Why Your World Is About to Get a Whole Lot Smaller
September 27, 2009 11:33 AM Subscribe
Post-(cheap)oil: will the end of globalisation be the beginning of re-localisation?
BONUS
-The Grand Energy Transition
-Energy Needs, Energy Efficiency and the Cost of Saving Us
-The Homely Costs of Energy Conservation
-Life after Peak Oil
-Peak Water
-Desalination Technology Increases Naval Capabilities
-Better cheap than good: renewable power for developing world
BONUS
-The Grand Energy Transition
-Energy Needs, Energy Efficiency and the Cost of Saving Us
-The Homely Costs of Energy Conservation
-Life after Peak Oil
-Peak Water
-Desalination Technology Increases Naval Capabilities
-Better cheap than good: renewable power for developing world
I do not doubt that oil production will peak, and that oil prices will rise dramatically, within (in historical terms) a pretty short time. There are some reasons to believe that we are pretty much at the peak right now, and there's little reason to think the peak is much more than 10 years away.
But I have doubts about the idea that high fuel costs will somehow roll back globalization. The predictiors of such things generally don't seem to have any hard numbers. If I spend $10 at Wal-Mart on some made-in-China gadget, about how much of my $10 is paying for the fuel for the container ship that brought it here? Why don't stories about the end of globalization have at least a cocktail-napkin grade estimate of such things?
Fuel is used in a wide variety of ways, some of which offer very little utility for the dollar or gallon (firing up the Suburban to drive a mile to the grocery store) and some of which offer quite a lot (farming, and powering container ships, trains, and aircraft). I'd expect rising fuel costs to cause more pain (and therefore more curtailment) in the case of low-payback uses compared to high-payback ones.
Moving cargo is very different from moving people. A 30MPG car with 200 pounds of junk in the trunk achieves 3 ton-miles-per-gallon. A 10 MPG truck with a ton of cargo achieves 10 ton-miles-per-gallon. A 3-MPG semi with 60 tons of cargo achieves 180 ton-miles-per-gallon. I believe trains can manage as much as 400, and ships can get nearly 1,000. If rising fuel costs are going to cause a falloff in traffic, I bet the least efficient and least economically defensible traffic will be curtailed first and most.
Consider that Europe, for example, has had what we Americans would consider ruinously high fuel prices for decades, yet the big-box-store way of life is not unknown.
posted by Western Infidels at 12:14 PM on September 27, 2009 [10 favorites]
But I have doubts about the idea that high fuel costs will somehow roll back globalization. The predictiors of such things generally don't seem to have any hard numbers. If I spend $10 at Wal-Mart on some made-in-China gadget, about how much of my $10 is paying for the fuel for the container ship that brought it here? Why don't stories about the end of globalization have at least a cocktail-napkin grade estimate of such things?
Fuel is used in a wide variety of ways, some of which offer very little utility for the dollar or gallon (firing up the Suburban to drive a mile to the grocery store) and some of which offer quite a lot (farming, and powering container ships, trains, and aircraft). I'd expect rising fuel costs to cause more pain (and therefore more curtailment) in the case of low-payback uses compared to high-payback ones.
Moving cargo is very different from moving people. A 30MPG car with 200 pounds of junk in the trunk achieves 3 ton-miles-per-gallon. A 10 MPG truck with a ton of cargo achieves 10 ton-miles-per-gallon. A 3-MPG semi with 60 tons of cargo achieves 180 ton-miles-per-gallon. I believe trains can manage as much as 400, and ships can get nearly 1,000. If rising fuel costs are going to cause a falloff in traffic, I bet the least efficient and least economically defensible traffic will be curtailed first and most.
Consider that Europe, for example, has had what we Americans would consider ruinously high fuel prices for decades, yet the big-box-store way of life is not unknown.
posted by Western Infidels at 12:14 PM on September 27, 2009 [10 favorites]
Peak Oil is essentially irrelevant because if we use more than 25% of today's proven oil reserves, we will utterly destroy the climate. In other words, why explore for more oil? We can't burn what we ALREADY HAVE without killing ourselves, and even using what's already available in reserves would kill us a few times over.
That's what makes oil so fascinating to me going forward: the price cannot be merely based on simple supply and demand, but on safe--to-use-supply and demand. We've never really had to deal with that before with any commodity. How does that affect pricing? Who gets to sell it, who gets to buy it, and who gets to burn it? 75% of current proven oil reserves is already essentially worthless, because if you can't use it, then it's not really worth anything.
But of course, not using the deadly 75% would require us to act intelligently as a species, and we may not. In that case, then burning all that oil will simply make the Earth less survivable for human beings, a bunch of us will die off, and the remaining population won't need to use much oil, and the Earth will slowly heal...minus a couple-few billion dead people.
posted by jamstigator at 12:45 PM on September 27, 2009 [1 favorite]
That's what makes oil so fascinating to me going forward: the price cannot be merely based on simple supply and demand, but on safe--to-use-supply and demand. We've never really had to deal with that before with any commodity. How does that affect pricing? Who gets to sell it, who gets to buy it, and who gets to burn it? 75% of current proven oil reserves is already essentially worthless, because if you can't use it, then it's not really worth anything.
But of course, not using the deadly 75% would require us to act intelligently as a species, and we may not. In that case, then burning all that oil will simply make the Earth less survivable for human beings, a bunch of us will die off, and the remaining population won't need to use much oil, and the Earth will slowly heal...minus a couple-few billion dead people.
posted by jamstigator at 12:45 PM on September 27, 2009 [1 favorite]
We can't burn what we ALREADY HAVE without killing ourselves
Plenty of other stuff you can do with oil. Burning it is just the most wasteful use.
posted by le morte de bea arthur at 1:21 PM on September 27, 2009
Plenty of other stuff you can do with oil. Burning it is just the most wasteful use.
posted by le morte de bea arthur at 1:21 PM on September 27, 2009
This seems to be a pretty narrow definition of globalization. Yeah, rising fuel prices will have a huge impact and the potential to reshape cities, but a large component of globalization is moving information around, not just stuff.
posted by lunalaguna at 1:21 PM on September 27, 2009
posted by lunalaguna at 1:21 PM on September 27, 2009
a large component of globalization is moving information around
that's what anigbrowl was getting at here: "we are slowly shifting from a resource-exploitation economy to a technology-innovation economy. We have not run out of resources, but experience diminishing returns as the cost of extraction rises," cf. graham & shirky
posted by kliuless at 1:49 PM on September 27, 2009
that's what anigbrowl was getting at here: "we are slowly shifting from a resource-exploitation economy to a technology-innovation economy. We have not run out of resources, but experience diminishing returns as the cost of extraction rises," cf. graham & shirky
posted by kliuless at 1:49 PM on September 27, 2009
Agreed, jamstigator. A lot of the free market types don't seem to be able to wrap their heads around that or want to accept it, which is why you hear a lot of climate change denial (aside from the people writing conservative pundits' checks). Many conservatives, including Sarah Palin, have argued that cap and trade legislation is pointless, because the free market regulates the use of a scarce commodity through supply and demand. This would be true for a normal commodity like wheat. However, the emissions are a cost that's ambiguous in its value and paid by everyone on Earth after the commodity is used. You can ignore the emissions if you pretend that they don't hurt the environment, but that's almost certainly untrue. The thing is that they use up air quality, a resource that can't be privatized, so it is inherently international public property. Thus, it's only fair that there is some form of tax mechanism on CO2.
Add to this that Palin's alternative to cap and trade was more domestic drilling.
/afterglow of 300 comment Palin thread.
posted by mccarty.tim at 2:16 PM on September 27, 2009
Add to this that Palin's alternative to cap and trade was more domestic drilling.
/afterglow of 300 comment Palin thread.
posted by mccarty.tim at 2:16 PM on September 27, 2009
Plenty of other stuff you can do with oil.
All we need is love.
posted by rokusan at 7:25 PM on September 27, 2009
All we need is love.
posted by rokusan at 7:25 PM on September 27, 2009
air quality, a resource that can't be privatized
I take it you feel that Totall Recall was a work of fiction?
posted by Rat Spatula at 7:53 PM on September 27, 2009 [2 favorites]
I take it you feel that Totall Recall was a work of fiction?
posted by Rat Spatula at 7:53 PM on September 27, 2009 [2 favorites]
jamstigator, I believe you will find the 25%/75% figures relate to total fossil fuels, of which oil is a small subset. Coal, gas, and non-conventional oil like tar sands provide the dramatic climate risk as we seek to substitute less attractive fuels for transport as oil prices continue to rise. The CO2 impacts of synthetic oil and the energy cost and resulting CO2 to liberate oil shales/sands are the most threatening examples.
Not that I am against addressing climate change.
Ultimately, peak oil is/will be an economic issue. We depend on inexpensive oil for transportation, and in the developed world we will pay a lot for that.
The result is the developing world will be priced out of both transportation (and cooking fuel - propane) and the accompanying food cost increases as fossil fuel based agricultural inputs like fertiliser and mechanised farming soar along with oil.
In the west, we will see economic dislocation as whole industries are created and destroyed on the back of soaring fuel costs. The potential for 1970s style stagflation is high, and potentially made worse by the current economic shenanigans.
posted by bystander at 8:19 PM on September 27, 2009
Not that I am against addressing climate change.
Ultimately, peak oil is/will be an economic issue. We depend on inexpensive oil for transportation, and in the developed world we will pay a lot for that.
The result is the developing world will be priced out of both transportation (and cooking fuel - propane) and the accompanying food cost increases as fossil fuel based agricultural inputs like fertiliser and mechanised farming soar along with oil.
In the west, we will see economic dislocation as whole industries are created and destroyed on the back of soaring fuel costs. The potential for 1970s style stagflation is high, and potentially made worse by the current economic shenanigans.
posted by bystander at 8:19 PM on September 27, 2009
Western Infidels, I believe Rubin's argument for some globalisation reversals is not somuch T-shirts in Walmart, as much as Chinese steel production and similar heavy industries. At the moment, iron ore is shipped from Australia and Brazil by the megatonne, along with similar megatonnes of coal to allow lower paid workers and less environmentally strict companies turn it into steel. That steel is then shipped to Detroit or Frankfurt or Seoul to turn it into cars or whatever.
I think Rubin's argument is that making steel in Pittsburgh from Pennsylvania coal and Lake Superior ore before the shorter journey to Detroit will make up for higher labour and environmental costs in the USA.
As for Chinese made finished products at Walmart, I have seen figures like a few cents for shipping apparel, but I don't have a cite. Certainly this recent link from a FPP (sorry Daily Mail) suggests shipping is in the hole, with rates 90% off boom times.
This link suggests c. $1000 per container fuel surcharge Asia to USA, so a per item cost this is a pretty low component of the overall price.
posted by bystander at 8:49 PM on September 27, 2009
I think Rubin's argument is that making steel in Pittsburgh from Pennsylvania coal and Lake Superior ore before the shorter journey to Detroit will make up for higher labour and environmental costs in the USA.
As for Chinese made finished products at Walmart, I have seen figures like a few cents for shipping apparel, but I don't have a cite. Certainly this recent link from a FPP (sorry Daily Mail) suggests shipping is in the hole, with rates 90% off boom times.
This link suggests c. $1000 per container fuel surcharge Asia to USA, so a per item cost this is a pretty low component of the overall price.
posted by bystander at 8:49 PM on September 27, 2009
"Peak Oil is essentially irrelevant because if we use more than 25% of today's proven oil reserves, we will utterly destroy the climate. In other words, why explore for more oil? We can't burn what we ALREADY HAVE without killing ourselves, and even using what's already available in reserves would kill us a few times over."
There is a very, very large difference between "we can't" and "we ought not to." And while global warming will certainly cause huge, permanent, devestating problems, it won't literally kill us off as a species. And as long as that is so, oil and other fossil fuels will be quite tempting....
posted by Diablevert at 11:12 PM on September 27, 2009
There is a very, very large difference between "we can't" and "we ought not to." And while global warming will certainly cause huge, permanent, devestating problems, it won't literally kill us off as a species. And as long as that is so, oil and other fossil fuels will be quite tempting....
posted by Diablevert at 11:12 PM on September 27, 2009
And as long as that is so, oil and other fossil fuels will be quite tempting....
Tell the junkie that the remaining 25% of cocaine left on the table will surely kill him, so he shouldn't...
posted by DreamerFi at 11:17 PM on September 27, 2009
Tell the junkie that the remaining 25% of cocaine left on the table will surely kill him, so he shouldn't...
posted by DreamerFi at 11:17 PM on September 27, 2009
The Americas have felt the effects of globalization since 1492. Well before oil was a factor the British and Spanish built a worldwide integrated supply chain on gunpowder, wind and slave labor. Power production won't hit zero. We may have to sacrifice some elements of transit (e.g. daily car trips become weekly, fewer plane trips) and downsize elements of our lifestyle to accommodate reduced individual power profiles and surplus food availability (e.g. no more high fructose corn syrup). Odds are you won't have much adjusting to do, unless you are poor; then you are going to be poorer and if you are really poor and hungry odds are you'll be in deep trouble. If you are living on the edge right now in terms of caloric intake odds are you are going to be running in the red soon. Also god help you if you are some poor subsistence farmer in the third world making it on decent agricultural land. Your local officials will figure something out to grab your land for China or some other richer country. Just like during colonial times.
Rest assured though you'll still get plenty of products manufactured far away and brought to your local market. Walmart and Costco will still offer warehouses full of crap. Free shipping will still be available at Christmas time on many items from Amazon. Though some heavy items like books which have clear digital substitutes will stop being that common.
The integrated global supply chain is an amazing and resilient thing. With the crop of global brainiacs produced from a growing base of world wide top tier research focused academic institutions, it is only a matter of time before someone somewhere figures something out to keep it all going. Hopefully it will be better than bundled subprime mortgages with built in risk management to preserve a AAA credit rating that the last batch of smartest kids came up with.
posted by humanfont at 11:42 PM on September 27, 2009
Rest assured though you'll still get plenty of products manufactured far away and brought to your local market. Walmart and Costco will still offer warehouses full of crap. Free shipping will still be available at Christmas time on many items from Amazon. Though some heavy items like books which have clear digital substitutes will stop being that common.
The integrated global supply chain is an amazing and resilient thing. With the crop of global brainiacs produced from a growing base of world wide top tier research focused academic institutions, it is only a matter of time before someone somewhere figures something out to keep it all going. Hopefully it will be better than bundled subprime mortgages with built in risk management to preserve a AAA credit rating that the last batch of smartest kids came up with.
posted by humanfont at 11:42 PM on September 27, 2009
Similar thoughts in Rethinking the Rust Belt.
The blogger who wrote that has since moved to the rust belt (from Oregon to Maryland), which he writes about in Betting on the Rust Belt.
posted by symbollocks at 6:23 AM on September 28, 2009
The blogger who wrote that has since moved to the rust belt (from Oregon to Maryland), which he writes about in Betting on the Rust Belt.
posted by symbollocks at 6:23 AM on September 28, 2009
Shameless self-promotion: This is what I blog about here: thenewregionalist.blogspot.com
My argument is simple: For most of human history, individuals have constructed homes that were specifically tailored to their immediate local environment. Our present habit of building identical boxes all over the planet and then "adapting" them to their surroundings via climate control systems like HVAC is unsustainably energy intensive. While some energy input will always be necessary to achieve the precise comfort level that homeowners demand, a conscientious attempt by modern homebuilders to model structures to local conditions would save more energy than is presently gained by successive efficiency gains in new appliances.
Here is a good post to start from.
posted by jefficator at 6:23 AM on September 28, 2009
My argument is simple: For most of human history, individuals have constructed homes that were specifically tailored to their immediate local environment. Our present habit of building identical boxes all over the planet and then "adapting" them to their surroundings via climate control systems like HVAC is unsustainably energy intensive. While some energy input will always be necessary to achieve the precise comfort level that homeowners demand, a conscientious attempt by modern homebuilders to model structures to local conditions would save more energy than is presently gained by successive efficiency gains in new appliances.
Here is a good post to start from.
posted by jefficator at 6:23 AM on September 28, 2009
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I just hope that the inevitable increases in the costs of transportation create windows of opportunity for change in the same way that the recent economic trouble has apparently made a dent in the rampant consumerism and 'spend now, pay later' mentality.
posted by limmer at 12:08 PM on September 27, 2009