Will My Daughters Be Serfs?
I have just spent a couple of hours reading Fossilgate which was on the
FutureWork List. It was about as exciting as a trip through Dante's
Inferno on your deathbed, in fact it could be an industrialized version of
the future for consumers rather than souls.
The facts are simple, as simple as the amount in your bank account.
Anything we withdraw from the petroleum reserves after the year 2000
diminishes the capital stock. There will be no new deposits. When it is
gone - it is gone. The second truth is that when a resource becomes
scarce, its value increases. The third fact is that everything we make has
a petroleum content. Therefore, logic says that everything will go up as
soon as the news is out. For those who hold petroleum, the longer they
hold it the more it is worth, therefore expect countries with reserves to
become very restrictive about selling their reserves and also, that they
will charge a continually escalating premium as the reserves continue to
deplete.
Forget our economic fiddling about inflation of 1 - 3%, those days will be
history. Instead, expect inflation to jump drastically, let's put a figure
on it, let's say 50% - yep, chew on that for a minute. Oil has twice
reached the $40 per barrel level, in 1974 and 1982 for short periods,
that's a precedent. Expect the first increase to be at least that,
doubling the price of the petroleum content of every good and service you
consume. This will cause a major deflation of your wealth and income.
Because the prices are going up due to scarcity, there will be no
corresponding increase in wages. Therefore, be prepared to try and exist
on 50 - 70% of your current income.
The worst is yet to come, massive industrial unemployment will follow
within months. As everyone loses 30 -50% of their income, they will
purchase less of non-essentials because they won't have the money. As the
capitalistic model strives for efficiency, large production runs have lower
prices. When those runs fall below a certain volume, efficiencies of scale
disappear. To stay in business, many businesses will be forced to raise
prices astronomically because of a shortage of consumer money - many will
close their doors.
Governments will not have the revenue or credit to maintain social services
even if they keep them at their current dollar level, their actual level
will be 50% less, not enough to even provide subsistence. Expect massive
crime and rioting as people are literally fighting for life and the lives
of their families. The model of self interest and competition we have all
grown up with will throw societies into Darwinian situations as the
strongest, formed into gangs, will prey on the weakest or god forbid,
actually gang up on the rich.
But a funny thing happens on the way to disaster. As petroleum energy, in
all its manifestations from gasoline to plastic bags become more expensive,
human labour gains in value also. Lets go back to 1600, when the world was
run on solar power. (Yes, no matter how rich or blest you are, the bottom
line is that human life runs on solar power in that we take in food and
water that is the result of natural processes.) The only excess energy
over human muscle was a horse, ox, dog or wind - all solar power energy
sources. Now between 1600 and 2100, we discovered alternate energy
sources, first coal, then steam, then electricity, then petroleum and then
nuclear. All stored energy of the planet rather than solar dependent
energy. This allowed, along with technological innovation, a man to do
considerably more work than he could with real time solar power.
Therefore, the more efficient we became in using this stored energy, in a
manner of speaking, the less value human muscle energy became. For
example, one small tractor, a plow and one man, might do two acres of
plowing per hour. Using muscle power, it might take a horse, a man and a
plow 8 hours to do two acres. Therefore, if the market price for the
tractor is $20 per acre, then $40 dollars worth of work was done because of
cheap energy. If a man, horse and plow did this, at the end of a day, we
would have to divide the 8 into 40 for an hourly rate of $4.50, one could
say, not enough wages for a man to live on therefore it is more viable to
use the cheap petroleum energy rather than the expensive solar energy.
But, if the cost of petroleum energy doubled, causing the cost to rise to
$80, then a man and a horse are now competitive at $10 per hour, an
adequate sum to buy the necessities of life. So we can see that the
possibility exists that as the cost of petroleum rises, many things will
become more economical through human labour that have been eliminated by
our use of cheap powerful energy.
Remember, there are no shortcuts, when we pass 2000, we are using up the
last half of our capital stock of petroleum energy. Therefore, in a funny
and unforeseen way, I see unemployment could be a temporary problem as the
cost of energy rises, it becomes cheaper to hire humans than it does to
burn petroleum - I didn't say nicer, as it is much nicer to sit in a
tractor with air conditioning and your favorite stereo music playing than
it is to follow the methane end of a horse.
By 2030, petroleum may be so scarce, that we might be looking at gasoline
at several hundred dollars a gallon. Humans only need 3000 calories a day
of solar power energy.
Petroleum energy has a natural limit on it. When it takes more energy to
find, process and use it than the new energy supplies, you have a net
deficit. This was the problem and is the problem with much of the tar
sands in Alberta. The net gain is so small energy wise, that you invest
100 gallons to make a 110 gallons or as Shakespeare would comment, "much
ado about nothing." As our petroleum energy reserves wind down, we will
have to make the difficult investment decisions about whether to use what
we have to save labour or to develop more energy. However that is the next
generations problem.
Now back to my headline, "Will my Daughters be Serfs?" Let me tell you a
sloppy story, I take a lot of liberties but this is to make a point, not
good literature.
I live in Canada, in the Ottawa valley which is quite agricultural. We can
grow carrots, however we import carrots for most of the year because of our
crop cycle. The imported carrots come from Arizona, California and Mexico.
They use irrigation, high tech farming, intensive fertilization and they
truck the carrots to Ottawa all year around. About 50 years ago, the only
way we had carrots for most of the year was to grow our own and store them
in root cellars, dark, cool underground storage areas. We managed to have
carrots about 10 months of the year.
Let's assume that the farmer can grow a ton of carrots in Arizona for $2000
and it costs another $500 to truck that ton of carrots up to my grocery
store. The cost to the grocer is $2500 per ton, or $1.25 per pound and
then he adds his overhead and profit. Let's say that in the Ottawa Valley,
you can get a ton of carrots per acre and that if I dug up by hand,
planted, hoed and harvested my acre and delivered my produce to the
supermarket, I could get $2,500 - the going market price. The reason we
don't do this is that it takes 500 hundred hours of work and I can't work
for $5.00 per hour or more to the point, it is not worth it to me to work
that hard for only $5.00 per hour.
Now, basic economics says that if his costs go up, the price of his product
have to go up or he goes broke. Now, I want carrots, they are a basic
food. If I want them, I will have to pay $2.50 per pound, so will you.
Now, it become feasible for me to work my acre of ground and make $10.00
per hour. The same holds true for digging a basement or mowing the lawn.
As the price of petroleum goes up, so does the value of labour and at some
point, for almost every item you can think of, there is an economic point
where labour can compete.
Will my daughters be serfs? I think so. I think that the world is about
to de evolve back to a solar society. Oh yes, it won't be quite as grim as
the middle ages, we have learned a lot about technology and we will still
have electricity. However, within 100 years, petroleum will be gone and
nuclear will probably be gone to. We will get better at non renewable
resources but I don't think we will ever have the surplus that the 20th
century gave us with the discovery of petroleum. I think future
generations will look back at our lifestyle much as we look back at the
most decadent Roman periods.
All our present concerns about GDP, quality education, careers, the unity
question will be subverted by a world that has to deal with the petroleum
fact. This is the best, 1997, may very well be viewed as the pinnacle of
cheap energy and human indulgence. We were there, we will say and we will
forget that it wasn't so great because against what will then be facing,
this will appear to be heaven.
It would be nice to think that our futurists and politicians and our
business community would face this altruistically, be honest, be fair to
all the people of the world and strive to make this transition with as many
souls as possible. However, we have spent the last 2000 years in
hierarchical models of survival, so I don't expect any change. Those who
come from a different model, the natives, the Quakers and those of
communitarian mind, we have done our best to exterminate, convert or
denigrate. Yes, authoritative governments of the military type, gangs in
the hinterland, daily grind for those in the middle, massive starvation for
those who chose the wrong place to be born, as Leonard Cohen says, "I've
seen the future, brother: it is murder."
