in the city, rely on mass transit and walking and start saving in a certain shiny metal instead of dollars. Crazy. Yeah, crazy like a fox. These same people are now upside down on their mortgages (some by an awful lot), increasingly unable to afford getting around their suburban wilderness and the stocks and dollars in their 401k's aren't looking like they'll buy so much as a loaf of bread by the time retirement looms much less pay for the jet setting they planned to do in their golden years.

There's a wonderful prediction by the inestimable Bill Bonner of Daily Reckoning fame (which you should be reading); There have been two times in the 20th Century when one could have bought all the stocks on the Dow Jones Industrial Average for one ounce of gold. Mr. Bonner believes, rightly in my humble opinion, that we are headed for such a time again. The boys over at Agora are calling for the cross to come somewhere around Dow 3000. I think that sounds about right. Gold is currently about $1000 for an ounce. So we are talking about a tripling of the dollar price (while the dollar buys less and less stuff in general as it slides down to its intrinsic value-- more on that later...). The real action, however, will be in silver and here I spill the beans. I mean, really, what harm could it do at this point? Silver has tripled in price in recent years, but it's still way below its historic ratio to gold. Over the past few hundred years it's taken about 15 to 20 ounces of silver to purchase one ounce of gold. A few years ago when both metals were near historic lows (thanks, Mr. Volcker!) the ratio was something like 80 ounces of silver to one of gold: What a bargain! Right now it takes 50. As this whole thing comes to a boil the ratio will shoot up and past the historic 15 to 20 mark, maybe getting as low as 10 to 1. If this happens as gold passes the Dow, we're talking well over $200 for an ounce of silver and maybe as high as $300. Keep in mind that these will be devalued dollars. Still silver has the potential to multiply ten times in dollar price while gold will probably multiply another three times. Silver simply has much more potential, though it is the more volatile of the two. Gold is the perfect way to protect purchasing power, but right now silver is a very good bet for increasing purchasing power as everyone around you gets poorer for saving in dollars.

One could ply the commodities markets and leave a paper trail for the government to follow when the lumpenproletariat are insisting on lynching and burning food and fuel "speculators." Or one could quietly accrue silver and gold and not tell a soul about it.

Note: none of the above constitutes investment advice. I'm a blogger not an investment adviser.

Wednesday, July 2, 2008

Trouble Brewin'

Ford's June sales are down 27.9% from the same time last year. "Ford sales sank to a new 52-week low, while rival General Motors Corp. shares are trading near their lowest level in more than a half century" according to our friends at the Associate Press Tom Krisher and Dee-Ann Durbin. Everyone in both the auto and airline industries must be flabbergasted. Who could have imagined everything would come apart so quickly? Well, actually we Peakniks imagined it, but no one listens to us much. People can't afford new cars and they certainly can't afford to keep those cars running. Who can save anything when the cost of the necessary driving takes up every available dollar and then some?

I was listening to NPR yesterday morning and heard a story about how the rural poor are being hit the hardest by the multiplying of gas prices. These are people who live way the hell out in the middle of nowhere but commute to factory jobs and such very far away. They aren't really rural, but are as Jim Kunstler puts it "living urban lifestyles in rural settings." These people are not going to make it. It was heart-breaking to hear one woman break down a bit when she discussed the impending loss of her home. Sometimes there are no easy answers or quick fixes or any fix at all. Sometimes there is only suffering to be had for the bad choices already made. (And sometimes the bad choices for which we suffer aren't even our own! )

The contrarian expectation to which I'm so prone is for energy prices to reverse their direction at least for a little while. After all, just when everyone is convinced of one thing it's time to make bets that everyone will be proven to be wrong. In this scenario, however, I suspect that things will turn out much, much worse than the majority of folks expect. They'll be surprised anyway, just not in the manner they were expecting. Prices up, wages down, jobs lost, etc, nothing new here, but we ain't seen nuthin' yet. I suspect the (emerging and permanent) energy crisis will bring the soon-to-be-formerly middle class of this country to absolute ruin before energy prices ease off. A few numbers to illustrate the point: by the time pump prices stabilize at $10, they will have already hit $15 or $20 long enough to drive most suburban households (which are still most households) to bankruptcy and foreclosure.

There is going to be work aplenty, however, for these newly ruined masses. We in this country will have a lot of rebuilding to do. A lot of what we've built in the past 60 years will have to be abandoned. Our challenge will be to build walkable towns and cities that will conform to the new world of decreased available energy. The same stuff that New Urbanists and Peak Oil Prophets have been begging the citizens of the U.S. to do by choice will have to be done out of hard, tearful necessity. There will be a hundred million families in this country who will watch everything they've come to view as normal simply cease to work: where they've been able to live, the physical manifestation of their communities in service to driving and car storage and multi-mile commutes, the way they've conducted business, the manner in which they've gotten their food. All of this is going to be forced to change. I gave up campaigning for these changes as a matter of mass volition years ago. I find it much more satisfying to watch as we all catch it in the neck and scarcity makes the changes for us while making paupers of us all.

Tuesday, June 24, 2008

Drill Everywhere! Then Embrace Extinction.

Oil production is falling (because the great existing fields are drying up... forever) while demand is increasing as the world continues to industrialize in leaps and bounds. Twenty years ago there were only a couple hundred million U.S. yahoos burning a barrel or so of oil every week or so in their foolishly megalopolitan arrangement. Now that many people in China and India each are upping the ante and expecting to burn as much, too, for their 50-mile commutes, skyscraper construction and air conditioners. (They also expect fossil fuel-based fertilizers to grow more crops to raise more beef.) The world is pumping as much oil as it can and suddenly about three times as many people are lining up for the daily allowance. And it turns out the amount we can get out of the ground daily is actually falling. But the demand is still growing because there are ever more people who expect to be able to drive and adjust the temperatures in their homes and to eat well. This is why prices are skyrocketing.

The falling dollar, the "speculators" (new scapegoating buzzword), and the greedy oil companies all play a part, but in the end demand is growing and supply is falling and that is that. More people want what is forever dwindling in availability. The dollar is always falling because it is every government's mission to destroy its currency over time; That a fiat currency will lose value at varying speeds till it is worthless should be taken as a given. The speculators can run the price up quite a bit, but they're making money because they bet on a sure thing: that oil would skyrocket in price because of the tragic supply/demand scenario that will bring industrial civilization to its knees before administering the coup de grace. And without the "greedy oil companies" and their investments, the people who love to hate these companies wouldn't have any oil at all. People seem to forget that the free market, profit motive, investment and risk are the things that get them the goodies they take for granted. I don't see any of the workaday suburbanites who complain so loudly about the price of oil doing any exploring and drilling. They just love to bash the people who actually find the oil, drag it out of the ground and bring it to market. If one wants to be less beholden to the oil companies, one should adjust one's lifestyle to require less of the stuff their selling. Of course the advice to move to a walkable neighborhood and take mass transit for long trips probably won't do much good as we slide into a permanent neolithic age.

In any case I am all for the drilling in every last patch of earth where we so much as suspect there may be a dram of oil. I can say with a pundit's arrogant certainty that there is not enough oil left outside of the already exploited giant fields to make much of a difference at this point. So we should go ahead and get it out of our systems. Look everywhere and take what can be found. When it proves not to be enough to continue the industrial experiment with 6 billion bipeds, then we can get to the next stage of loss: scapegoating. This will be the time for the frustrated peasantry to behead a few "speculators" and oil company CEO's. I image a war or two between the world's largest industrialized nations will start.

But don't fret. Rather embrace the loss of suburbia along with an unimaginably large chunk of the human population for we have fulfilled our thermodynamic obligation.

The universe is really just a vast collection of hotspots that are all seeking to give off all their energy till the entire cosmos is the same density and the same temperature throughout. The oil, coal and natural gas we've come to know and love are essentially just trapped energy from the sun condensed into physical form; just the remains of the microscopic flora that trapped the sunlight striking the biosphere over a long period of time. Our great task as a species is to free that energy from beneath the earth. That's what we're here for! The universe doesn't care that we fret about the ultimate survival of our descendants, the same way the winemaker doesn't care when countless bacteria drown in their own feces in order for fermentation to take place. We have fulfilled our cosmic onus admirably. That our fortunes as a species reverse afterward really doesn't matter a whit to the universe.

Thursday, June 12, 2008

Weird, Wild Stuff

How I shall miss the internet when it is gone. I just got to watch a news video of naked man being arrested and carted off in an ambulance.

In Georgia a naked black man drove to a gas station and started dancing atop his car. He then got back into his car and rammed the pumps. The car caught fire and the man ran away. Fire fighters were able to extinguish the blaze before other cars caught fire and the police were able to taze and apprehend the naked Negro. The news announcer commented that police have no idea what would drive someone to do this sort of thing. Allow me to put forth a theory. This man was a super-commuter, just like the coworker I've written about in previous postings. He bought a house with an ARM about 80 miles from his job in downtown Atlanta. His home's value has fallen off a cliff and he can't unload it. Meanwhile he is spending about $500/month-- between a quarter and a third of his take-home pay-- on gasoline. He is upside down on his mortgage so can't afford to sell and neither can he find another job closer to his exurban home that pays remotely well enough to offset the savings in gas and is thus forced to keep driving the 80 miles to employment. Maybe he has some other financial and emotional stressors like alimony and child support payments. The tripling of gas prices in just a few years might have done the poor guy in. He no doubt sees this all as grossly unfair. Wasn't he supposed to leverage a big house out in the middle of nowhere and heroically commute for over 90 minutes? Wasn't this the goal of every American? How could everything get so expensive all of a sudden? How could his pay fail to increase while the costs of everything he needed to live suddenly surged so much? A couple hundred million Anglophones are surely asking themselves the same questions. A few of them are likely to snap in similarly spectacular, but possibly much more tragic and gruesome ways.

I don't claim to be omniscient-- at least not out loud-- and I could be way off base about this man and his motives. The interpretations are so blatant, however: Nakedness symbolizing poverty, striking the source of the pain (the gas) with the tool that makes the gas necessary... The man's message seems pretty damned clear to me.

(Here's a link to the news clip on Youtube: )

Tuesday, June 10, 2008

What Did They Expect?

I happen to know a super-commuter. I've mentioned him before. He is one of those late-stage ultra-exurbanites who bought a home roughly 100 miles from his workplace back when getting a big house out in the cornfields with an ARM was all the rage. Gas has tripled in price since he fixed his residence and his job at 100 miles apart. I dare not ask him what's going on with the interest rates on his mortgage. The poor man seems pretty frantic as it is. His behavior is telling; he takes every chance to drum up a conversation with me about all the solutions that the new administration will usher in to cure the headache of high oil prices. And of course to his mind it's all the fault of politics and greedy traders.

I try to explain in the simplest terms that I know that the price is the collective result of billions of bipeds insisting on living as far from their daily destinations as possible then expecting to be able to use oil to power machines to ferry them these absurd distances. I also mention that oil is used to sustain ever-growing numbers of these two-legged locust-bunnies by means of the artificial petro-fertilizers that boost the planet's caloric carrying capacity. Of course this fellow and the 200 odd million lumpenproletariat like him will not let logic get in the way now. They've invested too much psychologically and financially in a way of life that is (was) glaringly unsustainable. I don't like to be so hard on them, however. The traditional city was quickly obliterated by the industrial tumor back when America was young and cities in the New World have spent most of their lives being ugly, dehumanizing places. No wonder the working class fled them as soon as the car and cheap gas made it possible to do so every day after work. And which species doesn't reproduce as much as possible given the chance? The individual bad choices that led us to this endgame were as innumerable as the stars, but here we are in any case.

The times they will be very hard. I, however, am relatively comfortable despite it all. My fanny will feel the flames, too, no doubt, but I moved to an old urban center in a small, but tastefully prewar apartment; I remain blissfully childless. I have no gas tank to fill up, nor child to feed, nor mortgage to service. I have a monthly transit card to buy for the short bus ride to work, but otherwise can walk to what I need. I have to pay higher food prices and home heating and cooling energy costs like everyone else, but not having to pay for gas leaves a lot of money free for food and not having a large place means the energy bills just don't get that bad. Those of you who have bought a parcel of land in the middle of nowhere and who are growing your own food organically and learning to sew up your own wounds as well as your own clothes will shake your heads and say I haven't done enough. You're probably right, but the theme of this blog has always been that it's better than being stuck in the suburbs...for now at least.

I admit to wry smiling and the occasional chuckling out loud when I think of the same people who laughed at my dire predictions and lifestyle changes and who are now trying to decide between feeding the kids or the family car. The super-commuter acquaintance is hoping that the guv'ment will lay down high speed rail lines like they have crisscrossing Europe or that he will get a transfer closer to home even if the geopolitics that have inflated the price aren't worked out. I humbly submit that it was folly to move 100 miles from work then hope that it would somehow all work out, that energy prices would stay low even though the number of people in the world trying the same type of exurbanist stunt was set to double and triple. Moving 100 miles from work in order to buy the most house possible only makes sense when oil is under $20/barrel. It's a precarious way to live, especially with all the clear signs that our party with the non-renewable stuff that makes multi-mile daily commutes possible is about to wind down. Of course, then one couldn't spare the techno-faerie tale pimps some blame. These folks kept telling us that renewable sources of energy could replace non-renewable oil and allow us to keep partying just the same. Never mind that solar panels, metal windmills, et alia need a fossil fuel infrastructure to make their mass production possible; these alternatives could never offer the energy density necessary to justify their existence long-term, but it's easier to listen to the soft cooings of pundits that tell you your lifestyle is non-negotiable and deserved rather than the physicists who tell you it is impossible to maintain and likely coming to a swift, messy end.

So my acquaintance and millions like him are trapped in homes that have suddenly become very hard to sell or afford to keep and with commutes they simply can no longer afford. How much longer can he keep putting the gas on the credit card before he is tapped out? But I mean; what was this man thinking? There will come a time when those of us who survive the unwinding of the world we've come to know will tell our grandchildren and great grandchildren stories of when energy was so abundant and cheap that we all lived "out in the country" where we could afford manses and daily travel dozens of miles to cities full of skyscrapers. Our little descendants will stare at us with saucer-big eyes and will not quite believe the world we describe was ever real, the way the other world of dragons and faeries isn't real either.

Monday, June 9, 2008

First Comes Oil, Then Comes Famine (or "What's A Few Billion Lives Between Friends?")

Latest AP story on the Yahoo page tells of the impending troubles in the world food supply due to rising costs of non-organic fertilizers. The mainstream media has let the cat out of the bag; The "Green Revolution" was a hoax. Oh sure, it happened, but it happened because farmers stopped using what are now called "organic" methods like laying manure as fertilizer and started using the whiz bang stuff the science boys made out of petroleum: a petroleum Ponzi scheme of global proportion. India was thus saved from famine in the 40's the article tells introducing a rapidly depleting, non-renewable resource to increase (very temporarily) the planet's agricultural output and carrying capacity. The inevitable costs of overpopulation were deferred a bit, but now there are that many more people at the end of the chain who will have to pay the bill. Famine has been waiting patiently to perform the wonders as laid out by her prophet Mr. Malthus. And how delighted she must be; there are twice as many people to cull now as there would have been if she'd been called onstage half a century ago.

The suffering does its worst work among the most vulnerable in the Third World first, but it will reach us here. Oil feeds our bellies as well as our machines and we will give up the extreme machine dependence of hypertrophied suburban industrialism by necessity, mainly so we can afford to eat. Trust us to do the right thing when we're left with no choice. Alas it is far too late to do much good. Iacta alea est, as they say. Our suburbanism will unwind as the world's poorest starve, but at some point we'll find it hard to afford a meal, too. The Chinese and the Indians are replicating our mistakes by industrializing (adding machines as necessities to daily life) in overdrive. I wonder how long before someone invades somewhere to get something that someone else wants really bad. Does McCain (let's not kid ourselves about that) lob missiles at Beijing when a few million Chinese foot soldier march into Russia to secure the oil supplies for the world's largest People's Republic? I don't pretend to know what will happen in the geopolitical sense, but I do know that wars start over resources.

In any case, expect food prices to start to climb an awful lot more than most people are willing to believe possible. I've read of experts saying that food prices tend to move cyclically and that they stabilize after a few years. I really wouldn't count on that. I also wouldn't count on the dollar as a vehicle of savings. I've purposefully left any financial considerations or advice out of these musings so far, but that's becoming increasingly hard to avoid. I'll just say that there are certain forms of money that tend to hold their value against commodity prices (food and fuel) in times of extreme price inflation. More on that later.

Tuesday, June 3, 2008

Demand Destruction And Price Pullbacks

Oil powers the modern industrial world and every single moment there is less oil than there was the moment before. The supply is headed effectively to zero. Discoveries of new fields or better drilling technology to better exploit existing ones don't change the overall picture. Fields do not fill back in. Even if demand weren't increasing, this would mean an eventual shift to a pre-industrial world. That demand is increasing rapidly thanks to a couple billion people in India and China buying cars and building skyscraper metroplexes just means that the eventual shift will come that much sooner.

Markets allow for speculation and this does run up the price of oil a bit. This also means that the price will pull back-- maybe even considerably-- when speculators take their profits. I wouldn't be surprised if oil fell ten or twenty dollars per barrel in the near future, but I also expect the price to run right back up toward $200. At that point, however, there will be a great deal of demand destruction. U.S. Americans in particular will have had to abandon the "American (read: suburban) Dream" and therefore will simply not be using nearly as much oil per capita. They will be out of the bidding. Prices will remain high enough to force people to keep living in walkable urban environments. Recall that the supply will still be heading toward effective zero while the Chinese and Indians will be using their new wealth (remember all the factories that got built in these places while factories were being dismantled here and all the jobs that disappeared from these shores and reappeared in Asia?) to live like we used to here. Don't be too upset by this, however; it won't last long in India and China either, certainly not nearly as long as it lasted in the U.S.

Sunday, May 11, 2008

Reaction Trumps Proaction...Again

Flipping around Yahoo News again for signs of the collapse. Discovered that bicycle sales and repairs are up, way up for the year. In this country 40% of car use is for trips under 2 miles. U.S. Americans (remember that Canada and Mexico are also in North America) are being forced to use their cars less. I read that a few intrepid folks are even biking many miles to work and with a cart in tow for the groceries. Of course as energy availability decreases people are going to start asking "hey! Why the hell is everything so far from everything else?!" Human settlements of the future will surely look nothing like the automobile suburban miasma that has coated the land in the latter part of the Twentieth Century.

The changes we are all going to see will be forced upon us. I get a little sick of Peaknicks encouraging the masses to make voluntary and proactive adjustments to their lifestyles. People will abandon their unsustainable lifestyles only on pain of financial ruin. The pain comes from market forces; supply and demand dictate what the masses can and will do. People will continue using the modern built environment till they simply cannot anymore. Bicycles will keep some of the older parts of the suburban buildout viable, but people are going simply to prefer living in traditional urban centers again. Who wants to have to bike ten or twenty miles each way to work every day? Life will center around the downtown main street again and no longer be stupidly scattered among the cul-de-sac subdivisions, malls and office parks.

Wednesday, April 30, 2008

Clueless Majority

Listening to public radio allows me to get some idea of just how clueless even respectable journalists and leaders are. In a recent interview with Robert Bryce author of Gusher of Lies: The Dangerous Delusions of Energy Independence, Leonard Lopate asked why hydrogen wasn't a viable "alternative fuel" since, according to Leonard, "it's just water." No, Leonard, hydrogen is not water; it's hydrogen, the easiest lay on the periodic table. Hydrogen is just a proton with an electron and as such readily bonds to form other stuff. Nearly all the hydrogen on this planet is locked up with oxygen in the form of water. Freeing that proton-electron combo means carving it off an existing molecule (usually water) and that takes energy. We get some of that energy back when we shove the hydrogen back together with oxygen to form water again. But there's no free lunch. We had to burn some energy to get the hydrogen in the first place, then we get a fraction of that energy back when we lock the hydrogen back into combination with another element. No energy is "produced"; it's merely carried. The original energy came from whatever was burned in the first place to free the hydrogen. It's an energy shell game with a significant net loss. You'd have been better off just burning the original fuel for mechanical energy instead of splitting water molecules, storing hydrogen and then recombining it with oxygen.

In my experience the general populace does equate "hydrogen power" with simply "burning" water. They figure that our modern whiz-bang technology can squeeze Nature's energy bounty out of all that useless sea water we have lying around the planet's surface. As friend Jim Kunstler puts it, they conflate technology with energy. Technology doesn't produce energy; it depends on it. There is no magic way to "burn" water and keep America's 200 million cars running 50 miles each per day. I reiterate for the physics-illiterate: Hydrogen is not water; it's hydrogen and in this context (split from oxygen then joined again) it's just an energy carrier. The energy is released by something else (usually fossil fuels) and the hydrogen acts as a way to store it. Hydrogen, like electricity, is an energy "carrier." Those who fail to understand this tend to be the same ones who are outraged--absolutely miffed--that those evil oil companies are preventing the development of the rainbow-and-hearts hydrogen economy that will save us all and make driving as cheap as dreaming. If hydrogen were only horses, these ignoramuses would ride.

In an interview on the BBC World News Kofi Annan remarked that Africa needed a "green revolution." Mr. Annan joins the list of people who really ought to know better but don't. He understands that this simply means injecting fossil fuel-based fertilizers into the ground and make agriculture into industrial agriculture. So he understands too that high-priced fossil fuels are needed to boost food production and that the escalating costs of fossil fuels are what is driving up food costs in the first place..? His comment reminds me of Steve Martin's advice on how to get a million dollars and not pay any taxes. First... get a million dollars... How to reduce food prices? By increasing food production by using high-priced fossil fuels which are driving up food prices in the first place? It's like cutting a foot off the bottom of a sheet and sewing it back to the top to make the sheet longer. Food prices are up in large part because food production everywhere has been as good as it has for the past hundred years because of fossil fuel-based fertilizers. Modern food production is an industrial process whose bounty relies directly on fossil fuels. Fossil fuel prices and therefore food prices are on the rise because supplies of fossil fuel are permanently declining (and what's left requires more energy to get because we literally have to dig deeper and deeper for it) while demand in the form of industrializing populations (two billion east and south Asians--the growing middle class in China and India) is rapidly growing.

There is no easy fix to hunger in poor nations, a disproportionate number of which lie in Africa. Poor nations simply will drop out of the bidding for food as fuel prices are driven up by increased demand in China an India. Africa will have to starve. We won't be dropping dead from hunger here in the U.S. quite yet, but our oil-dependent economy and way of life will take a hit. Most of the places we've built in this country will simply become useless. Our infrastructure is set up with the expectation of cheap oil supplies keeping things moving over vast distances. I've heard very few voices in the media explaining these two unassailable facts: starvation will absolutely ravage the swollen populations of the poorest countries and most of the built environment in the U.S. will be summarily junked.

Wednesday, April 23, 2008


Seeing the stuff I've been awaiting finally happening and making headlines prompted me to start blogging again. Peakniks come off as Malthusian Cassandras and Apocalypse-craving nuts to most people who lack the ability to think things through logically (and that means most people). So that I don't seem to be spinning this stuff out of my rear or trying to compose an addendum to the Revelation of St. John, I will share a few headlines that I expect to come in the near future and which really aren't so far-fetched. First let's recap the big ones that Peakniks have been predicting for years.

"Food Riots in the World's Poorest Countries as Food Prices Soar"

"Gas Prices Continue to Climb Toward $4 per Gallon; Oil Setting New Highs Regularly"

"Higher Fuel and Food Prices Curb Spending; Businesses Closing; Recession Fears Grow"

"Airlines Shutting Down"

Check, check, check and check. These are all related, of course. The world's poorest feel the dwindling of oil supplies in their bellies while the more coddled countries feel it in their ability to drive and purchase luxuries like electronics and furniture (which happen to be two of the great comforts in my life). We here in the U.S. are going to see both a lot of job loss and lower wages for those of us who remain employed; those lower wages will be buying less food and gas, but you will probably be able to get luxuries like SUV's and high-end electronics for fire sale prices. There will be much work in the new fields of urban retrofitting and agriculture, however. In any case, here are the headlines we'll be seeing next.

"Outer Suburbs Depopulate; Core Cities and Towns Overcrowded"

"Only 1 in 10 Americans Can Afford To Drive"

"Last Commercial Airline Stops Operation"

Again, related headlines. The automobile suburbs will be depopulating because they will be unusable. These places were built to be driven in and if you can't drive, they are unlivable. If you have to drive at all to get from your house to the grocery store or to work, that is to say if it's just too far too walk to either and mass transit isn't an option, expect to have to move within the next few years. Of course traditional 20th Century jobs will be disappearing anyway. This may seem far-fetched for the 90% of Americans outside of Boston or NYC for whom there is no other way of life than auto-suburbia, but that's part of the fun of me typing this stuff here in mid-2008; I want the people who read this to remember it when they abandon their homes in 2018.

The mass use of both cars and planes will be decisively over. There will still be cars and airplanes, but most of us will not be able to afford to use either of them. Cars require a massive investment in an infrastructure (maintained roads and highways) that will become impossibly expensive to maintain when carbon fuels are even more scarce (read: expensive). I would love to see a headline about the restoration of rail as a product of market forces; rail is much more energy-efficient for moving many people than either the airplane or an armada of personal automobiles. There is no guarantee that a bunch of rail companies are going to spring up to take the place of the airlines and the highway-and-car combo, however. Long-distance overland travel may simply stop being an option for a lot of us. Places that aren't dense enough for walking and mass transit (everything built after WWII which is most of the stuff built in this country) will not be habitable unless the inhabitants grow their own food (note: we used to call such places "farms" before paving them over with cul-de-sacs).

A little further out in the future I expect to see this:

"Starvation Kills Hundreds of Thousands Each Year in Africa and Asia"

"Food Shortages in Major U.S. Cities; Rationing Imposed"

"Electricity Increasingly Unreliable in Large Cities"

The big cities will have their share of trouble, too, but come 2018 I'd still rather be in NYC than Luanda or Port-au-Prince. I can stand to lose the auto-suburbs, but I hate to think that I'd be bereft of heat, hot water, lights, subways, the internet and takeout here in my urban womb. The terror of losing these things prompted me to start this blog in the first place. In order to keep tens of millions of people living comfortably on top of each other will require an immense energy source, even if those people no longer each travel a hundred miles each day. With fossil fuels increasingly unavailable and prohibitively expensive, nuclear power will have to step in to keep us comfortable in the reduced physical radius of our lives. If you think that "green" sources like solar, wind and water can do it, then you really need to do more reading. Nuclear, solar, wind and water are all only really good for generating electricity anyway while the fabrication and maintenance of industrial infrastructure (including power generating devices of any sort) is only really possible long-term by the burning of fossil fuels. Try generating enough energy to build a solar panel from scratch with an existing solar panel and you'll see what I mean. If you plan to use some of the energy from that panel to do other things like heat your water and light your home, then you are in for a nasty surprise. (Solar Power Satellites may be feasible; do the research and decide for yourself.)

There are some other headlines that I wouldn't be surprised to see, but which I don't like to think about...

"Russia/China/U.S. Attacks Russia/China/U.S."

"Pandemic Reduces Populations in Three Largest U.S. Cities by a Total 40% in 3 Years"

The nations which can will probably attack each other in a scramble to secure the remaining supply of fossil fuels. I have no idea how bad this is going to get and I don't want to hazard a guess. I already visited the potential for pandemic in a previous entry. I've had to discuss famine because that particular wolf is at the doorstep right now, but I loathe thinking about pestilence and war. The thrust of this blog is the megalopolis in energy supply freefall. It's disturbing enough to think of the exurbs crumbling till just the overburdened city cores are left. Who wants to think about every third person dropping dead from disease or one of our major urban centers getting vaporized by a megaton present made in China?

Tuesday, April 22, 2008

Compelling Circumstances

I'm starting to hear more about ending sprawl, driving less, reducing air conditioner use, etc all in the service of reducing global warming. The progressive sort of people who say these things in the media act as if these things should be a matter of policy or personal choice. What they fail to understand is that global warming is a horse that's already left the barn and that circumstances will compel us to drive less, turn off the A/C and move within walking distance (or a short bus/train ride) to where we make our living and buy our stuff. People are already using less oil because the remaining supplies are dwindling while the amount of people using the stuff to drive and regulate the temperature of their dwellings (and to eat indirectly) is still rising at the same terrifying clip. The price is going up and at some point very soon we here in the U.S. will simply not be able to afford our current lifestyles. You no longer get to use up a bunch of energy in shuttling in your private conveyance 30 miles each way every day. You no longer get to run your air conditioner every moment between April and September. Likely you won't be getting to eat quite as much as you do now either nor live quite as long for that matter, but first say farewell to the hypermobility Consumerus Americanis takes for granted.

Sunday, April 13, 2008

We've Only Just Begun

Millions haven't starved to death yet, but they soon will. We Peaknicks have had the term "Malthusian" applied to us derisively, but I've always worn it proudly. Malthus was right about everything except the dates. He couldn't have anticipated how fossil fuels would have temporarily lifted the planet's carrying capacity. Tragically that lift just means that there will be that many more billions who will suffer when the crash comes. And that crash is indeed beginning right now. The poorer countries are going to depopulate due to hunger and internal strife, but these countries don't have the power to make life miserable for the richer countries. So they'll starve and riot and tear themselves apart within. Countries like the U.S., Russia and China on the other hand do have to power to go campaigning in other places to secure resources; they have to power to create external strife and they most certainly will. We in the so-called advanced nations will have plenty of opportunity to kill off our populations with (resource) wars. But don't worry; we'll have our share of death from internal strife, too! At some point a trip to the gas station or supermarket will mean risking life and limb.

To recap: famine will strike first and pluck the low-hanging fruit of the swollen populations in the world's poorest countries. I imagine that something like a few hundred million will perish there alone before things start getting interesting within the industrial nations. When shortages of food and fuel strike more noticeably here ($50 for a gallon of unleaded, the same for a gallon of milk perhaps), we'll probably be willing to throw a few million young lives at the Russians and the Chinese who will be willing to see that and raise. Pestilence tends to accompany starvation and war, but this time around we have the multiplier effect of climate change and a century of accelerated pathogen evolution as an unintended consequence of modern medicine. I imagine the the trinity of starvation, strife and disease will each take a number of lives in a macabre Fibonacci sequence: over half a billion lost to hunger, nearly half that again to war and half that once more to disease. To be honest I expect double the first number which would mean a final tally of nearly 5 billion. This puts the random person's chances of long-term survival at about 1 in 6. If you can avoid being an inhabitant of an overpopulated Third World country or being a soldier in the army of an overpopulated First Wold country, then you've already improved your odds.

Our metroplexes are bound to become dangerous places to live, especially in the unserviceable, car-dependent sprawl between the older core cities and towns. These car suburbs and exurbs are destined for abandonment, but there will be a few hardy souls who will try to make a go of it in the remains. They will be living in a lawless, raised ranch ghetto wilderness, however. Our civilization will likely collapse physically back into our core cities and as the hungry mouths of the Third World close forever in death we may actually find food prices stabilizing due to the demand destruction. This is only a stopgap, however, and it will be far from orderly. The economy will be in shambles, jobs will be scarce and money hard to come by. Electricity will probably be very expensive and the supply not always reliable; the same goes for food. Tens of millions of ex-suburbanites will be living on top of the millions already in the city. Disease flourishes where there is crowding and malnutrition. City services will no doubt be strained and supplies of clean water could be problematic for any number of reasons (failing infrastructure and rising sea levels are the two most obvious) and the resulting lack of sanitation will do a lot of the work in fostering depopulation through disease. Sanitation engineering has been more responsible than medicine for making modern city populations possible. Modern industrial living has convinced the average person that the built environment's foremost priority is the movement and storage of personal automobiles; Never forget, however, that among the first conditions for permanent settlement of any size is keeping the shit out of the drinking water.

Tuesday, April 8, 2008

No More Driving

I was listening to The Brian Lehrer Show on WNYC this morning and it reminded to me to do a screed on how clueless even the smartypants public radio set are about Peak and its ramifications. Brian couldn't believe when the New York Times guy he was interviewing explained that Archer Daniels Midland had sold the greenies a bill of goods with the idea that using corn for fuel was somehow "green." There is no net energy savings. That corn was grown using fertilizers and pesticides made from natural gas. Why bother making the corn in the first place? May as well use the natural gas to heat homes or power motors. Adding the step of making it food first is all smoke and mirrors to make people believe that driving could be "green." "I'm not burning nasty petrochemicals; I'm burning MAIZE!" ...which was grown using nasty petrochemicals. It actually costs quite a huge chunk of the energy originally available in the natural gas to convert it to food first, a net loss.

The result in the real world, by the way, is that human bellies are now competing with automobiles more directly. The stomach and the gas tank have been competing for as long as there has been oil-based industrial agribusiness. As long as humans have (temporarily) been increasing the food yield of the soil with natural gas-derived fertilizers and making that food energy more available to humans by use of natural gas-derived pesticides, refrigeration and long-distance overland transport, then our stomachs have competed with the engine and bidding up the price of the same stuff. On the ground now in this age of ever escalating fossil fuel scarcity, that translates into the poorer nations being outbid for food. Americans are still paying whatever it takes to keep the car-dependent postwar way of life going. Meanwhile a billion Chinese have traded their bicycles for BMWs and are eating more beef (which takes monstrously more fossil fuels for the same caloric food yield as non-meat foods, though admittedly it is sort of value-added since animal flesh is much more nutrient dense than everything except eggs). Oil = food and Oil = industrial way of life dependent on constant shuffling between zones of separate use. Oil is running out and the price is still being bid up by increasing populations and certain populations who are now just rapidly industrializing (read "driving, driving, driving").

The New York Times guy's proposed immediate solution was increased foreign aid to poor countries where the hungry are rioting. Whether our government prints more paper or uses the more obvious method of raising taxes to get dollars to send, the equation stays the same; Scarcity and demand push up prices. Scarcity and demand are both growing. The only "policy" that will help is one of mass willful powering down. If a few million of us in the industrialized nations would be less industrial, would give up our cars and start building walkable neighborhoods, then the price of oil and therefore food would stop climbing and maybe even reverse. Of course I laugh at this notion even as I type it . We're not going to change a damned thing about our lifestyles until we have no other option, until we're the nation with the poor, hungry rioters. I guarantee there will be any number of murders at gas stations across the country, particularly in those places where not having gas in the tank means not being able to get to work or to food. Of course, if things are that bad, there may not be very much work or food anyway. I expect sanity will prevail a bit longer in those places with transportation options, including walking a couple miles to work, and with some prospects of local agriculture and manufacturing. I wouldn't want to be in Greater Orlando or Atlanta in 2020.

A few days ago some truckers staged a protest to decry the high cost of diesel. How are Americans going to get their toilet paper, they wondered, if independent truckers can't afford the fuel to stay in business? How indeed. So being 1000 miles away from the source of one's food and one's basic conveniences doesn't seem like such a bright idea anymore, does it? In my neck o' the woods, the nearby farms were paved over for urban sprawl and then suburban cul-de-sacs while the factories that used to dot the neighborhoods have been replaced with big box retail or condominiums. Localism only goes so far, though. No matter how local the agriculture or production of goods, a place like New York, NY, is too big to succeed in the energy-scarce scenario that is developing. As I've said before 10,000,000 souls on 400 square land miles is only a possibility when fossil fuels make it possible to command resources in a thousand-mile radius. And of course New York is just the biggest node in a conurbation that runs from Maine to Washington, DC. This Northeast Corridor City may be better off than its more car-dependent counterparts in other regions, but ultimately it is just as doomed a megalopolis.

Saturday, April 5, 2008

Here Comes The Future

Peak gains traction and I'm as excited as I am scared. Though I'm in for as hard a time as everyone else I can't help but feel immense satisfaction at seeing these Peak Oil predictions come to pass. The news is filled with stories of people giving up driving and using the bus, a true sign of desperation for car-loving Americans. With the exception of Manhattan (and I suppose downtown Portland, OR) taking the bus in this country is an admission of economic hardship and normally relegated to penurious widows, unemployable ex-convicts and young residents of government housing projects. The airlines, ever the canary in the Peak mines, are coming undone fast. Air travel was expected to be the first thing to disappear from the lives of the non-billionaires among us. Car use is following right behind. Motorized transport of any sort will likely become rare and expensive. I'm holding out hope for rail making a comeback, but I suspect long-distance travel may again become the sole province of large wooden sailing ships.

A super-commuter I know who drives across three states to get to work has actually started calling for the sort of high-speed rail they have in Europe. He drives from Pennsylvania through New Jersey, across Manhattan and into Queens. He has also spent lots of time in Europe and wonders why Europe is criss-crossed with rail that condenses 10-hour car trip into 4-hour affairs while America relies mostly on airplanes for long-distance travel. A few years ago there was a poster ad from some airline that read "Planes are faster than trains." Of course in Europe quite a few trains are plenty fast if not quite as fast as planes. They also run on nuclear-generated electricity instead of fossil fuels (France gets 90% of its electricity from nuclear). I wonder if the airline that ran that ad is still in business. Even if it is, it probably won't be by the middle of the next decade. Mass consumer air travel is a luxury of the era of abundant hydrocarbons and it simply won't survive in the new energy scarce world. Funny that that used to a be a prediction and now it's current events.

The American Dream has generally meant having a detached house as far away from sources of food and income as possible. Many of my loved ones live this way and now are finding that they almost can't afford to get to work or to the grocery store. People in this situation clamor for lower fuel prices (not going to happen ever) or alternatives like functional solar (and blaming the big oil companies for keeping solar from them). No one ever thinks about moving closer to work or living in a place where most things can be gotten to by walking. Others have chronicled the development of the car-reliant postwar landscape and I won't repeat it here. What amazes is that the average person clings to this toxic lifestyle and will do anything to preserve it. I point out to everyone who will listen that human beings lived without cars for 99% of recorded history; we've had cities for around 10,000 years and cars and their cities for 100. The dimensions of the traditional village and town that worked just fine for 9,900 years (give or take) are defined by walking distances. Working versions still exist all over the world and they are often beautiful and pleasant places. It's funny how the retronym phrase "walkable city" had to be coined at all to describe places that never got the automobile overlay. The best material on this has to be by Leon Krier and everyone reading this should purchase and read his books right now.

So air travel is going bye-bye and automobile commuting is right behind. Next in the string of failures will be the automobile cities. I'm thinking sheer abandonment. The over-leveraged home-"owners" are walking away from their upside down mortgages in the latest and outermost ring of developments. I'm sure the rising costs of driving to and from these middle-of-nowhere places helped pushed the residents into bankruptcy a little faster. It just got too expensive to keep paying the bank on top of feeding the car. At some point one just has to see the physical location of the house as a millstone about one's financial neck. Easier to walk away from the cheaply made, cartoonish thing and relocate to within a much saner distance of food and employment. Eventually "saner" will mean "walkable."

The deracinated masses will be seeking refuge in the core industrial cities and towns after they decamp from the low density sprawl, but I'm not too optimistic about the future of these cores either. I used to be when I thought Peak only meant the End of Suburbia. Peak, however, means an End to the Industrial Saga and that means the industrial mega-city. That means Paris (as pretty as it is) as well as New York. The core cities are composed of highly walkable precincts connected by rail, however, and most if not all of them are situated on major waterways and excellent natural harbors (which is why they became such dense population and economic centers in the first place). Sadly without oil it will be impossible to maintain several million human lives on a few hundred square miles of concrete. There have been mega-cities before and they always prove to be relatively temporary things that rely on the brutal command of resources and lives from hundreds of miles in each direction: water, grain, raw materials, soldiers, slaves and specialists. The largest sustainable city is maybe what we would now consider a medium-sized town of about 30,000 people. That's about as many lives as can be sustained in the center of an arable ring without having to go afield and take from the neighbors. A city by definition cannot sustain itself with the resources in its immediate vicinity. Keep this in mind as you consider which places have a long-term shot at survival with minimal chaos.

Friday, March 14, 2008

The Long Absence and Dying in Place

It's been well over a year since I checked in here and posted. The purpose of this blog was to help me come to terms with the ramifications of Peak Energy. It worked. I was able to shape a coherent statement over the course of what turned into a handful of articles. My only sibling called soon afterward to announce that she was going to have a baby. The birth of a near-descendant (a tangential descendant if you will) upset the equilibrium I had achieved. My nearest relations plus one unbearably cute new addition are now all hurtling to their doom in an area of the country that will be one of the hardest hit by Peak.

My familiarity with what's coming doesn't mean I can do much to prepare for it or to ease my discomfort or avoid what will likely be a much earlier death than I might have expected for myself just a few years ago. We're looking at a die back to less than half a billion humans (a mark we'll likely overshoot). 90% rapid depopulation. War, starvation and disease of biblical proportion. These are truly the End Times minus the triumphant returning Jesus. No one should think that he or she is smart enough or prepared enough for any of this. Most of you reading this will either a) die by violent means in a fight over oil, water or food, b) die because you don't have anything left to eat (though you'll probably resort to violence before starvation and end up at (a)), or c) die from one of the monstrous plagues that are currently building up strength and just itching to sweep across entire land masses. Survival for all of us will come down to a matter of luck, being in the right place really.

Before all of this, however, comes a crippling economic Depression that will be a worthy harbinger of the end of the Industrial Saga. The last depression was only economic, i.e. an inability to organize the exchange of goods which were in abundance. This was due to a loss of faith in a debased currency brought on by credit expansion, rampant speculation and inevitable collapse. There was plenty of "stuff" but no means of organizing trade of the stuff. This time there'll be plenty economic woe to go around, but it will be in the midst of actual resource depletion as well. We destroyed our currency this time by expanding credit to keep paying for an infrastructure and a way of life without a future. We borrowed more and more and used all the energy that came our way to build more highways, more suburbia, more parking lots, more imported crapola to fill our ARM-financed box in the latest ring of development 60 miles from work. We didn't reorganize food production to be closer to where we lived, nor our living arrangement to something less reliant on getting around in vehicles.

Now the first signs of the Great Reversal are starting to appear. The jobs are disappearing, the homes in the middle of nowhere are being abandoned. Entire subdivisions have become virtual ghost towns. Middle-aged people are moving back in with elderly parents. We're looking for ways to avoid using gas at all because we can't afford to replace it once it's gone. This is only a start. The multi-generational home will become the norm again. The outskirts of the megalopolitan monster will depopulate and the city centers and main streets will experience a vibrancy unseen since before the First World War. This is just a stopgap on the way down to dissolution, however. Megalopolis will spontaneously reorganize itself as its existence becomes untenable, but it cannot revert to small cities, hamlets and farms. And it won't. As Matt Savinar has so succinctly put it, we won't go gently back to 1775. Rather we will painfully downscale our collective way of life, then it will all chaotically fracture into something unrecognizable and bleak.

What to do in the meantime? Nothing much. I honestly don't believe any place will be better off than another for long. There are maybe a few dozen traditional towns left in this country with arable hinterlands that could make it in a post-industrial world... and they may have had a chance, too, if it weren't for the 250 million industrial zombies that will be decamping from the cities and their suburbs. Survival will mean being lucky enough to use sustainable places after your friends and neighbors have died. There will be no meaningful retrofitting of our unsustainable cities and suburbs, yet I don't advocate preemptive moves to more sustainable places because these are just as likely to be overrun. Maybe the best one can do is understand what's in store and make arrangements to die in place. We should think of ourselves as being hopelessly outnumbered by the enemy and just about to be overrun, captured, tortured and put to death. Come to terms with it, make peace with your deity and be prepared for the unpleasantness that will end in an early death.