Innately, everyone comprehends that the days of cheap oil are over and that supplies have passed their prime. Yet a large contingent of governments, instead of implementing sustainable policies to slowly maneuver their economies in accordance with that reality, continue to pursue growth in ways that refuse to take the decline of oil into account.
In the 1980s, China used up a modest two million barrels of oil each day; currently that consumption stands at nine million – every day. That seemed okay in an era where oil seemed boundless and all industrialized nations had geared up their national economies to reap the dividends. No more. With the end of cheap oil comes the era of shrinking economies and hard choices.
According to the International Energy Agency in its 2010 report, 80% of all oil fields operating today won’t be producing in another 25 years. Yes, new fields are always being discovered, but they are the expensive kind and inevitably lead to the rise of oil pricing and an outright attack on sensitive environmental regions around the world.
This is important because almost all Western nations have geared their concepts of economic growth and productivity on the availability of oil for everything from production to transport. We were warned about the danger of this years ago from major reports by the United Nations and energy and environmental think tanks to rather cheeky predictions of Canadian author Jeffrey Rubin. They were ignored, and now each country’s finances is in a bind.
As oil prices rise, so will the price of everything else, and the cost of running national economies will be forbidding. Those economies, like Canada’s, will stall because, despite all the warnings, governments never really prepared for the days when they would have to do more with less. And since they’ve been caught in these difficult times, they are attempting to peddle the message that we’ll be okay if we just keep going. This is understandable, but what is damning is that our governments never established the economic infrastructure that could assist us in transitioning to an era of sustainable development and growth.
Average citizens and their governments will be hit everywhere they turn. Food prices will rise markedly. Holidays will be curtailed. Home ownership will become more of a dream than a reality. We’ll have to get by with less because everything we pinned our hopes upon for prosperity and growth was linked to a commodity that has been in dwindling supply. Growth might not stall entirely, but the double-digit economic gains of the past are over.
I personally view this as an inevitability that provides significant hope. If how we have been living has been unsustainable, then the quicker we transition to sustainable economies the better. If Al Gore was correct in his interview of last week, that, “we’re borrowing money from China to buy oil from the Persian Gulf and Canada to burn it in ways that destroy the future of human civilization, and every bit of that has to change,” then for our children’s sake we’d better get it right this time and refrain from joining our economies to commodities that are finite.
These are not easy days for most of us. Some make billions of dollars from the extraction, refinement and distribution of oil, but that might as well be another world for most of us. Yet we have been just as guilty as our leaders of contentedly engaging in past excesses that now leave us with fewer options.
According to author Gwynn Dyer, we either face a financial meltdown or a physical one if governments refuse to deal with our dependence on a commodity that once enriched us but now poses our greatest threat to our economies and our planet. No political party or financial institution prepared for this moment, and we went along with it because we were having such a good and affluent time. None of the choices from this point on will be easy, but that’s what transpires when we refused to make the difficult priorities in a timely fashion. It turns out that the sky isn’t the limit after all – we are.