Oil Has Peaked: Now Begins the Transition

By Shaun Chamberlin, Chelsea Green Publishing. Posted April 6, 2009.

This incredible energy source fuelled the rapid developments of the 20th century, whether in technology, industry, food yield or transport, and is also the source of the plastics and many synthetic materials that are everywhere around us. Ninety-five percent of all goods in shops involve the use of oil, and ninety-five percent of the UK's food is now oil-dependent. Just to farm a single cow and deliver it to market requires six barrels of oil, enough to drive a car from New York to Los Angeles.

As oil becomes more expensive and less available it affects the price and availability of the products and services throughout the economy that are dependent on it, as well as the jobs tied into these products and services. And since oil features in the supply chain of almost every company, the health of the national and global economy is also threatened as they all find their costs increasing within an economy whose total productive capacity is decreasing.

In other words, the growth of our economy is dependent on a growing net energy supply, and for the first time in centuries it is unlikely to have it. A real cause for concern is that our economic system as currently designed fails without continued growth, leading to bankruptcies, defaults on loans and mortgages, mass unemployment, homelessness and a myriad of other unpleasant consequences.

At this point, however, it seems appropriate to remember the insight of the science fiction writer William Gibson that:

"The future is already here, it's just unevenly distributed."

Peak oil is no longer simply a future problem. While richer countries have been able to pay the increasing prices demanded for oil globally, those with less money have been struggling to afford the supplies they rely on.

In early 2007, a U.N. report found that:

"Recent oil price increases have had devastating effects on many of the world's
poor countries, some of which now spend as much as six times as much on fuel as they do on health. Others spend twice the money on fuel as they do on poverty alleviation. And in still others, the foreign exchange drain from higher oil prices is five times the gain from recent debt relief.

Of the world's 50 poorest countries, 38 are net importers of oil and 25 import all of their oil requirements."

When the report was published the oil price stood at $60/barrel, but over the next 18 months it proceeded up to over $140 a barrel. If the effects on the poorest countries were "devastating" at $60/barrel, they became yet more so.

The possible future America was warned of in that 2005 Department of Energy report, with its abrupt and revolutionary economic, social and political impacts, has already been unfolding elsewhere. Outright energy shortages and deadly fuel riots have been seen across the world, and the peak oil predicament underlying them is only worsening as time goes by.

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