The End of Cheap Oil - The Consequences
Dan Box, Tully Wakeman and Jeremy Smith
1st October, 2005
Our lives are now so dependent on oil that it is impossible to conceive of a world without it. Before long, however, we will have no choice. The sooner we start planning for that reality, and changing the way we live, the better our chance of survival.
On September 9, 2000, a hastily assembled force of lorry drivers and farmers arrived at the gates of Shell’s Stanlow petrol refinery near Ellesmere Port in Cheshire and threw their vehicles across the road, blocking the entrance to the plant. Protestors, led by farmers from St Asaph in North Wales, climbed into the cab of a tanker that had crossed a pavement to bypass the blockade. Police had to break up the ensuing struggle, before clearing the road.
The farmers were furious at the high prices they were paying for fuel, driven up by increasing taxes they said were forcing many out of business. They took their cue from France where, on August 28, French fishermen blockaded ports and within days won a reduction on fuel costs. Sensing a similar opportunity, French lorry drivers and farmers began blocking the refineries to protest at a 75 per cent increase in the price of diesel after a rise in world oil prices. At first the country’s Prime Minister, Lionel Jospin, stood firm, but soon concessions were on the table.
Inside Stanlow, 60 drivers were trapped, unable to leave the refinery. As a result, 1.8 million litres of fuel destined for hundreds of petrol stations around the country went undelivered.
It did not take long for the impact to be felt.
Three days later, on September 12, ambulance services in the north-west called a halt to all non-emergency journeys and imposed 55mph speed limits on their fleet to conserve petrol. Staffordshire ambulance service said it had enough petrol left for 11 days. Manchester ambulance service set up emergency accommodation for its staff, for fear that without petrol they would be unable to get to work.
The blockades spread around the country, to the UK’s main refineries and petrol terminals. As they did so, a rash of panic buying by motorists caused huge queues to spill out of petrol stations across the country, fouling the roads. Arguments broke out on station forecourts, where some had seen the price charged for fuel double, as drivers accused the owners of profiteering from price rises imposed in the name of preserving dwindling stocks. Bread queues formed and shelves were stripped bare at supermarkets as disruption to their supplies and more panic buying forced some chains, including Asda and Safeway, to introduce rationing. At some J Sainsbury stores shoppers were allowed only three loaves, six pints of milk and two bags of sugar each, while the company’s chief executive, Sir Peter Davis, wrote to Tony Blair to warn that it could run out of food completely within days. At this point the cabinet office civil emergency response team, Cobra, was meeting three times a day and the NHS had begun to cancel operations.
Its effects are an example of what happens when a country starts to run out of oil. By the time the protests subsided they had forced an unknown number of companies into bankruptcy and caused those that survived losses estimated at hundreds of millions of pounds.
One thing the 2000 protests made abundantly clear is that when the price of oil starts to rise it will radically affect the way our food is produced, bought and consumed. The competitive edge which supermarkets currently enjoy is entirely the gift of cheap energy. Cheap energy enables companies to process food into many different forms – frozen veg, ready meals, cook-in sauces, breakfast cereals, tins of soup – many of which are hugely expensive in terms of energy for processing, packaging and transport between the stages of processing. The huge number of processed products gives rise to the wide ‘range’ of goods carried by supermarkets, which gives them a competitive edge over smaller, local stores. It also enables supermarkets and other big companies to dominate grocery distribution, since the economics of warehousing say that the wider the range you carry, the larger and more centralised warehouses become. Cheap energy has also affected consumer preferences: today most shoppers have cars and almost all have fridges and freezers: this means they can shop weekly, and prefer to use their car to carry the resulting bulk of shopping, which again suits the supermarkets. And today’s consumers feel time-poor but cash-rich, so they are willing to pay a bit more for more convenience food.
As energy prices rise, however, all those factors will quickly unravel. Consumers will start to shop more locally to save petrol, and start to shop daily rather than weekly because frequent powercuts and high electricity prices mean they can no longer use a freezer, perhaps not even a fridge. Many will be looking to buy original ingredients rather than processed foods, which will have become exorbitantly expensive. Supermarkets will seek to buy even more convenience shops, and start to run down their out-of-town superstores, but have to turn to local distributors and local producers and manufacturers, which undermines their buying power and leaves them competing on more equal terms with local retailers. The cost of moving heavy items like milk, beer and fizzy drinks becomes a major factor in those items’ cost: regional dairies, brewers and bottlers spring up, using returnable bottles to save the energy cost of recycling, and easily out-compete their national rivals.
When the country’s food distribution network begins the shift from international to local, the lorries transporting our food, which currently make up a third of all freight on the roads, will start to disappear. Nor will they be the only change to our transport system, which today accounts for over one-third of the UK’s final energy use. As we reach the end of cheap energy, air transport will surely be one of the first sectors to disappear – both holidays in Malaga and mange tout from Kenya are luxuries that we will quickly trim from overstretched domestic budgets.
Likewise car transport has grown exponentially over the years because the cost of running a car has fallen while incomes have grown. People have been able to afford the luxury of living in one place, working in another, driving their children to school in another and shopping in another. As the era of cheap oil draws to an end, this trend will reverse. Families will increasingly look to save money by living, working, shopping and schooling the children in the same place. Eventually they will find they are using the car so little that they will not bother to replace it when it grows old: car ownership will decline markedly.
Of course it’s not just our ways of living that will change; those people who make their money from the various vanishing sectors will also see their means of income vanish. Airlines, aircraft manufacturers and travel agencies will be among the first to go. Car manufacturers, garages and road builders will not be far behind. Supermarkets will be another early casualty, as will many of the global food businesses that serve them. As these big corporations fall off the radar, the financial services sector that exists to service them will also start to collapse. Since currently 30 per cent of the UK’s gross domestic product comes from financial services, this will have a huge impact on our economy. Other sectors that piggyback on big corporations such as marketing, advertising, and computer services, will also implode.
Internationally, a number of ‘bubbles’ will be burst. The US’ massive balance of payments deficit will continue to stretch as Americans spend more and more on importing oil, until eventually their creditors (mainly in Asia) pull the plug, and the dollar collapses. The UK’s and US’s over-inflated share and property prices will collapse as belts tighten and big corporations go bankrupt. Banks fold as borrowers default on loans.
The very notion of growth itself belongs to the era of cheap oil. Growth in gross domestic product (GDP) has always depended on the increasing specialisation of labour, first between individuals and eventually between countries, which has depended on cheap energy. Growth in GDP has always been mirrored by growth in energy use (recent claims by western economies to have ‘decoupled’ GDP growth from energy growth merely reflects the fact that the west has exported energy-intensive activities to other countries, not that those activities have ceased to grow). And without growth, the notion of charging interest on money is also defunct – you can only charge interest if you expect there to be more money around next year than there is this year.
The collapse of the economy will be felt most in financial centres like London. With no fields on which to grow or graze, these giant cities need to buy in food and other goods, which they pay for by ‘exporting’ services like financial services, tourism and government. When financial services and tourism collapse, so will London’s income. (Government will probably also shrink rapidly, and become more localised). Meanwhile, the costs of feeding London, already unusually high, will become much higher, because of the need to transport food into the city. It seems inevitable that cities like London will shrink rapidly as the era of cheap oil comes to an end.
But where will Londoners go? Our governments may love building on every green space they can find, but soon we will need whatever land remains to grow our food. The reality is that there are simply too many people in the UK, and the world as whole, for our planet’s dwindling resources to sustain. Before the industrial revolution there were around one billion people on the planet. Tied closely to the improved yields that chemically based farming brought humanity, is the massive surge in population that now sees us stand at almost seven billion and growing. We already use up 40 per cent of the available photosynthetic energy on this planet to feed just our own species. However, as David Pimentel reported in 1996: ‘World cropland per capita has been declining and is now only 0.27 hectare (ha) per capita; in China only 0.08 ha now is available. This is only 15 per cent of the 0.5 ha per capita considered minimal for a diverse diet similar to that of the US and Europe.’ Having analysed the various options available, he and his co-authors conclude that: ‘Several studies have confirmed that to maintain a relatively high standard of living, the optimum population should be less than 200 million for the US and less than two billion for the world.’ On the other hand, if the population were to reach predicted figures of 12 billion within the next half century, there would be less than 0.15 ha per capita in just 40 years. What is clear is the world’s population, at it’s current levels, cannot be sustained.
So what can we do?
We need to return to localised systems of production and consumption. A UK study found that buying local food from a farmers market reduced the greenhouse-gas emissions associated with distribution by a factor of 650. For a box scheme the impact was even greater. Likewise a Japanese environmental group found that if Japanese families shifted from imported produce to local, it would be equivalent to cutting household energy use by 20 per cent.
Localising production also maximises the amount of energy we get from our food as opposed to the amount we expend producing it. For example, to fly one unit of carrot energy from South Africa to the UK takes 66 units of energy in the form of airplane fuel. For lettuce from the US itis a staggering 127 calories of fuel for every calorie of lettuce.
As well as localising food production, we have to move away from a system of farming based on inputs derived from fossil fuels to one based on organic principles.
A UK study comparing organic and conventional livestock, dairy, vegetable and arable systems found that producing our food organically used 42 per cent less energy, mainly as a result of using little or no fertiliser and pesticide, which between them account for half of the energy input in the growing of non-organic potato and winter wheat and as much as 80 per cent for some vegetables. Likewise organic milk production can be as much as five times more energy efficient than its non-organic counterpart. Currently, however, all these gains are being cancelled out by the fact that over three-quarters of organic produce sold in the UK is imported, while only two per cent of the UK’s farm land is organically managed.
While it is clear that we need to move towards a locally based organic farming system, this shift will be far from easy. As well as depleting the world’s fossil fuel reserves, industrial agriculture had ripped out the heart of our rural communities, such that whereas 75 per cent of Europe’s population was involved in agriculture before the industrial revolution, now it is less than 10 per cent. In the US it is even worse – only two per cent of the population are now involved in farming.
As people have departed the fields, so too has their knowledge. It takes far more skill to farm organically than it does to follow the instructions on the back of a pack of Monsanto pesticide. Yet because local, organic farming is more labour intensive than its industrial equivalent, we are going to need increasing numbers of ‘skilled’ people to return to the land if we are to come close to feeding the world’s population.
The need for such a return to local agriculture also makes a nonsense of the G8’s recent bold proclamations that it is going to help Africa by giving it the chance to export to the rest of the world. For how long? Who in the UK will pay £7 for a punnet of Kenyan green beans? The same goes for Fair Trade. While the short term benefits: steady demand, decent prices and fair wages are a lifeline to many farmers and their communities now, is encouraging farmers to work for export markets rather than for internal ones going to do more harm than good when oil makes export economically unviable? Wouldn’t it be better to help strengthen internal markets?
It has become a truism that we go to war for oil oil, but while the concept of peak oil and the relationship between oil and the entirety of our everyday lives is not fully understood, people still see this as some abstract geopolitical game played by corporations and politicians with little impact upon their own lives except at the petrol pump. This disconnect between the reality of fuel price rises and their impact was shown during the 2000 fuel protests. While the head of Sainsbury’s Peter Davies’ dire warning that if they carried on for more than three days his stores would be out of food, should have been a warning of our food system’s reliance on oil, the end result was one that has made matters worse.
Six years earlier the Royal Commission on Environmental Pollution had advised that fuel duty be increased every year so as to double the price of fuel, relative to the prices of other goods, by 2005, a plan that would require a nine per cent increase in duty each year. This would have made long distance transport of food less economically attractive, and had the effect of boosting local economies and protecting the environment. Yet what did the government do in the wake of the 2000 protests? It dropped the fuel duty escalator. Long distance transport remained cheap, excess unsustainable consumption resumed. We are now at a point in time where we, as individuals, are faced with two stark choices. Either we carry on as we are. We keep going to the supermarket, buying imported food and spurning our local producers, growers and suppliers. The supermarkets get stronger. The distances get longer. The oil runs out quicker. And we are totally unprepared for the inevitable collapse of this system. After all, we haven’t cooked a proper meal in years, let alone worked out who or where our nearest farmer is.
Or, we turn our back on the supermarketisation of our world. We go to farmers markets, sign up for box schemes, grow our own food. The price of oil continues to rise but this time as the shelves empty in the supermarket and the fights break out over the last chicken tikka massala, we, and the local community we have helped to save and been saved by, are better prepared for a world without oil.
Tully Wakeman is coordinator of East Anglia Food Link. Jeremy Smith is the deputy editor of the Ecologist.
Cuba: Running on (almost) empty
An example of what can be achieved, admittedly on a much smaller scale than would be needed in the UK, can be found in Cuba. In the late 1980s, farmers in Cuba were highly reliant on cheap fuels and petrochemicals imported from the Soviet Union, using more agrochemicals per acre than their American counterparts. In 1990, as the Soviet empire collapsed, Cuba lost those imports and faced an agricultural crisis. The population lost 20 pounds on average and malnutrition was nearly universal, especially among young children. The Cuban GDP fell by 85 per cent and inhabitants of the island nation experienced a substantial decline in their material standard of living.
Cuban authorities responded by breaking up large state-owned farms, offering land to farming families, and encouraging the formation of small agricultural co-ops. Cuban farmers began employing oxen as a replacement for the tractors they could no longer afford to fuel. Cuban scientists began investigating biological methods of pest control and soil fertility enhancement. The government sponsored widespread education in organic food production, and the Cuban people adopted a mostly vegetarian diet out of necessity. Salaries for agricultural workers were raised, in many cases to above the levels of urban office workers. Urban gardens were encouraged in parking lots and on public lands, and thousands of rooftop gardens appeared. Small food animals such as chickens and rabbits began to be raised on rooftops as well.
As a result of these efforts, Cuba was able to avoid what might otherwise have been a severe famine. Today the nation is changing from an industrial to an agrarian society. While energy use in Cuba is now one-twentieth of that in the US, the economy is growing at a slow but steady rate. Food production has returned to 90 per cent of its pre-crisis levels.
For those of you not yet convinced that we are at the end of cheap oil… or who think peak oil is not due for a few decades… or who
aren’t worried because technology will appear to sustain our current lifestyles … take your pick from the following books and websites:
Blood & Oil : How America’s thirst for petrol is killing us
By Michael Klare
Penguin, 2004, £7.99
Crossing the Rubicon :The decline of the American empire at the end of the age
By Michael Ruppert
New Society, 2005, US $19.95
High Noon for Natural Gas
The new energy crisis
By Julian Darley
Chelsea Green, 2004, US $18
The impending world oil shortage
By Kenneth S Deffeyes
Princeton University Press, 2001, £10.95
A survival guide for the end of the fossil fuel world
By Matthew Henley
Publish America, 2005, US $19.95
It’s the Crude, Dude
War, big oil and the fi ght for the planet
By Linda Mcquaig
Anchor Canada, 2005, Canadian $22
By Colin J Campbell
Multi Science Publishing, 2005, £23.50
Options and actions for a post-carbon world
By Richard Heinberg
Clairview Books, 2004, £10.95
The End of Oil - The decline of the petroleum economy and
the rise of a new energy order
By Paul Roberts
Bloomsbury, 2004, £17.99 (Hbk)
The Growth Illusion
How economic growth has enriched the few, impoverished the many, and endangered the planet
By Richard Douthwaite
Green Books, 1999, £12.95
The Last Hours of Ancient Sunlight
By Thom Hartmann
Hodder & Mobius, 2001, £8.99
The Long Emergency
Surviving the converging catastrophes of the twenty-first
By James Howard Kunstler
Atlantic Books, 2005, £12.99
The Party’s Over
Oil, war, and the fate of industrial societies
By Richard Heinberg
Clairview Books, 2003, £11.95
Twilight in the Desert
The coming Saudi oil shock and the world economy
By Matt Simmons
Wiley, 2005, £15.99
www.dieoff.org (comprehensive directory of articles on oil peak)
www.drydipstick.com (a peak oil metadirectory)
www.energybulletin.net (a clearing house for current
information on the peak in global energy supply)
www.globalpublicmedia.com (public service broadcasting for a
www.odac-info.org (an independent, UK-registered educational
charity working to promote better understanding of the world’s
www.oilcast.com (energy news site)
www.oilcrisis.com (comprehensive site on the coming global oil
www.peakoil.com (up-to-the-minute news and message boards)
www.peakoil.ie (home site for Dr Colin Campbell, one of the
kings of peak oil)
www.postcarbon.org (educational institution and think tank
that explores in theory and practice what cultures, civilisation,
governance and economies might look like in a post-carbon
www.powerswitch.org.uk (UK campaigning website)
www.322.org.uk (peak oil, global warming and nutrition)
This article first appeared in the Ecologist October 2005
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