Peak Oil: High Tide for an Oil Addicted World/Consequences

Can we see what is going to happen by what has gone before?

There are some recent historical precedence that can be used to gain some idea what might happen. The situation in Cuba is probably the most important. When the former Soviet Union collapsed Cuba found itself with out a regular supply of oil. They were dependent on oil from the Soviet Union for things such as electric power production and food. The situation there deteriorated and they found themselves with regular power cuts and food shortages. The energy intake from food for the average Cuban was reported to have declined by about a third when compared to before the collapse of the Soviet Union.

To get through the crises Cuba turned to the community solution of cooperation coupled with organic growing techniques. They introduced organic hydroponics called organoponics, which uses only organic fertilisers fermented from urine and worm farms. They also introduced other methods such as permaculture to produce food. They developed bio-pesticides and grew food wherever they could, even converting old car parks into growing areas in the towns. For transportation they reverted to cycling and walking as well as aiming for more energy efficient public transport system. A new revelation swept through Cuba and it worked. Cuba successfully survived the transition and has become a model of what can be achieved by working together and Cuba can be seen as an example of a post carbon state.

Have we ever experienced anything like this before?

No. We have never in human history had a civilisation that ran on oil. We have never been so dependent on such a single source of energy and we have never had such an abundance of cheap energy before. This civilisation in its current form has been built on a mineral slime like no other civilisation before it. Civilisations have come and gone before and we have had dependencies on various types of minerals and land usage before but not on oil. We have never faced a situation where we have put all our eggs into one basket and than faced a situation where it started to run out!

However, there are some historical precedence that, although they are not the same situation, do have aspects that can give us an indication of what might lie ahead. On of which is what happen in Cuba after they lost their oil supply due to the collapse of the Soviet Union. The collapse of the Soviet Union, itself, is another situation that we can draw lessons from. So is the population collapse on Easter Island. We could also draw some ideas what we might be in store form the oil shock of the early 1970s and maybe even from the famines in eastern Europe during the 1930s as well as the depression before the Second World War.

So, although this situation is unique in human history there are past events that we can look at. They may not be exactly what we are up against now but they do have element that maybe found in our current and future situation.

Will it be anything like the fuel protests of 2000?

Maybe. As the price of oil increases we could expect to see some sort of fuel protests. However, even though the bulk of the fuel price at the pumps is tax the underlining reasons for a price rise due to peak oil is physical not political. As such there is only so far that any government can go to alleviate any rise in prices. Those countries with a high rate of tax have the ability to soften the rising cost for a limited time and those countries with low tax will notice the rise in price first. So, in the end, no matter how much fuel protests there are the price of oil will most likely rise in the long term and the fuel protests of 2000 may well end up looking like minor irritation but nothing significant in comparison!

Will oil and other energy prices just keep on going up?

With demand increasing but supply decreasing, what we will see is oil and other energy prices rising and rising until an economic recession is induced, creating ‘demand destruction’ through the closure of businesses and increasing unemployment. This downward spiral of decreasing economic activity will lower prices because usage will be lowered. However, at a certain point there will be a recovery with the whole process being repeated. Even in the absence of recovery as the decreasing supply crosses the depressed demand line, price will rise, creating deeper depression. It will be an ongoing process of prices going up and down, but when they go down it is not because of increased supply but because the economy is in decline. It is maybe for this reason that it is wise to invest early in having microgeneration installed for your property.

Does peak oil increase the potential for conflict?

With the arrival of the peak of oil and gas production, we can expect to see a series of deepening global recessions, culminating in depression due to our dependence on fossil fuels. Throughout this time there will be large pressures placed on our current ways of life, pressures that will either dictate a voluntary change in the way our society works, or, should we chose to reject that course, a series of conflicts and wars over the lessening scraps around the world. This later route, at its best, will be a more painful means of reaching the same low energy society, at worst...depends how far things escalate, but we may not get there at all.

From time immemorial wars have been fought over resources. Actually, virtually all of them: from the expansion of the Roman Empire, to French, Spanish, Portuguese and British Imperialism, to the Japanese conquest of Manchuria, to Soviet expansionism, to the Iraq invasion of Kuwait, and the British and US invasion of Iraq.

With virtually every aspect of the world's people and lives reliant on oil and gas, the stakes are raised. The arguments will be more subtle ("Our way of life is not negotiable"), the bogey men more terrifying ("The Hitler of our time"), the consequences of military inaction more disastrous ("40 minutes").

The last great depressions in the 1920s and 1930s were firmly felt in Germany and the United States. The Nazis played the scapegoat card to support their expansionist policies. The resultant war dragged the United States out of its depression. Everyone would have preferred a different way out to the estimated 55 000 000 deaths.

Is peak oil related to the ‘War on Terror’?

Lets look at the facts. Fact one, world oil production will peak, for definite in the next 30 years, and very likely much sooner. Fact two, the US depends on control of the world’s energy supplies to ensure economic growth and consolidate its position as the only superpower. Fact three, Europe and the US have been meddling in Middle Eastern politics since days of empire. Fact four, the US’s government is controlled by people who have a lot to gain by increased military spending.

There can be very little doubt that peak oil and the War on Terror are related, just how related is open for debate. There are two levels of theory about the relationship between the War on Terror and peak oil. The first is that Al-Queada’s attacks are a useful and co- incidental part of a plan to gain more control over the world’s energy resources, the second is that Al-Quaeda’s actions were known about and possibly encouraged in the run up to 9/11 by elements of the Bush administration in order to bring about conditions for the use of force. There are many unanswered questions about what happened on 9/11, such as the destruction of building number 7 at the World Trade Center and the failure to scramble intercept aircraft, amongst others. To do this subject justice would require another book, so I won’t write anymore.

What effect will this have on the economy?

That can be difficult to say but there are various scenarios that are possible. Peak oil could actually be a good thing in the short term. As oil prices rise it may well become cheaper to produce goods locally which could be a boost to local economies, as more jobs become available. Governments could also invest in new ways of doing things and implement effective. Individuals and private groups could form an important part of new initiatives. Society could move over easily to a more sustainable way of living and we may hardly notice a difference. Other scenarios could be a recession or a depression, which may result from a slow response by governments and other agencies. However, even after a slow start our economies could be transformed into a more sustainable economic system. Another scenario is an economic collapse and civil unrest.

Whatever happens, it is unlikely that our current economic system will survive as it is. Oil is so fundamental to our economy, and we have no simple solution, that it is hard to imagine that our current system will continue as it is, as the oil prices rise. Even without peak oil it is unsustainable and will need to radically alter the way we do things.

Why haven't the recent dramatic increases in oil price had an effect on the economy like the 70's oil shocks?

There has long been a strange assumption (or so it seems to me and my recent interest in economics) that the world is governed by rules of economy. Economists seem to forget that their 'rules' are simply observiations of what has happened over a prolonged period of growth, therefore they ignore limits to growth, and tend to underplay the importance of the 'inputs' to our economy, such as fossil fuels etc.

There is an interesting section of Strahan's Last Oil Shock that explains that up until the mid 1950's most economists thought that growth of the economy was caused by increases in either labour or capital. This causal link was formulated into the Cobb Douglas function. In the mid fifties Solow applied this function to the US economy as a whole and showed that growth could NOT be attributed to just labour or capital. The economy had grown more than either of those two alone could have achieved. There must be something else at work.

It would seem that at this point, rather than wondering why there was such a huge miss-match in the figures the difference became known as the 'Solow residual' and was assumed that the gap represented 'technical advance'. They left it at that.

Check out this definition of the Solow residual (from the London School of Economics); http://lse.co.uk/FinanceGlossary.asp?searchTerm=&iArticleID=2308&definition=solow_residual

Imagine that!!! They are quite happy to have a huge amount of the economy unexplained! To me as a scientist that is just bloody weird.

Anyway finally some scientists got involved after the 70's oil shocks and showed that oil was far more important to the growth of the economy. Solow's model represented energy only in terms of the money spent on it. The Solow model predicted that if energy inputs increased by 1% the economy would grow by only 0.05%!!!!! The oil shocks of the 70's proved that was ridiculous.

The team of scientists used the old inputs (capital and labour) but also included a physical measure of the energy put into the system (oil, gas etc measured in Joules). This model they resulted in is called the Linex function. It is a fairly sophisticated function, but models the US economy really well. No more 'Solow Residual'. Kummel's Linex function showed that for 1% increase in energy the economy would grow by roughtly 0.5%. i.e. Kummel's model showed that oil was 10x more important to the economy that Solow predicted.

The interesting thing is this. That the Solow model shows that if oil costs go up by 1% then the effect on the economy is a shrinking of 0.05%, whereas the Kummel model shows that if the amount of energy used by the economy drops by 1% then the economy shrinks by 0.5%. 10x more effect.

Ayers took the work further and suggested that what is important to the economy is not the energy contained in the sources of energy to the economy, but the amount of energy from those sources that is turned into useful energy. i.e. thermodynamic efficiency gains can cause increases in the economy, which can result in more money being invested in R+D which can in turn increase efficiency.

Ayers researched efficiency gains through the last century, and came up with figures for the amount of energy usefully converted to work by the economy. He fed these figures into the Kummel function and his resultant figures fit the US and Japanese curves almost identically. Amazing! So we end up with an indication that the AMOUNT of energy used by the system is far more important to the economy than the cost of the energy in the system.

As we are aware the cost of oil has gone up some 200% since 2001, which will affect the economy, but it will be nothing like the effects of removing oil from the system. That has over 10x more influence on the economy than the price!

A good examination of the Linex function and some clever modeling should show how much a rise in the price of oil will affect the economy. Remembering that oil is only a proportion of the energy we use, then maybe overall energy costs have gone up by 100% since 2001, and look at the advances in fuel efficiency of cars etc over that time. Maybe the effect on the economy would be a small shrinkage. However the models clearly show that actual energy received from fossil fuels is far more important than cost.

What else is interesting is that as oil prices have been rising strongly since 2001, and the economy has been growing then something must have been contributing to the economy. I would speculate that two things have contributed to the growth of the economy in the face of rising oil prices. Increases in capital (money supply) caused by ever more irresponsible lending, and secondly increases in efficiency. If we all drove more economic cars and changed our lightbulbs we could probably even coax another couple of years of growth from the system.

Where will conflict be for oil in the future?

To look at where oil conflict will be in the future you need to look at where the oil will be in the future. Michael T Klare’s book ‘Resource Wars’ identifies these points of tension. The Persian Gulf, The Caspian Sea Basin and The South China seas are the main ones. However, there is also the possibility for conflict in places such as Venezuela and Mexico. Of the Persian Gulf, Klare writes “Of all the world’s oil producing areas, the Persian Gulf region is the one most likely to experience conflict…possessing nearly two-thirds of global petroleum supplies, the Gulf is certain to remain the focus of intense worldwide competition. In addition, the region is riven by a multitude of power rivalries, religious schisms and territorial disputes.”

The Caspian Basin is believed to have the second or third largest reserves of petroleum along with a vast supply of natural gas. “Caspian sea energy is clouded by ethnic and political turmoil and the emergence of a new power struggle between the United States and Russia.”

The conflict in the South China Seas could emerge from the competition for the Spratly Archipelago that stretches for hundreds of miles. Possession of these islands would enable claims to ownership of the surrounding waters and sub-sea resources where large quantities of oil and gas are expected to be. China, Malaysia, Philippines, Taiwan and Vietnam have all established military bases while Japan is also exploring the area for energy resources.

Any conflicts in these regions will impair the supply of oil, causing price spikes and actual physical shortages.

What is fractional reserve banking?

This is the method that most, if not all, banks work today. Someone deposits a certain amount in the bank and then the bank loans out, usually nine times that amount, keeping the original deposit, the'fraction', in the bank is keep to pay any withdrawals that might occur. The money that is loaned out is generated, as if by magic, out of thin air and doesn’t, as such, “really exist". Almost all the money loaned out (nine times the original deposit) very quickly ends up in the banking system as another deposit - and the trick is repeated: the banks loan out another nine times more than the deposits, which themselves were created by the fractional banking system. The whole process is repeated many times and in the end the amount 'created' by the banks ends up being close to ninety times the original deposit. The new money that was made up by the bank increases the amount of money in the system and is the primary cause of inflation. The system works so long as people believe that their deposits will be paid back when needed, which is normally the case. However, the system can fail if there is a run on the bank and more people wish to withdraw their deposits than the bank has reserves. All the money, the original deposit and the up-to ninety times more of money created by the banks, attracts interest. Since there is no other source of new money, the interest can only be financed by yet more money created by the fractional banking system. The whole lot functions as long as economic growth generates new deposits leading to new money created by the fractional banking system at a rate sufficient to pay the interest on the money created so far. However, when growth stops or even reverses for anything but a short period of time, large scale defaults result, leading to failing banks, bankrupt businesses, loss of employment, foreclosures on real estate, all driving a visious downward spiral.

Will I lose my job?

Probably not immediately. However, there are some jobs in the long-term that maybe unsecured as a result of peak oil. One could imagine, for example, jobs like airline pilot or petrol station attendant being threatened by peak oil but other jobs may also be threatened. It is possible that the world economy could go into a down turn. We could see a recession or even a depression as bad as the one in the 1930. In which case it is quite possible that most people may see their jobs under threat as we go down the down slope.

On the other hand we may also see new jobs being created. There could be, for example, more employment in local food production or indeed, any local industry as the increase in the price of oil makes it more economical to produce goods more locally. There may even be new industries of occupations formed as a result of peak oil depending on what new technologies may come about in response to a new need that is generated or how creative people are at finding solutions to problems that arise post peak.

Will I lose my house?

Possibly, if you have a mortgage. If peak oil was to cause a recession or even a depression, anyone in debt, not just house owners with a mortgage, could be hit, and may well feel the effects of any future rise in oil prices the hardest. This is because any rise in oil will have knock on effects such as a rise in food costs, heating and electricity costs. This would mean less money for paying back the mortgage and, therefore, threatens people homes. Coupled with a possible rise in unemployment there is a real possibility that on the down slope you may see more people having their homes reposed due to failure to pay back the mortgage.

What will happen to my investments?

We could see major economic problems ahead and if things go really, badly we could even see an economic collapse. In such a scenario any long term financial investments could seriously be threatened. Even if things go well and we move over to a sustainable society, long-term financial investments may not be safe. If we were to head towards a society that is more sustainable it is arguable whether or not such a socio-economic system would have the ability to grow financially. There may not be any profit for industry nor interest for bank loans so future financial investments may just remain static. It can be hard to say.

FTSE 100 stocks had an average p/e ratio of around 13, whereas FTSE 250 stocks are on 19 at their peak(1). In a non-growth scenario, which many think is the most likely, such valuations make little sense. It is more likely that valuations would fall back to perhaps p/e ratios of 2-4, and therefore investment values reducing to between 25% and 10% of peak levels (that is equivalent to FTSE100 falling to somewhere between 1800 and 750 points - a disaster for most investors and pension funds.

There are, however, other investments that might be of more value. Investments in education, learning things that might be of use in a post peak world. Investments in activities, joining with other to start preparing for a post peak world. A world without oil is not all gloom and doom but to make it so could well depend on what we do today and what investments we make for the future.

Ref 1. http://www.moneyweek.com/investment-advice/how-to-invest/what-you-need-to-know-about-the-pe-ratio.aspx

Hold on…pensions are investments. Are you saying I’m going to lose my pension?

That is a very real possibility. There are many, probably some even within the pension industry, that think pensions are not as safe as they are presented. As they say in the investment industry, “past performance is no indicator of future performance”, yet on the basis of the past we predict the future. The situation with peak oil is something different to past situation so we really don’t know what will happen, but facing a recession or depression is a real possibility. If we were to have severe economic troubles one could imagine that pensions will be among the first casualties. If the economy was to collapse then pensions would have to stop or be severely limited.

(NB: maybe something about Russia in here too?)

What will happen to my debts?

Debts are like loyal friends they will stick with you through thick and thin! It could be argued that those who are owed money will do their best to ensure that it is paid back. Thus, your debts will most likely remain. They may even become more difficult to pay back. In the great depression of the 1930s people who owed money suffered more than those without debts did. A wise course of action, therefore, could be to minimise or remove debts as much as possible and avoid getting into new debt. However, on the other hand, we could see more and more debts being cleared by people becoming bankrupt but then would that really be a better situation to be in?

What will happen to transport?

Post peak with a probable higher cost for oil the price of petrol at the pumps would no doubt increase. We could see the era of private, personal transport coming to an end, or at least becoming the domain of the rich. It is unlikely that bio-fuels will ever replace the level of oil we currently use. Major consumers of oil such as the airline industry could even cease to exist. Personal transport of the future may be horses and bikes! Perhaps electric cars, if the infrastructure and batteries problems can be resolved. Large scale public transport such as buses, trains and ships may take over from private cars, however travel in general is likely to be much more restricted than now. For example, the idea of commuting large distances daily to work will become impractical and unaffordable for most people.

What will happen to agriculture?

As we go post peak it is most likely that we will be able to use less oil based fertilisers and pesticides but that will bring in two foreseeable problems. Firstly, the cost of production might increase and food will become more and more expensive. This could be good for farmers as it might turn the industry into a profit making business again. However, the second problem is we may not be able to produce the food we need without oil based fertilisers and pesticides which has the potential to lead to starvation and famine in Europe.

To minimise the possibilities of food supply problems it maybe that we change our agricultural methods to more organic methods and we may see the introduction of systems such as permaculture. Work in this area has so far shown that there is more opportunity for work if such practices were used, and we could possibly maintain food production at adequate levels. Therefore, we could see a movement of people to the countryside. We could also see more “inner city farms” where people in the towns start producing their own food more locally. Either in their own gardens or as community projects.

What will happen to agriculture & food distribution?

This will depend on the speed of the transition but the first thing that consumers will notice is that they are spending an increasing amount on food as a percentage of income. This is likely to have a knock on effect into other areas of expenditure reducing discretionary spending on luxuries.

We will see reduced imports in particular things mange tout from Thailand and green beans from Kenya or other such products which are air freighted into the country and have a relatively short life after harvest. There are also implications for the availability as other countries start to struggle to reach their own food requirements they will be more likely to try and grow more of what their own people can eat rather than crops that can be traded for money with which they buy food from other countries. Food security will become an issue again for all nations and they will seek to de-globalise to achieve this.

Supermarkets will increasingly losing their competitive advantages such as breadth of range and the efficiencies of centralised distribution. Chilled and frozen foods will gradually become more expensive as people will consume less luxury foods and more necessities. Diets will change as meat becomes less affordable, we will be eating more whole cereals, root vegetables and beans, less fats and sugars and significantly less processed food. Overall the diet is likely to be healthier, though much less exciting.

Customers' habits & lifestyles will change as we have to start using more public transport again, the size of the shopping basket will decrease, but the frequency with which we shop will increase. We will be spending less time travelling to work as we will have to live nearer to our place of work. Consequently we will probably have more time in which to cook proper food at home, providing we don’t have to work longer hours just to keep bread on the table.

The supermarkets will fight these new trends with all their might as they have a lot invested in the continuation of business as usual but they are unlikely to be able to maintain the massive facilities they currently have for a much reduced product base and as local food produced on local farms and sold in local shops becomes very competitive once again.

We will be more interested in keeping warm & keeping fed than we will anything else we will be seeking necessities over luxuries. Human expectations will be somewhat lower in terms of material wealth. Agriculture can be a source of food and of fuel for keeping warm and a new balance will have to be found between these priorities.

Crop production

The use of fertiliser is going to get very expensive because of the cost of the energy involved in producing and distributing it. Nitrogen fertiliser in particular is produced using natural gas and is already hitting record prices due to the increase in gas prices. If farmers stop using or reduce the amount of fertiliser that they use, crops will not yield as they do at the moment, this in itself has the potential to increase food prices due to the supply and demand effects driving food prices up.

Crop protection products

Pesticides are used to control weeds, pests & diseases, all of which can reduce crop yields. Again the price for these products is linked to the price of oil, both as energy for manufacture and distribution but also as a feedstock in the manufacturing process.

Many people who study peak oil claim that after the peak in oil production, organic farming using no pesticides and no chemical fertilisers farming will become more normal, but early on the oil production down slope, there may be an increase in chemical and fertiliser use as prices of food go up therefore stimulating production and also as governments realise the potential impact of the food security threat, there is a possibility that they may subsidise pesticides and fertilisers to encourage them to be used, thereby keeping yields up and stopping the market from finding a natural balance.

Mechanisation

Fossil fuel is used extensively across the world for cultivation, crop protection, fertilising and harvesting using a combination of various diesel powered machines such as Tractors and Combine Harvesters. Although electrically powered agriculture machinery may be technical possible, renewable energy simply cannot replace the power of a diesel engine with existing technology. So farmers will have to decide between doing it the old way with horses or trying to maintain the status quo with tractors using bio-fuels such as oilseed rape oil produced on the farm where they are used or nearby. There are advantages to both ways, but it will depend on how much industrial infrastructure can be maintained, for example tractors go wrong and need spare parts, whereas horses are able to replicate themselves. Both routes are likely to see 20 to 50% of the land being used for energy production for the purposes of farming to produce food (crops for horse fodder on one hand and bio-diesel on the other).

We are likely to see a return to more mixed farms as crops and livestock work very well together. We will need to see the materials loop closed with all bio-degradable waste being kept in the nutrient cycle either in people own gardens or on the farms. The days of sewage going out to sea or vegetable peelings going to land fill will be gone.

If there is a return to using horses for draught work then there will be a need for significantly more people working in agriculture. Even if the bio fuels route is taken this is still likely to be the case as crops which are more labour intensive make a return to the U.K.

Livestock products

The livestock industry will also change as a lot of energy goes into all livestock products although most of it is indirectly. Dairy farming will alter because much of the increase in yield from a cow has been due to concentrate feedstuffs largely based on crops grown with fossil fuels. Cows can of course manage on diet consisting mainly of grass or stored grass in the form of hay and silage; however their milk yield is likely to be much lower. The productivity of the grassland that feeds them is also likely to drop if fertiliser input is reduced, at least in the sort term. The same applies to beef and sheep farming, all ruminants are likely to be farmed much more organically leading to lower yields, higher prices to the consumer, and potential food shortages, in milk and meat.

Poultry & pig farming for eggs and meat will suffer higher input prices due to increased prices for grain. It is possible for pigs and poultry to live on scraps of waste from the house and forage around the farmyard, but they would not grow very well and it would not work commercially. Overall it may come down to can we afford meat today or will our protein have to come from beans and nuts.

What will happen to food distribution?

It is quite conceivable that food distribution is likely to go back to the way it was done before oil really started to drive the economy. That is local production for local consumption using very short distribution chains, market gardening becoming more competitive and people growing more of their own food. The supermarkets are likely to disappear altogether, within 50 years of peak and gradually pull back from their least efficient sites a lot sooner. Food distribution systems will change moving more by rail and sea transport.

Trade in some high value goods with a long life such as herbs, spices teas & coffees will continue as it always did prior to oil; they will just become more expensive.

The end of cheap food!

What will happen to water supplies?

Water supplies are very oil dependent – for chemical treatment and also because water supplies are energy intensive. Pumping, cleaning and storing water requires tremendous amounts of energy, so the more energy prices go up because of oil prices going up, this will affect the cost of supplying clear water. Water is considered by many to be the main resource constraint of the 21st century, world-wide. We might be able tp live without oil but we can’t live without water. Water, like all commodities, will become more expensive.

What will happen to healthcare?

There are several things to think about as far as healthcare goes. First, a lot of medicines and products are reliant on oil and gas in their production. These will become more expensive and harder to obtain. Secondly, if we experience an economic crisis as expected, the reduction in tax collected means that there will be less available for national healthcare. The NHS is already under a lot of financial stress, and this will only be exacerbated further. It could be that there will be a rolling back of exactly what the NHS will deal with, while private hospitals and healthcare may gain more ground. The emphasis will be placed much more on prevention rather than cure, with health education becoming much more prevalent. Preventative healthcare can be a very low energy intensive scheme, and could be a source of wider, although lower-paid employment for the future. Such a system exists in Cuba, which is almost a perfect case study for a Post peak oil world, where "Health care for every citizen" has been a top priority, second only to education. Clinics and health care providers are located throughout the country even in rural areas, and care is free. The system emphasizes prevention, health education, and community medicine… Cuba's life expectancy rates and other such indications are equal to those in developed countries: Life expectancy among men is 74 years, among women 77 years; infant mortality rates are about 12 per 1,000 births."

What will happen to religion?

Religion has been with us since the Stone Age. It has developed as the human race has developed since the dawn of humanity. It has survived the rise and fall of civilisations and continues today. Religion is a very human activity. It builds on our human nature, our desires and wishes, our need for control and to be controlled and our need for security. Therefore, come what may, so long as there are people around there will most likely always be religion. It may adapt, it may change, it may be reinterpreted as it has been in the past (today’s religion is not the same as it was 100 years ago) but it will most likely still go on and still be there post peak. It could even be argued that it might become a stronger influence in a post peak world. If times become harder people may turn to religion for comfort and for emotional strength so it could even be possible that we see a reverse of secularisation. When material wealth becomes harder to obtain, people may begin to look to achieve spritual wealth, with religion as the conduit to achieve that.

What will happen to the environment?

It could actually get better! Imagine, less pesticides around more balanced farming less plastic waste and less mono-cultures as we adopt systems like permaculture, we may see a better a cleaner environment. However, we may see more destruction to out world then we have ever done so before! Imagine society doing what ever it can to pro-long its current way of life. Imagine a society that is quite happy to destroy what we have in the way of wood land and forests, not just in the UK but world wide in an attempt to grow bio-fuels. Imagine a society that is willing to destroy the ant-arctic to get at what may be the lasts deposits of oil.

There is potential to go either way. We could have a world with a better environment or one that we spend our remaining energies destroying so we can party a little bit longer.

What will happen to education?

This can depend on what happens to society as a whole. Education is a long-term investment. It costs a great deal of money to educate a person and the longer a person is in education the more it will cost. The returns on that investment comes over the life time of the individual, often with those of a higher education level generating more wealth for society. However, if finances become strained due to economic problems that may result as we go down the down slope of peak oil it could well be the case that long-term investments will be one of the first areas to suffer as reactionary policies will more likely be aimed at short term survival efforts rather than securing the long term future. This could mean that education, especially higher education could suffer post peak.

What will happen to democracy?

It could be argued that we are already seeing the signs of the decline of democracy as a result of the “war of terror”. It could then be seen as a possibility that if the situation was to deteriorate with a break down in social order, rioting, and an increase in civil disobedience post peak that we could see governments resorting to more and more dictatorial powers post peak in a desperate attempt to control the situations. However, it is not necessarily the way things might go. For example, another scenario could be that the people become more involved in the way society is governed and the direction society takes as peck oil forces more focus on local communities and local solutions. In that respect society could become more democratic with more individual involvement.

What will happen to freedom?

This can depend on how things go. The down slope and any resulting increase of oil prices may result in civil unrest. In such a situation you could imagine a government being more reactionary and attempting to maintain order by introducing more draconian measures and suspension of freedoms. However, this is by no means a certainty. A more enlightened government would be preparing for the down slope and action would have been taken before any civil unrest problems were to develop. Also individuals and groups would be acting independently to eleviate any future problems as best they could and that would lessen the probability of civil disturbance and any resulting attempt to restrict freedoms.

However, there still may be practical restrictions to freedoms such as losing the freedom to travel by car when ever you want due possible high prices of oil.

Will trade decline?

People have been trading since the beginning of the human race. Stone Age people maintained trade routs that stretched long distances and we have had world-wide trade long before we discovered a use for oil. It is possible that we may see a decline in world-wide trade as the cost of oil goes up. It may become more cost effective to produce goods more locally. As a result we may see more local trade even if there is a decline in world trade. That could actually mean there will be more trade on the down slop than before! However, if things go badly we could see less trade as economies go into recession or depression or even collapse but even in such scenarios some form of trading will continue even if its just barter.

Will plastic production decline?

Maybe, we could see a general decline in manufacturing if we were to go into a depression and plastic production might decline as a result of that. However, plastic production only takes a small amount of oil when compared to other usage. If we were to become a bit more sensible with the way we do things it is possible that we could use the remaining oil more for plastics than for other usage and, therefore, plastic production would not decline. Also, we don’t actually need oil to make plastics, we can make it from other sources so we could continue with plastic production.

However, do we really want to maintain our current level of plastic production. If we were to more to a society that is more in balance with nature, one that reduced its consumption, reused what it made and recycled the rest we could reduce plastic production and the resulting waste and still maintain a good standard of living.

What do you mean by interdependencies?

Like a cobweb, everything is connected to everything else! To produce the food we need we need oil to produce the oil we need people and to feed the people we need food. Stop the food we stop the oil or stop the oil and we stop the food. Now, that was an example of interdependencies and it was very simple. For such a simple example it is easy to find solutions or alternatives to keep things going. However, our society has many interdependencies and most of them are far more complex then the simplistic example given. Consequently, solutions to any break down to the interdependencies is not so easy to find!

Another way to think of the interdependencies is to think of a woven mat. It all hangs together nicely but tug at one of the lose threads and the whole thing can come undone. In some ways out society is like that. One of the lose threads that could cause society to fall apart is oil. As oil is at the root of so much of our interdependencies losing oil can mean the thread that society is woven of can come undone.

What will happen to the law?

It is too simplistic to say that poverty or unemployment breeds crime. There are many important factors that play a role at the same time such as perceived social inequality, previous experience of steady employment, perception of future prospects, cultural influences etc.

However, there is no doubt that a sudden drop in living standards that an economic recession can bring on increases in crime rates. A study by the Crime and Society Foundation in 2005 indicated that “The recession of the early 1980s triggered the rising murder rates of the past 25 years…People in the poorest areas were six times more likely to be murdered than those in the richest. This is because poverty is the "key component to what makes one place more dangerous to live in as compared to another ““http://news.bbc.co.uk/1/hi/uk/4348238.stm

Equally, economic recession can bring stresses on families that can lead to more broken homes which again is something said to contribute to increasing crime rates.

Argentina is a good example to look at. "These days Argentines not only have to cope with their economic malaise but also what they see as its most worrying by-product: a violent crime wave that has swept the country and encouraged some to take the law into their own hands."

This does not mean that everyone is going to become a criminal but it will create an environment where criminal acts are likely to be more common. This will take place in a context of declining taxes and decreased funding for the police, which could increase the problem. In response to this there may be harsher punishments for criminals as deterrents, with maybe a push for the reintroduction of the death penalty. Communities may take it upon themselves to self police their own areas. There is also the option for an increase in police numbers but at a lower salary (for example you could have two policeman on half the salary of a current policeman, thus getting better value for money). The danger with this is that police would possibly be face increased exposure to opportunities for corruption.

How will this affect politics?

Politics is all about manipulating opinions and politicians have been doing that for centuries and it is highly likely that they will continue to do so for as long as their are people around. It was noted in the ancient world that politicians often maintained contradictory opinions and nothing has changed that in the intervening centuries. Perhaps the main way that peak oil will affect politics is to give politicians another subject with which to manipulate people’s opinions on.

Will there be civil unrest?

This is a very real possibility. In a scenario where oil production was to decline and prices were to rise we could see the cost of, for example, the price of petrol at the pumps rising considerably. The full protest of 2000 could then bee seen as a small taste of what might come. It would not take much of an imagination to see that in such a situation things may indeed become ugly if there has not been sufficient preparation in society to handle the crises to the world economy that may result as oil prices rise. There is a possibility that we could see food prices and unemployment rising and when such things have happened in the past they have often been followed by some form of civil unrest. Civil unrest may well be the norm for the future if adequate preparations and planing are not taken today!

Will we experience blackouts?

Britain has an ageing fleet of power stations, and analysis suggests that perhaps the only way to avoid blackouts would be to build over 50 new coal powerstations.

What will happen to population levels?

Thomas Malthus predicted a population crash as a result of unbounded population growth and the failure of agriculture to keep up. His predictions did not come true. There are a number of reasons for that but the main one is that food production increased at greater rates than he anticipated. One of the reasons why we wear able to maintain high food production and feed an expositional growing population is because of pesticides and fertilisers, which are based on oil. If oil production was to decline and there was a shortage of oil or its price was to increase it does give the possibility of a population crash. Even before that there could be scenes of malnutrition before starvation is seen in the UK, Europe and even America. Such a possibility is a scenario developed by the Club of Rome. However, it is not a certainty. The application of our scientific understanding of nature could help us to produce sufficient food using methods such as organic farming and permacuture, although there may be some doubts as to whether or not that is achievable.

Even with oil, fertilisers and pesticides there will be a maximum population that this planet can support. We can not grow forever. Peak oil may just bring a population crash earlier than would otherwise be expected unless there is some immediate limitation on the population growth.

Ref: Limits to Growth : the 30-year update by onella Meadows, Jorgen Randers, Dennis Meadows. Earthscan. 2005. ISBN 1-84407-144-8.

What is die-off?

“Die off” is a rapid population collapse due to the decline in oil production and the lack of possible replacements that will meet our energy needs. Basically our whole civilisation can be considered to run on oil, from the production of pesticides and fertilisers to the transpiration of food and other goods everything is in one way or another depended on oil. This abundance of energy has allowed us to go into a population “overshoot”. An overshoot is where we have more people than we can really sustain. In other words, without oil our current population levels are unsustainable. It’s like borrowing more money form a loan shark than we can pay back; sooner or later it will catch up with us and the “pay back” isn’t going to be pleasant! As the oil production declines we may well be unable to supply food for most people on this planet which would lead to starvation and a population collapse.

Wasn’t Malthus wrong?

Yes and no. Basically his thesis was that the production capacity of the earth is far less than the potential for population growth. He considered that the food production increases at a liner rate and that the population increased exponentially. The result of which would mean that at some point in time there would be more people than we could supply food for if the population was not kept in check by such things as floods, war and diseases. This would lead to a “Malthusian catastrophe” where populations would collapse and society would revert to a subsistence level of existence.

Yes he was wrong in the sense that his predictions of population collapse did not come true, certainly not within the following centuries. However, he was right in the sense that population growth, if unchecked, will out strip our capacity to produce food. To some extent the reason why there was not a population collapse during the nineteenth and twentieth centuries could be considered to be because of the improvement in farming methods. One of the main improvements was, of course, the use of pesticides and artificial fertilisers that have been produced from oil. Therefore, if there was to be a decline in production of oil and /or an increase in the cost of oil there is a very real possibility of Malthus being proved correct in the twenty-first century.

Die-off sounds dramatic? Will it be?

It depends what you mean by ”dramatic”. Its unlikely that if there is a population crash that it would happen overnight. The population could decline rapidly over a few years or even a few decades. Even so, on the long term scale of things a decline that took decade would still be seen as dramatic. It could also be seen as dramatic on the scale of the individuals who will go through any such population decline. An uncontrolled population collapse would entail a large amount of human suffering and hardship. To the people who would be there at the time that would be a very dramatic change in their lives!

Can we stop die-off?

Some would argue no. Essentially we have known that our current system is unsustainable for at least the last 70 years, possibly even longer. In the 1950 the decline in oil production was predicted to occur about the year 2000. The world was given a sharp remainder of the unsustainability of our current socio-economic system and the importance of oil by the Club of Rome and the oil shock in the 1970s. Even through we have known about the unsustainability of our current system we have done very little to correct the problem. Consequently we have just been running faster and faster to the cliff edge so that now it would take such a radical change to the way that we do things that society would just not be able to stop and change direction before we all fall off the cliff edge! So, no matter what we do now we would not be able to stop a population collapse, only minimise the suffering for our children and grand children who may have to go through it.

However, that may not be the case. It could be argued that die off is not inevitable. It could be the case that if we act now to point society in the direction of sustainability for a post carbon world we could avoid a population collapse. In one scenario of the Club of Rome, for example, a world population of eight thousand million, more than we have today, was sustainable.

There have been efforts by individuals and groups to form sustainable communities and these may be indicators of how we may live in the future. There have been advances in science that may help us produce the food we need without oil, for example, applied ecology in the form of permaculture. Combine that with a society that implements a zero population growth policy then there is every possibility, even at this later stage, of avoiding die off. However, the longer we leave it the harder it will be! The correct answer depends on what we do today!

Does peak oil increase the chances of Nuclear War?

Yes. Due to increased international tension and possibly limited resources for fighting wars, combined with increasing nuclear proliferation, the risk of Nuclear War is certainly increased.

Since the industrialised world is so much more dependent on oil than the developing world, will the industrialised world suffer first?

The oil crisis has begun for many poorer or developing countries where oil is now simply too expensive to use as they did before. These countries will be like 'canaries in the mine shaft'. Equally, people within countries will be affected differently, depending on their level of wealth. It will be like a rising tide.

Is this oil crash going to be slow and gradual or hard and fast?

It could be either and we need to be prepared for both.

Why isn’t anyone dealing with this? Why isn’t it a number 1 national issue?

A very good question! There actually people dealing with this but its is more on an individual or group bases rather than at local or national government level. What response there is from governments can be considered to be minimal and more in the form of words than action. The lack of any major response from the government can be seen as puzzling and there maybe a number of reasons for it.

It maybe that governments do not take the potential fall in oil production seriously, which could be because they are not convinced about peak oil or because it is not seen as a subject that will attract large number of votes. It could also be argued that the government’s job is to maintain the status quo and provide and environment that is profitable for business, stable and of a high standard of living for its citizens. As any attempt to move to a post peak, sustainable society would be counter to that objective governments are reluctant to implement any policies until dwindling oil supplies becomes a more serious threat to the economy. It could also be argued that peak oil and its effects are a long-term issue and that governments, businesses as well as individuals plan and act for the short term. As a result the lack of action may be a “we will cross that bridge when we come to it” attitude. Also, it can be considered that governments are there to serve the people and that the elected representatives are there to represent the opinions and interests of their constituents. As a result the government follows the people rather than leads from the front. So if the people are not interested nor wish to act then governments will follow suit. After all, governments get elected by promising a bright and sunny future and manipulating peoples opinions rather than campaigning on issues that deal with physical reality. Those parties that do deal with physical issues tend not to gain much voter support.

It could also be the case that the lack of government action is only a perception and that the government is doing something about it but it is not made public.

Can’t I just buy a farm and be all right?

Probably not!

Farming is currently only marginally profitable in the UK and across Europe. This would be insufficient to fund significant borrowings. If you have access to the funds to purchase a farm then it becomes a much more secure proposition. With shortages of food created by the peak in oil, farming is likely to become profitable once again.

Agriculture is currently heavily supported; will governments be able to continue this after oil has peaked? It is probably likely that they will have to, as food security will become once again the biggest issue which governments have to tackle.

Farmers have become very good at adapting to changing priorities. The Common Agricultural Policy and other government interventions frequently changes the direction in which farmers businesses need to go for the best profits. peak oil will alter the rules again, but will farmers respond, will they realise before it is too late that the change in the rules is permanent. Some will survive and prosper under the new rules others will go to the wall.

The average age for UK farmers is currently 60 which suggest that there will be a lot of people retiring from the industry over the next 10 to 15 years. Many currently have no sons or daughters wishing to enter the business, so there may be a glut of land on the market which may exert a downward pressure on the value of land.

Owning a farm does not guarantee that you will be able to sell whatever you produce. Farmers tend to have a broad range of skills, such as production, finance, marketing, mending, driving tractors.

If your primary concern is just to secure your own and your families food supply then buying a smallholding might be a good idea. However you would need to bear in mind whether you have or can obtain the skills of a smallholder and whether you are prepared to put up with the downsides, such as having to go outdoors every day whatever the weather.

You could just get an allotment and be in a good position from the point of view of your own food, however you may need to be prepared to defend and secure your crops if law & order breaks down.

Farms nearest to centres of population, with easily accessed markets and shops will be best positioned to profit from the coming turmoil.