One of the central functions of government under state capitalism is to subsidize the inputs to large-scale business enterprise, like energy and transportation.  The railroad land grants, the civil aviation system and jumbo jet industry created almost entirely at government expense, the Interstate Highway System, a foreign policy aimed at providing cheap and abundant oil for the American economy…  all these things have a massive distorting effect in favor of large scale organization and economic centralization.

But whether or not the state can be persuaded by political means to withdraw all these subsidies, the effects of Peak Oil will probably be more than enough to overwhelm the state’s capacity and counteract the effects of its subsidies.

Right now the American public is largely in denial, hoping for some technological fix that will enable the present economic pattern to persist:  a “warehouses of wheels” economy of large market areas supported by trucks and cargo jets, and a lifestyle centered on bedroom communities and long commutes.  But this is almost certainly not going to happen.  There’s simply no energy alternative that provides anywhere near the energy return on energy investment (EROEI) of fossil fuels.

James Kunstler dismisses as “delusional thinking” the “desperate wish to keep our ‘Happy Motoring’ utopia running by means other than oil and its byproducts. “  Peak Oil will impose drastic changes in

The way we produce food

The way we conduct commerce and trade

The way we travel

The way we occupy the land….

….First, we’ll have to dramatically reorganize the everyday activities of American life. We’ll have to grow our food closer to home, in a manner that will require more human attention. In fact, agriculture needs to return to the center of economic life. We’ll have to restore local economic networks — the very networks that the big-box stores systematically destroyed — made of fine-grained layers of wholesalers, middlemen and retailers.

We’ll also have to occupy the landscape differently, in traditional towns, villages and small cities. Our giant metroplexes are not going to make it, and the successful places will be ones that encourage local farming.

Incidentally, while Kunstler’s right about the sustainability of existing metroplexes, he’s probably wrong in his prediction that their collapse will necessarily be sudden or catastrophic.  With sufficiently restructured economies, their present sites could probably support at least a majority of their current population.   When Kunstler says that the car-centered suburb is non-viable, he’s right.  But I think he neglects the possibility of transforming the suburb into a diversified and self-sufficient local economy.  It will require the development of networked local economies, the emergence of commercial centers in existing monoculture suburbs, and local exchange systems and division of labor based on household production and crop specialization.

For local food production, the amounts of greenspace, in lawns and elsewhere, available raised-bed horticulture and edible landscaping, are enormous…. [Redundant sentence deleted--KC]   I can’t track it down, but a study in the UK found that–despite fears by some that suburban sprawl was causing the destruction of farmland–total food production actually increased in newly suburbanized areas because of backyard gardens.  In China, according to the authors of Natural Capitalism, some 85% of urban vegetable consumption is supplied by rooftop and small lot production (as well as significant amounts of tree crops, and some small-scale sources of meat like poultry) [p. 74].

Even in the area of industrial production, the transition to a survivable local economy probably isn’t as hopeless as Kunstler makes it out to be.  As I argue in the draft Chapter Fourteen of my org theory manuscript (”Decentralized Production Technology“):

In a post-Peak Oil world, following a collapse or severe degradation of the national transportation system and the centralized economy dependent on it, facilities to keep existing appliances and machinery running might well be the first step toward local industrial self-reliance.  Small machine shops, even the backyard shops of hobbyists, out of sheer necessity might begin to custom-machine the spare parts needed to keep aging machinery in operation.  From this, the natural progression would be to farming out the production of components among a number of such small shops, and perhaps designing and  producing simple machinery from scratch.

This is, by the way, exactly the way Jane Jacobs (In The Economy of Cities) describes the Japanese bicycle industry developing.

To replace these imports with locally made bicycles, the Japanese could have invited a big American or European bicycle manufacturer to establish a factory in Japan…  Or the Japanese could have built a factory that was a slavish imitation of a European or American bicycle factory.  They would have had to import most or all of the factory’s machinery, as well as hiring foreign production managers or having Japanese production managers trained abroad….

[Instead], shops to repair [imported bicycles] had sprung up in the big cities…. Imported spare parts were expensive and broken bicycles were too valuable to cannibalize the parts.  Many repair shops thus found it worthwhile to make replacement parts themselves–not difficult if a man specialized in one kind of part, as many repairmen did.  In this way, groups of bicycle repair shops were almost doing the work of manufacturing entire bicycles.  That step was taken by bicycle assemblers, who bought parts, on contract, from repairmen:  the repairmen had become “light manufacturers.”

Jeff Vail argues, along lines similar to Kunstler’s, that since available energy inputs will not only not rise “45 percent more by 2030” (as the fossil fuels industry agitprop puts it), but will be radically reduced, the only way to maintain or improve the real standard of living is through “improving technics–improving how we use the energy that we do have to create quality of life.”  Vail suggests an alternative paradigm for technics, to promote a high quality of life with dramatically reduced energy inputs, based on three organizing principles: “decentralized, open source, and vernacular.”  He uses the Tuscan village to illustrate them:

How is the Tuscan village decentralized? Production is localized. Admittedly, everything isn’t local. Not by a long shot. But compared to American suburbia, a great percentage of food and building materials are produced and consumed in a highly local network. A high percentage of people garden and shop at local farmer’s markets.

How is the Tuscan village open source? Tuscan culture historically taps into a shared community pool of technics in recognition that a sustainable society is a non-zero-sum game. Most farming communities are this way—advice, knowledge, and innovation is shared, not guarded. Beyond a certain threshold of size and centralization, the motivation to protect and exploit intellectual property seems to take over (another argument for decentralization). There is no reason why we cannot share innovation in technics globally, while acting locally—in fact, the internet now truly makes this possible, leveraging our opportunity to use technics to improve quality of life.

How is the Tuscan village vernacular? You don’t see many “Colonial-Style” houses in Tuscany. Yet strangely, in Denver I’m surrounded by them. Why? They make no more sense in Denver than in Tuscany. The difference is that the Tuscans recognize (mostly) that locally-appropriate, locally-sourced architecture improves quality of life. The architecture is suited to their climate and culture, and the materials are available locally. Same thing with their food—they celebrate what is available locally, and what is in season. Nearly every Tuscan with the space has a vegetable garden. And finally (though the pressures of globalization are challenging this), their culture is vernacular. They celebrate local festivals, local harvests, and don’t rely on manufactured, mass-marketed, and global trends for their culture nearly as much as disassociated suburbanites—their strong sense of community gives prominence to whatever “their” celebration is over what the global economy tells them it should be.

There are a number of concrete models for getting from here to there.  For example, the Energy Descent Action Plan (EDAP), developed by students in the Practical Sustainability course at Ireland’s Kinsale College, describes how the town of Kinsale might make the transition to living on half of current energy inputs twenty years from now, in a decidedly non-catastrophic manner.   The EDAP envisions the lawn having virtually disappeared by the end of the process, replaced largely by edible landscaping.  By the time Peak Oil runs its course, the lawnmower will be a museum relic.

Cuba has already undergone, in recent years, something like the transition we face to local and sustainable food systems–and it has managed to survive a transition far more sudden and catastrophic than what we are likely to face.  Until the collapse of the Soviet bloc, Cuba was heavily dependent on foreign oil imports to sustain a large-scale, mechanized agriculture on the Soviet (or Cargill/ADM) model.  Deprived of these inputs, they were forced to cut back drastically on the use of electric power and transportation, on farm equipment, and on petroleum-based chemical fertilizers.   They were also deprived of Soviet bloc markets for an agricultural economy centered on cash crop sugar.  Over the following decade, as Bill McKibben describes it, Cuba shifted from growing sugar for export to growing food

on small private farms and thousands of pocket-sized urban market gardens—and, lacking chemicals and fertilizers, much of that food became de facto organic. Somehow, the combination worked. Cubans have as much food as they did before the Soviet Union collapsed. They’re still short of meat, and the milk supply remains a real problem, but their caloric intake has returned to normal—they’ve gotten that meal back.

In so doing they have created what may be the world’s largest working model of a semi-sustainable agriculture, one that doesn’t rely nearly as heavily as the rest of the world does on oil, on chemicals, on shipping vast quantities of food back and forth.

In the industrial realm, the economy in Italy’s Emilia-Romagna region is ideally suited to survive the shock of transition to small-scale manufacturing for local markets.  Emilia-Romagna is organized on a  “cluster model” of “[s]mall firms operating in cooperative networks…,”  with most individual firms operating as subcontractors to local manufacturers of finished goods.  Although much of the region’s industry is presently geared to the global market, with its prevailing small size and the presence of entire production and supply chains in the same area, it can almost certainly manage the transition to serving the local market far more easily than the American industrial economy.

One problem in achieving energy efficiencies is that there’s so much inertia, as a result of path dependency in engineering culture.  For the past several decades, we’ve had an industrial culture based on easy profits from extensively adding more cheap inputs rather than intensively extracting maximum use from existing inputs.  The old Soviet economy promoted a similar culture by pricing energy inputs at a third their actual cost [Natural Capitalism, p. 42].

There is an enormous amount of low-hanging fruit out there which, as a result of cultural inertia, American industry has almost totally ignored. And American corporate accounting culture does not treat the savings from energy efficiency as equivalent to the returns on any other capital investment.  The corporate bean counters, tyically, require an investment in energy efficiency to pay for itself in two years before they will consider it–an astronomical rate of return compared to other capital investments.  When savings from energy efficiency are treated as ordinary returns on investment, it turns out that the cheapest source of “new energy,” in terms of price per kilowatt-hour, is conservation.

But the way energy prices are rising, we’re probably about to reach a threshold where people start paying attention.  There are clear signs we’re beginning to make the transition.  During the energy crisis of the late ’70s and early ’80s, Warren Johnson argued in Muddling Toward Frugality (Sierra Club Books, 1978) that the long-term effect of rising energy prices would be to  shorten supply chains, shrink market areaas, and localize production.   Although he jumped the gun by a generation, his book seems prophetic in light of current events.

According to the authors of Natural Capitalism, the last time energy consumption per capita actually declined was in the oil crisis of 1979-83, when energy consumption declined by 6% (at the same time as  the economy grew by 19%) [pp. 249-50].

We seem to be already experiencing a similar reduction, as a result of record oil prices over the past year or so.  What’s more, this is probably a long-term crisis, unlike the one that occasioned Johnson’s book.

Total car miles driven are down by around 5% from this time last year.

A number of economists viewed May’s record $130/barrel oil price as a tipping-point.  Car dealers are having trouble getting rid of SUVs at any price, and there are waiting lists for fuel-efficient cars.  Airlines are raising ticket prices and baggage-handling fees, and will probably have to eliminate around 20% of routes if oil doesn’t fall under $100/barrel sometime soon.

“The airline industry is devastated. It can’t survive $130-a-barrel oil,” said industry analyst Ray Neidl at Calyon Securities in New York.

The trucking industry is facing a similar catastrophe.

American corporations, which for years have outsourced production to China and other suppliers of sweatshop labor, are now frantically looking for ways to shorten their supply chains.

Meanwhile, in the face of rising grocery prices, nurseries and seed companies are seeing skyrocketing demand for home vegetable production supplies.

Probably the single biggest piece of low-hanging fruit, in industrial production,  is waste heat recycling:

Recycling the heat that spews from industrial smokestacks may be one of the biggest opportunities for reducing greenhouse gas emissions, yet not many climate-savvy entrepreneurs are aware of it. When it comes to energy conservation, “[b]y and large, the world ignores the biggest, single most cost-effective, most profitable thing to do, which is recycle the energy that we’re wasting,” says Thomas Casten, chairman of the Illinois-based company Recycled Energy Development (RED).

Of the 500,000 smokestacks in the United States, the 47,500 stacks that produce waste heat above 260 degrees Celsius (500 degrees Fahrenheit) could produce at least 50,000 megawatts of power, says Casten….

…[T]he United States could conceivably continue producing the same amount of energy it does now, with half the fossil fuel, by recycling the waste heat from its factories and electric generating stations….

It typically takes three to four years for RED’s projects to make back their initial investment in the heat-recycling equipment, a roughly 35 percent return.

Better urban design would achieve enormous savings.  Right now, there are two separate cities for the average American–one city where he works and shops, and one where he lives–with a complete utility infrastructure for each and a freeway infrastructure connecting them.  Portland estimated that the savings from restoring the neighborhood grocery to monoculture suburbs, alone, would result in a 5% savings in gasoline [Natural Capitalism, p. 45].

Passive solar design could reduce energy use for heating and cooling by some 80% [Natural Capitalism, pp. 82-83].  Passive solar cooling is far less familiar to most people than passive solar heating, by the way.  As Jeff Vail describes it,

… while in Phoenix it may never get below 90 at night during some points in the summer, the temperature of the earth at 10′ underground is always a nice 55-65 degrees F. A simple solar chimney on your home (roughly, imagine a normal chimney x 50%, with a single-glazed window on the South side and a black-painted vent pipe inside) will heat up and pull air rapidly out of your home. Now, for air intake, lay a “radiator”, a network of pipes 10′ underground that acts as a heat-exchanger with the thermal mass of the earth. As the solar chimney draws air out, you get nice, cool air blowing in through vents in your floor. 0 energy cost, 0 moving parts, simple technology, and it keeps your (well insulated) home at a comfortable temperature and well ventilated, even in Phoenix in August.  Similar technology has been in use in vernacular architecture in the Middle East for thousands of years.

Here’s the catch: because it’s vernacular technology, and can be easily implemented in a decentralized fashion, there isn’t much money to be made off this through a centralized/industrialized economic mode. But it works… this is the very stuff of freedom.

This is a classic example of something that’s probably at a tipping point, thanks to current energy prices.  Almost nobody’s heard of this, and the building industry’s probably not interested in trying anything new without massive consumer pressure.  But there are people out there who use this stuff, and when they explain to their neighbors that it keeps their indoor temperature under 80 degrees when it’s over 100 outside, with no $300 monthly electric charge, you’d better believe the number of people asking about it will increase exponentially.

Tags: peak oil