How Important Is Energy?

This picture may be gone within the decade

Peak Oil Is Here!

How important is energy? Energy, especially produced by oil, is everything. In our “advanced society”, these are essentially one and the same. Also, tied up in oil is money. Economic growth, in terms of dollars, is tied up in our oil-based economy. One drives the other. Oil drives the economy and provides the necessary money for a consumer addicted society. Not the other way around.

We are running out of oil! Without it, our economy and everything that is dependent upon it, collapses. This list includes consumer goods, the fuel needed to run our automobiles, the factories and our airline industry; even the energy needed to produce more oil (eg. The tar sands) When the oil bubble “bursts” and it will, our world and everyone living in it will deteriorate rapidly. It’s just a matter of when not if.

Economic growth cannot continue indefinably because it is all tied to oil. And oil is a non-renewable resource and we will be running out cheap, easy-to-get oil in the very, near future. And guess what? The government is not prepared for it, and neither is industry. Nor you or me. There is no immediate solution and yet, the peak oil scenario is already here. Within a few years, the consequences will be felt worldwide.

We have already experienced this when the oil prices spiked in June and July, 2008. Over-extended consumers could no longer meet their subprime mortgages and the cost of gasoline triggered the great economic crash that began in September and October. Expect oil prices to soar, reaching a stratospheric $200 to $300 per barrel within a couple of years, and it will not go back down!

How important is oil to our society? It provides 90% of our transportation and is what plastics, pesticides, many chemicals, and a hundred other “indispensible” things are made from.

But cheap oil is almost gone. Peak oil in the United States was in 1970 and in Canada in 1973. And the Middle East countries (the largest suppliers) probably have all reached their peak as of last year. It takes hindsight to see that this is true, but several oil fields in Saudi Arabia are showing reduced daily production. When the suppliers can no longer supply, where will we get the oil, and thus the energy to supply our “needs” (wants).

Almost every country is now in decline. See the table below for a comparison of major producers and consumers of oil. This data is from 1980 to 2010.

By the year 2020, The top 12 oil producers will produce 34.71 Barrels per day while the top 12 oil consumers will consume 56.34 Barrels per day. Where will we get the extra oil to support our addiction by 2020? All conventional oil reserves have been discovered and don’t expect God will produce a miracle so we can burn more fossil fuels and thus produce more greenhouse gases!

Why is oil depletion occurring so rapidly? Because of excessive demand! On the average, it requires ten calories of hydrocarbon energy, to be used to produce every calorie of food consumed in the industrialized world. That’s before cooking energy is considered. Of the three (oil, natural gas, and coal), coal has had far less significance for agriculture. Take away the oil, and what happens? The food supply must shrink. Around the world nations are failing and people are starving because of energy and resource shortage. This is the major reason for the uprisings in the Arab World. People are not getting enough to eat because the cost of food is rising (due to rising costs of oil and climate changing weather disasters). Also, it should be noted, the tremendous economic growth rates of China and India and their demand for energy – they want to be liked us – voracious appetite for luxury goods and toys.

Our future may be looking dim, very dim. Changes that have been predicted for decades have finally arrived, and faster than anyone had anticipated. We have done so many things to make our future bleak and unattainable.

How many times have we been told we are “living the Canadian Dream”. Yet, do you feel it? Sure, you may have an large, expensive home, an SUV or pick up truck that you are still paying off, or the latest technological gadgets to impress your friends and family. But what does it take to achieve this goal?

Working 60-70 hours a week, trying to make your credit card payments from monetary funds from two or three part-time minimum wage jobs. No time to play with your toys or enjoy your home. Friends? Only if you text on your inexpensive smart phone.

How did we arrive this crazy, ridiculous situation? Well, this look at what the “American Dream” is all about and why it was so important to the economy of the United States. (we can identify this with Canada easily)

Let us look at what happened after World War II in the United States. The American economy was a complete success after World War II. It was left unscathed by the war unlike their European Allies. The military and the American industries were fully employed to create weapons for the Allied cause. So when the war ended, what did a wartime economy look like.

Dwight Eisenhower advised that the American economy’s “ultimate purpose” was “to produce more consumer goods.” The solution was first expressed in the Spring 1955 issue of Journal of Retailing. To maintain economic growth, the author, Victor Lebow, stated :

Our enormously productive economy demands we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption. The measure of social status, of social acceptance, of prestige, is now to be found in our consumptive patterns. The very meaning and significance of our lives today is expressed in consumptive terms.

Does it follow by what polices that were set up back in 1955? I would suspect so… Do you feel good that our society was actually molded by an economic policy that we must purchase goods and services whether we need them or not? That we must follow the “Canadian Dream” and this unattainable goal can only be achieved by increasing economic growth, even if it damages the health of our society or the environment.

Do you feel that you are an addictive consumer? Think about it. Look what you shop for: cereals with lots of sugar but little or no nutrients, tobacco, liquor, fast foods, cellphones, SUV or pickup trucks, houses two or three times larger than are required. These items require a tremendous amount of energy to maintain.

We cannot continue to live in this vein. The message is a simple one: investment in new oil production has fallen so low that whenever an economic recovery occurs, the oil to support the recovery is unlikely to be there. Supplies will be inadequate and prices will rise much as they did in the summer of 2008, if not more, choking off the recovery.

Do not depend upon the government to resolve the problem. They deny it even exists. Do not rely upon the multinationals – they don’t want you to know what’s going on. The scariest scenario wilh peak oil is that we are quickly approaching the “cliff” where oil production exponentially decreases. This will lead to an energy crisis like we have never experienced before. Expect numerous blackouts and reduction of electricity. Canadians’ electrical generation and delivery system is falling apart due to profit taking (from deregulation) and lack of investment. Just imagine living without electricity for any reasonable period of time. Your way of life would change drastically.

The possible solution to this is localization. Time and space prevents me from writing about this, but stay tuned for this information in future HubPages.

Supply

 Country
Production Increase (%)  
Production Increase by 2020 
China
-25.0% 
-51.5% 
 U.S.A. (48 States)
 -38.9%
-69.2% 
 Saudi Arabia
22.6% 
11.0% 
The Production Increase is fromm 1980 to 2010.

Demand

Country
Demand 
Peak Year 
China 
309.6% 
2003 
U.S.A. (48 States) 
18.2% 
1970 
Saudi Arabia 
209.7% 
2012 

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