Future at the end of the Oil Age

SUBHEAD: Building resilience in a resource-constrained world at the end of the Oil Age. [Publisher's note: The following article is the text version extracted from an online "slide" presentation by Dmitry Orlov. Slide 1 is the title page.] By Dmitry Orlov on 25 March 2010 in ClubOrlov - (http://cluborlov.blogspot.com/2010/03/our-future-and-end-of-oil-age-building.html) Image above: detail of chart from Slide 4 "HOPE: for an alien intervention?" [Publisher's note: The following article is the text version extracted from an online "slide" presentation by Dmitry Orlov. Slide 1 is simply the title page. See online version below.] Slide 2: Peak Oil Theory vs. Reality Theory

• Global oil production peaks and declines gradually; slow growth.
• Alternative and renewable energy ramps up to compensate
• Challenging economic environment, many social and political problems.

Reality

• Massive spikes in oil prices crash financial markets and kill growth.
• No money for alternatives or further oil exploration and production.
• Financial, commercial, political collapse followed by something completely different.

Slide 3: HOPE: for an alien intervention?

• Peak Oil models work well for individual countries. Prima facie: most of USA peaked in 1970 (Alaska peaked later).
• Individual countries compensate by importing oil from countries that have not peaked yet.
• When the entire planet peaks, there is nobody left to import from - except aliens from outer space, of course!
• Industrial economies cannot grow without increasing fossil fuel consumption (empirical result).
• Without growth, debts go bad, economic and political problems mount, and economies collapse.

Slide 4: HOPE: for an alien intervention? Without help from friendly space aliens, we won't have the energy to power a gradual energy descent. It will be a cliff. The right-hand side of this graph is pure science-fiction. Slide 5: Scraping the bottom of the oil barrel The new oil is not like the old oil:

• Energy Returned on Energy Invested has gone from 100:1 to 10:1 and is heading down.
• We are using up the dregs: deep offshore, heavy/sour crude, tar sands, arctic oil.
• Oil consumers will run out of money before oil companies run out of places to drill
• The agony of the industrial age can be prolonged by destroying what's left of the biosphere.

Slide 6: Scraping the bottom of the oil barrel

• Net Energy = Usable Acquired Energy / Energy Expended

Slide 7: The bottom of somebody else's barrel

• The US has to import over 2/3 of its transportation fuels.
• High oil prices mean extra revenue for oil exporters.
• Oil exporters invest that money in their domestic economy.
• Their domestic oil consumption increases.
• Consequently, there is less oil for them to export.
• Net exporters become net importers even while they are still pumping some oil (just as the USA did in 1970).
• Many oil importers end up left out in the cold.
• Oil importers who ride scooters and use kerosene lamps do a lot better than oil importers who drive SUVs.
• This is not a contest for who can use the most oil.
• This is a contest for who can grow their economy using the least amount of oil.

Slide 8: HOPE: for an alien intervention?

• The aliens better bring us some money too...High energy prices cut into personal budgets, making individuals unable to service their debts.
• Banks are burdened with nonperforming loans, toxic assets, foreclosed properties.
• Governments step in to bail out banks.
• Fractional reserve banking? Volcker: 12:1, Greenspan: 30:1, Bernanke: infinity to 1.
• Economy continues to shrink, job losses mount, tax revenues collapse.
• Who bails out the governments? Why, aliens from outer space, of course!We have already lost; let's regroup and try again.

Slide 9: Lifeblood transfusion?

• "You see, the flow of credit is the lifeblood of our economy." - Obama SOTU speech, February 2009
• According to Treasury data, the long-term trend is that by 2015 an additional dollar of debt will produce zero additional GDP growth.The short-term trend is that debt is rising rapidly as the economy is continuing to shrink (so we may be there already!)
• The economic patient is hemorrhaging too fast for the transfusion to work

Slide 10: More debt, anyone?

• The Treasury borrows trillions from the Federal Reserve and promises to repay this debt with even more debt.
• Everyone is supposed to believe that this activity is somehow meaningful.
• Actually we are just writing ourselves IOU's and periodically moving them from one pocket to another (not convincing)

Slide 11: Why can't this show go on?

• A system that evolved in conditions of continuous growth of material resources cannot shrink controllably.
• The key ingredient is confidence; once faith in the future is lost, everyone's behavior changes radically.
• Everyone at the top already knows that this show cannot go on and are (attempting to) plan accordingly, for themselves.
• The name of the game is "Keep the rest of them fooled for as long as possible".
• People are still paying down their mortgages, putting money in their retirement accounts, etc.
• Being fooled this way can make people very angry.

Slide 12: The logic of diminishing returns

• Joseph Tainter, in his "Collapse of Complex Societies", pointed out that social complexity increases until further investment in complexity becomes counterproductive.
• He also pointed out that complex systems do not self-simplify; they collapse catastrophically and are eventually replaced with much simpler systems.
• Diminishing returns are observable and measurable.
• Diminishing returns cannot be explained using the internal logic of the systems involved.
• The people involved in maintaining these systems struggle along, but are eventually forced to give up.

Slide 13: Examples of diminishing returns

• Each additional dollar of debt causes the economy to shrink even faster.
• Each additional dollar of defense spending makes the country less safe.
• Each additional dollar spent on health care makes the country sicker.
• Each additional dollar spent on education makes the people more ignorant.
• Each additional dollar spent on the justice system increases injustice.
• Each additional dollar spent on job creation increases unemployment.

Slide 14: Escaping from diminishing returns What can we do to avoid wasting our efforts on perpetuating doomed systems? How do we construct alternatives?

• Lower your official exposure/profile
• Decrease your environmental footprint and burn rate
• Avoid financial arrangements and legal documents
• Rely on personal connections and relationships
• Avoid the mainstream, look for fertile margins, fringes, niches
• Be hard to classify (use the SEP field to your advantage)
• Each additional dollar contributed to a political campaign makes the people even more powerless

Slide 15: Reasonable expectations

• Money will not be very common or useful (government defaults, growing joblessness, savings wiped out or taxed away, access to imports lost, etc.).
• As the US loses ability to import 3/4 of transportation fuels, economy will stall and population will become stranded.
• Political system will maintain appearances as long as possible - "Proud and Purposeful Paralysis".
• Many local authorities will fail (close police stations and fire departments, stop supplying sewer, water and garbage removal services).
• Other local authorities will try to charge confiscatory rates, and fail just a little bit later.
• Various officious busybodies will have a hard time figuring out whose side they are on, and will probably need help.

Slide 16: The Big Transition BEFORE

• Cars and trucks
• Municipal water supplies
• Municipal sewage
• Trash removal
• Garbage removal
• Fast food
• Supermarkets
• Hospitals
• High Schools
• Colleges
• Office work

AFTER

• Bicycles, boats, 2 feet
• Rainwater collection, wells
• Composting toilets
• Local junkyards, incinerators
• Local compost piles
• Community kitchens
• Open-air markets
• Local clinics
• Home Schooling
• Apprenticeships
• Physical labor

Slide 17: The future is very unpopular

• Each resident of North America employs the equivalent of 100 "energy slaves": services provided by machinery that runs on fossil fuels. But emancipation is at hand!
• People do not like to be persuaded by fact or logical argument.
• People like their comforts: cars, HVAC, etc.
• People are seduced by TV, consumerism.
• Manual labor and farming are low-status activities.
• People lack the skills to lead a non-mechanized existence.
• It is almost impossible to convince people to do what will be necessary - until it becomes necessary.
• It will be almost impossible to do what is necessary without a significant amount of preparation.
• Those who take the trouble to prepare will be a tiny minority.

Slide 18: The Pre-Collapse Checklist

• Food
• Water
• Shelter
• Lighting and communications
• Medical care
• Transportation
• Security

These have to be provided

• Without access to savings,
• Without a positive cash flow,
• Without an official economy.

Slide 19: Food

• Enough food to feed a family can be grown on 2000-3000 sq. feet (It takes a bit of practice to get this going.)
• Some foodstuffs (cooking oil, grains, wine, coffee, chocolate) need to be "imported" somehow.
• A lot of wild foods can be gathered (berries, mushrooms, roots & shoots, nuts, [white] acorns.
• "Edible Forest Gardens" can be planted on public lands - useful plants surrounded by thorny thickets.
• Community kitchens are more efficient than personal ones.
• Eliminate all food waste: chickens, rabbits, guinea pigs, carp, catfish, crayfish - something out there will eat it all up.
• Nanny goats can provide milk for infants/children.
• Seasonal migration out to the land to grow food.
• Harvests have to be "floated out" (road transport expensive).

Slide 20: Water

• Municipal water = bad risk.
• Flushing with potable water = insanity!
• Many grades: drinking water, washing water, irrigation water, gray water, "lively" water.
• Sewage is a very bad idea; composting much better.
• Roof rainwater collection, barrels, filters for drinking water.
• Swales dug into hillsides can boost groundwater.
• Hot water for washing: rocket stoves fed by brush piles.
• Passive irrigation systems instead of pumps and hoses.
• Runoff from disused parking lots and other structures can be saved in cisterns.
• Flat roofs can be planted with sod to soak up water and keep buildings cool.
• Proper placement of shade trees and evaporation pools can make air conditioning unnecessary.

Slide 21: Shelter

• Single-family dwellings are no longer affordable for nuclear families; single-family dwellings become extended-family GULAGs where the residents eventually go insane.
• There is a lot of unused commercial real estate that will belong to nobody in particular once all parties are bankrupt.
• There are a lot of unused shipping containers that are very easy to customize for a wide variety of uses.
• Large structures are cheaper and easier to retrofit for off-grid use than small ones.
• Transportation needs are much reduced if the entire town relocates into the shopping mall and the office park.
• Basements of demolished suburban houses can be flooded and used for aquaculture, or for tree nurseries, etc.
• Freed-up land can be used for community agriculture.

Slide 22: Lighting and Communication

• Relying on the electric grid - a high-risk, high-cost proposition.
• Keeping the existing system running through "renewable" means is not achievable, sustainable or renewable.
• Using wind/solar/micro-hydro to power to run AC appliances is an expensive proposition - not affordable.
• All it takes is 100-200W of solar and/or wind to power a few LED lights, radio, laptop, 2-way radio, cell phone charger, etc. That's something that can be put together for a few thousand dollars.
• It's all made in China! Yikes! Get yours now! (Install it later).
• 12V batteries, alternators and voltage regulators will come from scrapped cars/trucks - then what? (Food for thought).

Slide 23: Medical "care"

• Stay healthy: eat little, mostly vegetables, avoid exercise, but do some physical labor, sleep plenty and get lots of rest, avoid stress, have a sense of humor.
• Avoid doctors and hospitals (they prescribe toxic drugs, spread disease and deplete family savings).
• Know how to treat/cure yourself and the people around you - good hygiene, herbs, massage, rest & TLC.
• For serious medical needs, have a medical evacuation plan in place - to a country with a functioning medical system (Canada, Mexico, Cuba, Russia...).
• Know when it's time for you to go (your life isn't worth half a million to extend by a year or two, no matter who you are - the country can't afford it).

Slide 24: Medical "care" - steer clear of fraud

• Avoid American medical "care" if at all possible.
• Making a profit off of sick people is deeply unethical.
• Health is not insurable. If all houses burned down, there would be no fire insurance. Nobody dies healthy.
• Resist efforts to tie you to a "job" by the threat of cutting off your access to medical "care".
• Resist efforts to force you or your family into medical bankruptcy through medical extortion.
• You have no choice of doctor who isn't an American doctor and violates the Hippocratic oath by putting financial and legal considerations ahead of what's good for the patient.
• And now, you have no choice but to buy federally mandated private health insurance.

Slide 25: Transportation

• To recap: 2/3 of transportation fuels are imported, and these entire 2/3 are going away.
• Daily trips to town by private motor-car will once again be reserved for the aristocracy (chauffeur not included).
• There is not much hope for continuation of air travel, air freight or interstate trucking.
• Rail freight could actually be revived at very little cost (much more cost-effective than road freight).
• Water freight is supremely efficient, especially if by sail.
• Our harbors, bays, sounds, estuaries, rivers and canals are our prime regional transportation assets.
• Many people will be delighted to once again be able to make a living on the water.

Slide 26: Security

• One happy family: former military, former prisoners, former police, former government spooks, plus some drug lords.
• An "online community" is a hacker's playground.
• Easy pickings: loaners (armed or not), people who can be tracked using their GPS cell phones and other gizmos.
• Hard nuts to crack: cohesive communities that deal face to face and are electronically "dark".
• Having a lot of witnesses about makes crime more difficult.
• A 24/7 watch/patrol is an excellent idea.

Obvious ideas:

• Surround yourself with people you know.
• Mistrust electronic communications.
• Cultivate friendships in places high and low.

Slide 27: In conclusion

• Many people can't be persuaded by either fact or reason. Let's hope you are not one of them.
• Running out the clock on our current living arrangement is a bad idea: the longer you wait, the fewer options you will be left with.
• A rather exciting time to be alive, wouldn't you say?

Below in online version of the slide presentation of Dmitry Orlov's "Our Future and the End of the Oil Age: Building Resilience in a Resource-Constrained World". .