Saturday, December 11, 2010

We live in interesting times

"May you live in interesting times" is reputed to be the first of three ancient Chinese curses (Source). Well, we are in the midst of times which are certainly interesting. One reason they are interesting is that they appear to be unpredictable. I am used to predicting my future based on my recent past, expecting that things will remain much the same as they are and life will basically be a case of 'business as usual'. This has always worked in the past and I have regarded attempts to woo me away from it to be the actions of long-haired right (or left) wing radical hippie pot-smoking trouble makers.

Now, I am not so sure.

This blog is a record of my attempts to untangle the present enough to work out what might happen next and, from this, to predict what might happen in my lifetime.

I am just Mr. Average Citizen. I am not an economist, environmentalist, or any other kind of high-profile '-ist'. What I am is a retired computer systems analyst, a product of our age of technology. My only asset is an ability to focus - my wife says obsessively - on problems that interest me. I do not expect to bring new information to the debate, but only to winnow kernels of fact from the harvest of information available on the Internet.

The current problem that interests me is this: What will happen as energy gets more expensive?

Like most Baby Boomers, I have been used to cheap fuel for my car, cheap electricity for my computer and unquestionable solidity in the banking industry. As an Australian, I have also been used to a world in which the USA is generally cast as the good guy in global conflicts, by the media in my country.

This decade, I have seen oil prices go from about $25 per barrel (Source) to about $90 per barrel (Source) and electricity charges rise by 13.29 per cent on July 1 2011 (Source) following annual rises in excess of inflation since at least 2007. In the same period, the global financial crisis has hit and the shiny image of the USA has become more than a little tarnished.

Could all this have been forseen? I certainly did not see it coming, but researching now I see there were plenty of clues and plenty of well informed commentators sounding alarms. What has been missing is media focus, to let Mr. Average Citizen know what to expect.

My research to date leads me to the conclusion that much of the geopolitical turmoil and financial instability we are living through comes from one root cause, which is that the world is running out of cheap oil. Cheap oil. We are not running out of oil as a commodity and probably never will, because there will always be some which is just not worth extracting.

The problem is that we are reaching the point where world demand cannot be met by available supply and the oil which is being produced is getting more expensive to extract. This is resulting in the price being bid up on global markets, as developed and developing economies compete for this shrinking resource which fuels almost all economic growth.

This blog will not attempt to argue the case for an impending oil shortage, as that has been done already by many other people. If the reader is interested in this background, I recommend googling 'Peak Oil' and 'Energy Decline'. As far as I am concerned, if a body as conservative and optimistic as the International Energy Agency (IEA) states that oil production probably peaked in 2006, that is good enough for me. For an insightful discussion of the IEA's 2010 World Energy Outlook (WEO) report, I recommend you turn to this article by Chris Martenson.

I am here having already arrived at the conclusion that an oil crunch is coming in the next handful of years and in this blog I am interested in exploring both the near term and long term impacts this will have on oil-powered economies in the developed world. Is it going to be a bump in the road, or will it be the end of civilisation as we know it? What will be the social and geopolitical impacts as we transition to a low-carbon future and what kind of society will eventually stabilise? How does climate change fit into the mix?

Watch this space for the next exciting episode. Please note that this web page has been produced using only recycled electrons.

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