Peak water, peak fish and the end of everything

‘Peakonomics’ forgets there is such a thing as innovation. The Stone Age didn’t end because they reached ‘peak rocks.’


 

Peak water, peak fish and the end of everythingWhat do salmon dinners, SUVs, and subprime mortgages have in common? They all depend on cheap oil, at least according to the book jacket of Jeff Rubin’s bestselling new book, Why Your World is About to Get a Whole Lot Smaller.

Rubin is a former chief economist for CIBC World Markets, and a recent convert to the economics of peak oil—the supposed point at which global oil production reaches its maximum level, after which it enters a long, slow decline. The result, Rubin argues, will be a world where demand increasingly outstrips supply—and the end of the entire global economic order.

But, surprising coming from a guy whose last job was predicting where the world economy is headed, all this talk of peak oil is old news. The peaknik movement has already moved on from its obsession with oil and—like the peacenik movement of yore—split into a multitude of factions, each warning of the impending catastrophic consequences of one form of peakonomics or another.

And so in addition to the peak oilers, we now find people banging on about peak fish (the point at which the amount of food we can pull from the sea goes into decline), peak soil (same thing except for agriculture), peak water (an impending water shortage) and peak carbon (which has something to do with global warming). A former Cisco employee named Jaswant Jain has identified something he calls peak debt, the point at which the ability of consumers to access credit will run out, with a corollary called peak dollars, the supposed limit of the government’s ability to print money.

And recently, in a slightly different vein, educational policy folks have warned about peak enrolment, after which university enrolment will go into terminal decline, presumably leaving the groves of academe looking like an abandoned set from a new Mad Max sequel.

These arguments can be seductive. Resources, after all, are finite, and it stands to reason that at some point we’ll drill all the oil, and fish out the oceans. But there is hope, whether or not the peakniks like it.

At its essence peakonomic thought rejects the foundational economic principle of our civilization, that over the long term, increased productivity leads to ever-higher levels of prosperity, social stability, and well-being. Instead, peakniks suggest output will soon crest in any number of sectors, followed by an extended or permanent period of decline. The assumption is all historical trends in production and consumption inevitably continue along their current path, with no hope for innovation, no leaps in technological progress or improvements in institutional design.

But why should we buy this assumption? It is weirdly ahistorical to think we’re not going to get massive innovation in each of those sectors. Over the past 100 years, life in the developed world got steadily better by almost any conceivable measure. Life expectancy rose while infant mortality dropped; the air quality of our cities improved, food got cheaper and more nutritious, and the workplace became safer as wages steadily climbed. There is no reason to think this sort of across-the-board progress cannot be sustained. From global warming to food production to the current economic crisis, the odds are we’re going to figure things out.

Peak oil may just be a much-needed first stop toward progress. As President Obama’s new energy secretary, Steven Chu, has argued, most of our energy technology is 19th-century technology. Compared with other areas of innovation—computers, biotech, information technology—energy saw a period of almost total stagnation in the 20th century. The simple reason is, there’s so much energy in oil that nothing else could compete. Oil’s ridiculously low price-to-energy ratio was also a barrier to technological innovation, so high prices should eventually lead to a better solution. To put it another way, the Stone Age didn’t end because they reached “peak rocks.”

But that’s historical amnesia for you. Peakniks are driven not just by pessimism about the economy or the environment, but a deeper distrust of the entire modern project. Call them doomers, dystopians, or neo-Malthusians, but they are at heart “declinists.” And what motivates declinism is an abiding distaste for the modern world—the urban alienation, the individualism, the shallow entertainments and mindless consumerism. For declinists, peakonomics is not a threat but a hope: once the collapse happens we’ll be thrown back into a low-impact hyper-local subsistence economy—precisely the sort of lifestyle most declinists think we should be adopting regardless.

The doomers may be right. Thanks to peak oil, our world may get a whole lot smaller, and certainly, the best-case scenario, of more local economies that will repatriate lost jobs and revitalize neighbourhoods, doesn’t sound so bad. But what about the prospect of more people chasing ever-fewer resources, leading to civil strife, population dislocation, even war? Even if it doesn’t come to that, there is no reason to think our lives will get a whole lot better. Much about the good old days was truly awful, which is why people spent a great amount of effort trying to make things better. They called it progress—perhaps the one old-fashioned idea worth preserving.


 

Peak water, peak fish and the end of everything

  1. A point well worth making. But (there's *always* a but!) the historical changes you reference were largely in the context of increasing productivity, inventing new technologies, and that sort of thing. Those changes have largely been the result of human agency. (For example, intensive agriculture wasn't developed because there were too many folks to feed with old methods, it was the new approaches that allowed for sustained population growth).

    Perhaps there's some parallels in coping with ice ages or droughts to learn from, but I'm not convinced that inventing the steam engine or genetically modifying corn is the same thing as coping the relatively sudden loss of oil, the loss of arable land in the face of a huge population, and that sort of thing.

    I think your critique of the declinists is bang on in many ways, but surely we can allow that 'progress' might not have an infinite curve.

  2. "There is no reason to think this sort of across-the-board progress cannot be sustained."

    As I understand it, peakism views resources as finite, whereas technology can only affect what we do with those resources. Surely the faith that some new source of energy will spring up is rather naive. Sure, fusion power vel sim. would solve our problems, but so far there are still no free lunches. As to progress being infinite, that is hard to believe from a historical point of view; you can't extrapolate a whole theory of human destiny from the last 250 years. Rather, it seems to me that we are reaching the end of technological innovation in terms of the ability to harness pressure via steam and via oil; in that field, there have been no breakthroughs (correct me if I'm wrong) for 50 years, if not the last 100, only fine-tunings. Sure, things like computers have changed the way we live our lives, but they don't affect the fundamentals, which boil down to one man mining steel, another refining it, a third turning it into an engine, and a fourth building a vessel to ship the raw ore across the ocean. Look at WWII: discipline, tactics, strategy — in the end it came down to who had the oil and who had the rubber.

    • RE: WWII – and more horses than the movies would have us believe.

    • Resources are indeed finite, but in most cases we have barely scratched the surface of what is actually available to us. For instance, there is, no such thing as "peak steel" simply because when the most economic reserves of iron ore are depleted we still have access to quadrillions of tons of iron. They may be less concentrated and less accessible, and therefore more expensive to mine and refine, but they are still available to us.

      • You’re missing the point. With energy becoming more and more expensive, those iron resources become less and less available. At a certain point, ‘more expensive’ becomes ‘too expensive’.

  3. Personally, I think the same psychological elements at play that make peakology a seductive passtime are involved in email hoaxes using urban legends to provoke serial forwarding to everyone in your contact list.

    We like to have the bejesus scared out of us and to be the first one to pass it along to credulous friends and family. It puts us in the superior know it all seat of predicting a crisis and putting it on others to solve.

    As you say, I have no doubt certain resources are finite – but predictions of oil's end point have so far surpassed the first such prediction I heard in 1979 – 15 years and that's it, baby. We just doubled the end point and the theoretical peak point still hasn't been reached, let alone the end point predicted then for 1984.

    I just hope the invention borne of necessity that replaces octane produces something that gives me that kick in the pants feeling of acceleration and the freedom having personal and mass transit oil has given us.

    • Except that American Oil production peaked in the 70's and the Saudi's may be peaking now…and yes, technology can definately have an impact (I for one like the idea of wind and solar power alternatives – lots of windy/sunny places out there. Think of all that land in the Sahara that can't be used for farming…can you say MASSIVE solar farm? And it's not oil running out – it's the cost of getting the oil out of the ground getting super super high.

  4. Labelling those reasonably concerned as Luddites and Cassandras is pointless. Your cornicoupian and ultimately religous faith in technology and unending progress is of no real help to the need to modify our behaviour while we may still have time. If you are right, great! If you are wrong……. Yes life has improved. We have made great progress so far, but who is being ahistorical when the arc of history can, as it has in other cultures, also bend the another way? Linear progress? I think not.

  5. "Even War!"

    That is ridiculous that a war would be fought over oil! (Sarcastic)

  6. You are right that its not all doom and gloom. Though I think you are making some sweeping generalisations about all people who think we are nearing a production peak in conventional oil.

    The energy future looks quite bright in the long run. we have a stable fusion reactor at a safe distance of 92 million miles, that is good for a couple of billion years. We have the technology to harness it with solar thermal, wind and tide (all having good EROI).

    Its just the transistion period that will cause some pain.

  7. A point well worth making. But (there's *always* a but!) the historical changes you reference were largely in the context of increasing productivity, inventing new technologies, and that sort of thing. Those changes have largely been the result of human agency. (For example, intensive agriculture wasn't developed because there were too many folks to feed with old methods, it was the new approaches that allowed for sustained population growth).

    Perhaps there's some parallels in coping with ice ages or droughts to learn from, but I'm not convinced that inventing the steam engine or genetically modifying corn is the same thing as coping with the relatively sudden loss of oil, the loss of arable land in the face of a huge population, and that sort of thing.

    I think your critique of the declinists is bang on in many ways, but surely we can allow that 'progress' might not have an infinite curve.

  8. Seeing improvements and technical progress is OK, but we have only improved that what directly affects us: the air we breath in the city, the water we drink or swim in. The rest that doesn't immediately affect us is degrading at in increasing rate. Biodiversity is declining rapidly, even where laws protect the environment, species disappear at a rate 100 times higher than before the age of humans, in very many places water is scarce and running out, the oceans are acidifying, the Pacific is so full of plastic waste that seabirds die from hunger because their stomachs are filled with trash. We may have sufficient energy in the future, but the phosphate required for agriculture is running out, the bees required for pollination are dying, aquifers are emptying. So, what do we eat while watching TV seeing spectacular pictures of environmental disasters?

  9. The real problem is us. There are too many people and we are hard wired to increase our population, our activity and our technology. Jevons paradox has shown us time and again techno fixes provide no solutions, they merely make things worse.

    It has been nice; and still is, but ultimately this civilization will collapse. If anybody thinks otherwise they don't know enough history, which is riddled with collapses. Collapses always have the same underlying factors – population, climate change and resource depletion. Often they are overlaid with some or other social problem too. Religion is a good example. Does any of this sound familiar?

  10. there will be no economic recovery. each attempt at re-starting the economy will be rapidly throttled by spiking oil prices.

    the best analogy for peak oil is a boa constrictor that gets tighter — and tighter — with every breath taken by the world economy. with each successive collapse in demand the price will back down a bit, but successively less and less, and each following expansion of the economy will be a little less hearty. mr. rubin is quite right: our world is about to get a whole lot smaller.

    peak oil is real. but i don't know anyone in their right mind who is eager to experience its effects.

  11. Those “peakniks” have studied the matter in depth and detail. Journalists who write these kind of articles have not. They write articles based on nothing else than “belief”. Belief in progress, innovation.
    Peak Oil means that net energy available for society will decline – unless we replace it with something that has better return on energy invested, we are in deep trouble. Social complexity must decline along with net energy.

    “At its essence peakonomic thought rejects the foundational economic principle of our civilization, that over the long term, increased productivity leads to ever-higher levels of prosperity, social stability, and well-being.”

    The Mayans, the Romans, the Easter Islanders and countless other civilizations probably had the same opinion. History’s graveyard is full of complex civilizations that have collapsed.

    As a “peaknik” I always read all articles that may point to a better future, but I am always disappointed to find nothing but faith in innovation and denial of the problem.

  12. The basic message of Mr.Potter is that peak something did not happen in the past it won't happen in the future. So why buy insurance? Why give a thought to it?
    But, peak something occurred all the time (large land animals in Australia, trees on Easter Island and the Mediterranean). So, civilizations collapsed or they managed to find the resources outside their own territory (oil, copper, land to produce feed for cattle). Only, this time many peak somethings are worldwide…..

  13. i ask our gentle author to consider the following:

    it took 150,000 years for our human population to reach 1-1/2 billion, in 1910 or so.

    it took only 100 years to add 5+ billion to that number. what allowed for such a population explosion?

    CHEAP Oil. oil alone spurred the advances in technology that made possible the simple things — modern sanitation, antibiotics and dentistry, along with cheap fertilizers and all the other oil-based products of modern life — that allowed our lifespans to increase dramatically.

    the author, like many, confuses ENERGY and TECHNOLOGY. the next decade will show that without ever-increasing source of abundant and cheap oil, civilization is like wiley-e-coyote over the cliff — just before he looks down.

    btw, malthus was 100% right: a population will expand until its food supply is curtailed.

  14. the peak oil theory has now been validated. we are past peak oil. predictions can be made. we'll see whose predictions come to pass.

  15. Mr. Andrew Potter, honestly, "The Stone Age didn't end because they reached ‘peak rocks.'"

    Get on with it and get over it … believe what the number tell … and join the "dark" side ;)
    it is a little weird… but there are hardly any "non-peakniks" here…

    • Yes, the 'Stone Age' line is classic misdirection. In the Stone age, we might have USED rocks, but we didn't EAT them, get to work with them, build an industrial society that depends on them to support an immensely oversized population,.. and after it's been used, the ROCK is still there! Of course you don't run out of them.

      Oil is the precious Trust Fund that we just spent on a century's worth of throw-away toys.

  16. This article states that Peak oil "may be a much needed first stop towards progress". That may well be true, but to think that we can somehow carry on with business as usual in the face of declining oil supplies ignores the fact that the past 100 years of "progress" has been driven largely on the back of "rediculously cheap" fossil fuels

    Most at risk in the immediate term after oil production peaks is our ability to feed ourselves.

    Sure, high oil prices will promote innovation in all directions, the problem is can we produce enough energy from the alternatives to maintain our increases in productivity and prosperity. The past 100 years has achieved this, but only at the cost of exponential growth in population, energy use and pollution.

    This is certainly not sustainable in the long term and we may soon discover if it is even sustainable in the short term. We may have the capacity to change things, but only if we first acknowledge that there is a problem! Waiting for peak oil to hit before trying to change will not be a nice experience for anyone. This first stop could end up being the last one for many!

    • Exactly Barrie! And the cavalier attitude toward the problem reveals that we are lax in our responsibility to future generations. I hope to leave a better world to my children and grandchildren.

  17. Well, I sometimes make the point the author makes: that there will be some benefits to the decline. But let's not kid ourselves: this transition away from oil will be mostly unpleasant. We have built an entire civilization on cheap and abundant oil. Take away the oil and we will operate at a much lower energy level, which is a very different world than the one we live in now.
    The substitutes for oil don't even come close because they are too diffuse. Saying that we are simply going to move to solar power is like saying we have to stop living on our $100 million dollar inheritance (oil) and start living on $1000 per month (energy from the sun). It's the same thing for other energy sources.
    Rubin is, in my view, exactly right. Take away the highly concentrated energy of oil and we will soon be living in a very different world.

  18. Another column in which Andrew Potter seizes upon a complex system his doesn't understand and then rolls his eyes.

  19. Former Chief Economist says it all. This guy is a screw up who missed the financial meltdown so now he thinks he can tell us what will happen next. I don't thing so.

  20. "It is weirdly ahistorical to think we're not going to get massive innovation in each of those sectors."

    Of course we're going to get innovation, but that's not a contradiction to realistic "peakists" thoughts. We're going to get innovation but the question is whether we wait until supply is so constricted, prices are so high and our society is so dependent on oil that the transition becomes extremely expensive and painful, or do we do it now, when we can better control the impact?

    Energy-wise, we're running towards a wall. Hitting the wall won't kill us, but it'll force us to stop moving, step back and find a way around the wall. And it'll hurt. What myself and I believe most other "peakists" are suggesting is that instead of running headlong into the wall we know is coming, that maybe we try turning just a little bit now so that we don't hit it at all.

  21. As a geologist who has studied energy for decades I am dismayed that journalists such as Mr. Potter get any print on these issues. In my extensive travels lecturing on these issues and meeting thousands of people I find that the scientists concerned about the issue of non-renewable resource depletion are predominantly geoscientists that have actually studied them, and the blind-faith believers in technology and silver bullets are classical economists, politicians and journalists such as Mr. Potter who have little firsthand knowledge of the issues. Mr. Potter's idle speculation is dangerous and the fact that it gets covered in a national magazine where it stokes hope in an infinite growth business-as-usual future makes it even worse.

  22. What do salmon dinners, SUVs, and subprime mortgages have in common? They all depend on cheap oil, at least according to the book jacket of Jeff Rubin's bestselling new book, Why Your World is About to Get a Whole Lot Smaller.

    That was a great info and the comment by DavidM was amazing.

  23. What do salmon dinners, SUVs, and subprime mortgages have in common? They all depend on cheap oil, at least according to the book jacket of Jeff Rubin's bestselling new book

    Valuable points and thanks for the info

  24. Where is this innovation? We needed it 20 years ago if it was ever going to be a substitute for oil.

    The great innovations of the past 200 years were fueled by cheap and plentiful energy. When that energy is no longer cheap or abundant, the age of innovation ends.