Letter Re: The Reactive Culture, or 20 Years of Greater Depression

Dear Jim,
America, and modern industrial democracy, is a reactive culture. We wait for disaster to strike, then we talk about it, vote, and throw money at it until it goes away. That’s what we’ve been doing since the deficit spending initiated by FDR, socialist that he was. Now we’ve reached the end of deficit spending, having exported our jobs, currency, and control of our economy overseas and become a great big lazy balloon floating over the glass recycling bin at the local dump. Gasoline, food, and other essentials are in a tight 18% inflationary spiral and the public is only just now starting to complain, to shift their behaviors. Carpooling is becoming more common and accepted. Smaller cars are replacing SUVs and large pickups for solo commuting needs.

The trouble is, this is too little, too late. The disaster is already upon us. Oil prices are $140/bbl. Financial opportunists claim “oil price correction next week” then exploit the delusional optimism for profit. Gasoline is $4.50/gal, diesel $5.30/gal. Thieves (most of them methamphetamine junkies) are stealing the copper wiring running irrigation pumps, gutting houses abandoned by foreclosure (an irony if ever there was one), taking the farm diesel from unguarded tanks and equipment. Farmers are angry, but basically helpless to stop this. The Chinese pay top dollar for “salvage copper” and ship it back to mainland China to grow their own economy, meanwhile gutting US infrastructure. And its probably even worse in the Third World. Then again, lose enough infrastructure and the USA will be the Third World (again).

As a Republic, we are ill-positioned to deal with proactive efforts. There’s no percentage in the risk associated with planning out a solution you may not be in office to reap the political capital for. Instead, our representatives vote for pork that benefits their constituents and wins votes now or in the next few months. Stuff that people remember at the polling station.

Trouble is, Peak Oil isn’t going away. It’s getting worse. And solutions need to be developed 5 years ago to have any value today, to help with this situation. What can be done today is grassroots carpooling, use of mass transit (often slow, smelly, and expensive, as well as impractical), and eventually the highly unpopular but inevitable: fuel rationing. I know that’s terrible, but that’s inevitable too. If you don’t ration, you get hoarding and the US economy collapses faster. What’s worse, it’s terribly unpopular politically and no Rep who wants re-election will vote for a national fuel rationing plan. We, as citizens, are going to have to beg for fuel rationing just to make sure we get some fuel as things get more dire. Even with that, America only produces 7 million barrels per day of oil, and our demand is 21 million barrels. Libya and much of OPEC is responding to the threat to seize assets of terrorist sponsoring nations by cutting production to the world, which then pressures the world to squeeze the USA to back off. So expect trade tariffs, first as warnings, then as punitive measures. That means our inflation rate will worsen.

We’ve seen protests and riots over fuel prices in Portugal, France, Italy, Spain, Belgium, and the UK over the last few weeks. This is only the beginning of troubles. As the prices rise thanks to production falling, the blame game will continue, and further irrational public behavior will worsen. The public have resolutely refused to grasp that oil is ancient energy and it will run out. Right now, our leaders here in the USA point fingers to delay tactics, like offshore drilling, domestic discoveries (which would have already been exploited if they were remotely as big or easy as these non-geologists like to claim). The oil under the ANWR? That’s 45 days of [global] oil supply. That’s it. If you saved it for US-only consumption, you can stretch it to around 6 months of oil supply. Better than nothing–only it takes five years to reach the marketplace. All those pipelines and wells and sideways drilling takes time, and by five years from now, the price of oil will be around $500/bbl. and gasoline something like $20/gal, well beyond the means of humble lower and middle class users to buy. Only the rich will be burning $500 per barrel oil.

And at some point, your fuel ration and carpool won’t get you to work, or it won’t get most of your co-workers to work so your operation/job ends. It doesn’t have to be your fault, it just happens. Some few businesses will relocate, but they may leave your area and offer you a job if you follow–if you can sell your house and convince your family to join a company town somewhere in the Midwest (assuming that’s where they go, not overseas). Rinse and repeat and the conservative estimate for job loss due to Peak Oil is around 20%. Public works programs, hiring the unemployed on contract for physical labor is very likely, a return of the WPA. Roads must be maintained. Railroads need to be rebuilt, with spurs reaching every town in the USA (and other nations would be wise to do this too). That’s a high demand for steel, so all those useless SUVs can be turned into 3 feet of heavy rail apiece. Rail is cheap transportation, very cheap with energy. Frugal. We like that.

Smarter and wealthier towns will also install streetcar railing and overhead wiring for electric operation. And then police that wiring for thieves looking to steal it or the power generated. That returns mobility to the local population so they can get to school, get to work, get from their neighborhood to the job on the other side of town instead of bicycling. But it may take 5 or 10 years before the economy can support that. It’s cheap to do it now, but nobody cares enough to make it happen while they can still afford it on Chinese-supported bonds. And that’s the real tragedy of Democracy.

None of this happens until after the disaster, after people can’t buy gasoline, after they’ve lost their jobs and the unemployment rate jumps 20% in a week. Only after disaster will things change. And when you proactively Hurry Up And Wait and Just In Time, you get slow improvements, shortages of critical infrastructure supplies so you can’t rebuild fast enough to save all those businesses. Unlike the Great Depression, your gasoline, the fuel that runs the recovery, isn’t going to cost four cents a gallon. Its going to be “out of reach”, “can’t buy it here”, and “sorry Mister, we’re out.” With no interim solution, those jobs are going away for good. And the general public is going to shift from Middle Class to Poverty with no way around it.

Both candidates for US President are funding a contest to invent a new car battery for all electric cars. Good move. Doubt we’ll see it anytime soon, as the laws of physics and chemistry are laws for a reason, but maybe we’ll get lucky. It would be nice. Even with a crash program like the Manhattan Project, you’re still looking at years before a product hits the shelf, years with a collapsed economy is decades of Greater Depression and generations of mistrust and sore memories of our suffering. You don’t recover from that easily or quickly. Children today are going to have to grow up in a time that’s worse than the Great Depression was, and it will last longer, too.

We still need to face facts that the Saudis have promised us $200 oil this year, and that’s $6.30/gal. gasoline. Think about how you’re going to operate your life on $6 gasoline. My commute is now two miles. I could walk if I had to. How many people can do this? Not many. If you own a house, or are leasing one from a bank, you probably don’t have the option to just move closer to work. If you take a job you hate or aren’t suited for to have a commute, your pay will decline and your job security too. Not a good move for most people. And businesses won’t move to keep their employees until after they stop showing up for work and they realize they have to close their doors. It only pays to be Proactive if you’re smart enough to look ahead. The fact that you’re here reading this means you’re smart enough. But are your neighbors? Your coworkers? Your boss? Your congressional representative? Probably not. And we get to live with their mistakes and ignorance as a consequence. Best, – InyoKern