The Long Descent (3 page)

The
Limits to Growth
team found that the twin economic burdens of resource depletion and pollution turn a growth-oriented economy into its own nemesis. The MIT team's computer models showed that once an economy overshoots the carrying capacity of its environment, the costs of resource depletion and pollution rise faster than the rate of economic growth. In the end the economic burden of dealing with the consequences of growth overwhelms growth itself and brings the global economy to its knees.

All this posed a stark contradiction to one of the most widely held beliefs in modern economics — the conviction that economic growth is the answer to all the problems of human society.
The Limits to Growth
demonstrated that you can't grow your way out of a crisis if growth is what's causing the crisis in the first place. The study concluded with the sobering assessment that unless something changed drastically, the limits to economic growth would arrive sometime in the first half of the 21st century and push industrial society over the edge into a long period of catastrophic decline.

From the day of its publication,
The Limits to Growth
became the focus of a firestorm of criticism, much of it politically motivated and not all of it fair or well informed. Economists dismissed it out of hand; conservative politicians denounced it as something close to a Communist plot; and plenty of people from all walks of life found its conclusions impossible to accept. Still, it found receptive audiences all over the world. While the use of sophisticated computer models was new, the risks charted by the MIT team were simply a restatement of problems already discussed in educated circles in Europe and America for most of a century before
Limits to Growth
was published.

By the late 19th century, in fact, perceptive people in Europe and America were already comparing the modern West to ancient Rome and other vanished civilizations and suggesting that industrial civilization was already on the downslope of its history.
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The crises of the 1970s brought these uncomfortable possibilities to center stage. The industrial world found itself confronted with a succession of economic crises — soaring energy costs driven by depletion at home and the rising power of OPEC overseas, and the American military failure in Vietnam. These troubles drove many people to take a hard second look at their assumptions about the future, kickstarting a flurry of projects aimed at retooling industrial society so that it could survive in an age of resource depletion and ecological limits.

Some of those projects were follies from the start, and others that could have succeeded foundered on the inevitable problems facing any innovative venture. Fingerpointing and scapegoat hunting played as large a part in the collective dialogue then as it does today, but despite all that, a remarkable amount of effort went into constructive responses to the crisis. The 1970s were a boomtime for the now-forgotten “appropriate technology movement,” which developed an impressive toolkit of methods for conserving energy and raw materials. Two other movements — organic agriculture and recycling — moved off the drawing boards and became profitable industries during that decade.

Conservation and energy efficiency in general had a pervasive presence on the cultural radar screens of the time. Most Americans in those years knew about insulation and weatherstripping and at least glanced at the miles-per-gallon numbers when shopping for a car. The result was an unprecedented decline in energy use — for example, petroleum consumption worldwide went down some 15% in the decade after 1973.
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For a brief moment in the late 1970s, it seemed possible that the industrial world might move forward to a future of sustainable prosperity.

The successes of 1970s conservation, however, represented only the first baby steps toward that goal. By the end of the 1970s most serious students of energy policy saw only two realistic options for going further. The first would have thrown the full weight of government policy and funding into a transition toward a “conserver society,” in which stability rather than growth would be the watchword. The second would have launched a transition to nuclear power, gambling the future of the industrial world on the success and safety of untried breeder reactor and fusion technologies. Both options were major challenges with huge financial and political price tags.
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The Reagan/Thatcher era saw politicians across the industrial world choose a third option, breathtaking in its simplicity — or rather, in its simple-mindedness. Where the conserver society and the nuclear options accepted severe short-term costs to ensure the long-term survival of industrial society, 1980s political leaders across the industrial world pursued short-term strategies that forced energy prices down in order to keep the electorate and business interests happy; the politicians simply hoped that things would somehow work out in the long term.

The conservation successes of the 1970s helped make this decline in energy costs possible by bringing down the demand for oil. The reckless overproduction of newly discovered oil fields in the North Sea and Alaska's North Slope finished the process by allowing American and British governments to turn the oil spigot all the way on, sending the price of oil crashing to levels that were (in constant dollars or pounds) lower than ever before. As a short-term strategy, it proved overwhelmingly successful: energy prices plummeted; economies shook themselves out of the “stagflation” of the 1970s; and the Soviet Union lurched into bankruptcy and political collapse as oil — its one reliable source of hard currency — no longer propped up the inefficiencies of the Communist system.

The blowback from these successes, though, is only just coming due today. As energy prices plunged, efforts to find a replacement for fossil fuels withered on the vine. Alternative energy companies went bankrupt by the score as the market for their products evaporated. The nuclear industry took just as severe a hit; only massive government subsidies kept nuclear plants functioning as the price of electricity dropped below the cost of producing it by splitting atoms. The 1982 bankruptcy of the Washington Public Power Supply System, a grandiose, and wildly overpriced nuclear power project, convinced investors around the world that the nuclear industry was a sucker's bet.

Some of those who pushed the short-term economic fixes of the 1980s likely did so out of sheer political opportunism — it's almost always a good election strategy to tell voters what they want to hear. Still, it's only fair to say that some of those who supported the energy policies of Reagan, Thatcher, and their equivalents in other industrial nations had more respectable reasons for doing so. Faith in the free market's ability to solve all problems was at an all-time high. Influential conservative intellectuals of the period such as Julian Simon and Herman Kahn argued that the exhaustion of petroleum reserves was a nonproblem. Once government regulations got out of the way (the claim went) entrepreneurs would come up with abundant new energy sources and all would be well.

Those of us who were around in the 1980s may still remember the Laffer Curve, the theory floated by Reagan's economic officials that tax revenues could actually be increased by cutting taxes. The theory was that excessive taxes stifled business activity and lower rates would spur so much economic expansion that they would actually bring in more revenue. Although it looked plausible at the time, it didn't work. Instead, the Reagan tax cuts landed the United States in a cycle of reckless deficit spending that continues today. The energy policy embraced by industrial nations in the 1980s followed a similar logic. It looked just as plausible to many people at the time, and it turned out to be just as misguided in the long run.

For most of the 1980s and 1990s, though, it looked to many as though both the energy shortages and the visions of sustainability seen in the 1970s were an aberration best forgotten. That was where matters stood in the late 1990s, when Hubbert's nearly forgotten 1970 prediction suddenly took on a great deal of new urgency and a new phrase — “peak oil” — started moving in whispers through the intellectual back alleys of the industrial world.

The Coming of Peak Oil

At the time, nothing seemed sillier than concern about the future of the world's energy supply. Oil prices were at historic lows, bumping along just above the $10 a barrel level. Gasoline was so cheap that huge, gas-guzzling SUVs had become America's latest automotive obsession, and they were starting to find a market overseas. Energy had cost so little for so long that most of the conservation programs put in place during the 1970s had long since been scrapped. Hubbert's curve, while it remained a standard tool among working petroleum geologists, had dropped so far out of public awareness that even the best discussions of energy in the 1990s routinely missed the fact that oil production would peak and decline a long time before the last of the world's oil was extracted from the ground.
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The only thing wrong with the comfortable picture of abundant oil was the troubling numbers coming from the oil industry. Despite huge investments in exploration and discovery, it was becoming harder and harder to find new oil fields, while existing oil fields all over the world moved closer to their Hubbert peaks and the world's thirst for oil kept climbing. Those who took the time to put the numbers together discovered that the volume of oil pumped out of the ground overshot the volume of new oil discovered in every year since 1964, and the gap was growing — by 2000, for example, new discoveries only equaled a quarter of the oil drawn from existing wells that year. Since oil has to be found before it can be pumped, and it can only be pumped out of the ground once, a slump in the rate of oil field discovery is the proverbial canary in the mine shaft of the petroleum economy.

These unwelcome figures brought belated attention to –Hubbert's 1970 prediction of a 2000 peak. During the late 1990s, several teams of independent researchers set out to update –Hubbert's figures. This was a challenging task, not least because oil in the ground is an asset that affects stock prices and the value of national currencies. Oil companies and oil-exporting nations alike have strong incentives to inflate their reserves and no reason at all to reveal details that might puncture the bubble of apparent prosperity. As a result, many oil-producing nations keep the size of their oil reserves secret, and the estimates published by various government and industry sources are unreliable, at best. Still, as the teams crunched numbers and found ways to estimate figures they could not locate, it became clear that unless the world had much more oil than the evidence showed, the world's Hubbert peak was much closer than anyone had guessed.

The imminence of the peak was bad news because the entire modern way of life runs on oil. Industrial civilization demands fantastic inputs of energy. Oil, more than anything else, keeps it running. Oil is nearly the perfect energy source: there was originally a huge amount of it, it contains a huge amount of energy per unit of volume, it can be extracted from the ground very cheaply, it's just as easy to transport and store, it's even easier to use, and it's
fungible —
that is, it can be easily put to work in many different ways; you can burn it to produce heat, power motors, fuel cars or planes, generate electricity, or anything else you want. Oil provides 40% of all energy used by human beings on Earth, and it powers nearly all transportation in the industrial world. It's also the most important raw material for plastics, agricultural and industrial chemicals, lubricants, and asphalt roads.

As the first peak oil researchers and activists began work, two objectives took center stage in their work: figuring out when the worldwide peak of petroleum production would arrive, and communicating the unwelcome news to the rest of the world. The first of these tasks proved to be the easiest. A loose network of retired petroleum geologists and engineers — Colin Campbell, Kenneth Deffeyes, Richard Duncan, Walter Youngquist, and others — took the lead in sorting through the data on oil reserves. Taking advantage of the great strides made in computer technology in the 1990s, they developed analytical models as accurate as the ones used by the major oil companies. As the end of the decade closed in, the results of these new models converged, placing peak between 2005 and 2010. As the imminence of the peak became clearer, the focus shifted steadily toward the second objective — getting the word out to governments and the public that a new round of energy crises might soon be in the offing.

At first, these warnings fell on deaf ears. The same business and government interests that had been fighting tooth and nail against the recognition of global warming quickly turned on peak oil as well. In the resulting debate, official figures on oil reserves too often reflected political expediency rather than accurate science. Thus the Energy Information Agency (EIA), a branch of the US Department of Energy, has long been one of the major sources used by debunkers of the peak oil theory. Its own documents, however, show that the figures it offers for future oil production are generated by estimating future demand for oil and then assuming that the supply will be there when it's needed.
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To say that this begs the question is to understate matters considerably.

One of the many ironies of these debates is that while the EIA and other government agencies massaged the data, the peak oil message had already found an audience in the highest levels of the American political system. One of the experts who began speaking out about peak oil in the late 1990s was Matthew Simmons, a banker to the energy industry who served as energy advisor to Vice President Cheney in the months immediately before and after the 2000 election. Many astute observers of the American political scene have argued that peak oil has been the hidden subtext behind much of American foreign policy since that time.
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This would certainly go far to explain the Bush administration's obsession with launching an invasion of Iraq, a country that probably has more untapped oil reserves than any other nation in the world.