Norman Pagett writes:
It’s not the actual figure at the pumps that’s the problem, because as fuel prices have risen, everything else has risen in tandem….Up to now.
Basically we use hydrocarbon fuel to produce stuff and do stuff. As long as we have the means to do that we can continue to pay each other for services rendered, no matter what the transaction. We’ll call that taking in each other’s washing and pretend that it makes a profit and provides ‘GDP’ and % growth and makes us all rich.
But of course our business isn’t taking in each other’s washing, it’s pumping oil out of the ground and burning it, along with coal and gas. We build bigger better faster machines to do just that. (think airlines as a simple example). As long as we had fuel, we had employment. Without fuel our finest machines are scrap iron, we have no ‘jobs’ no ‘business’ and no ‘economy’.
Now back to the price of gas….the cost shown at the pump is irrelevant as long as we were producing more oil that we could consume in our machines, then whatever price it rose to, could always be counterbalanced by payrises. In other words, a payrise was always met out of increased production/sales, which in turn was supported by more oil output. We locked ourselves in a vicious spiral that could only go on rising as long as enough cheap oil was fed into the system to support wages/production/sales. (that explains how gas rose from 10c a gallon (or whatever) to its present price). Industrial production during the 20th century was precisely matched by oil production, so wages, gas prices, houses , food and everything else simply leapfrogged each other while economists and politicians pretended it was this or that political dogma that was responsible.
Deniers of this basic truth point to Roosevelt’s ‘new deal’ in the 30s, blind to the obvious…that the great municipal projects that provided jobs were burning cheap oil at a colossal rate. Without oil there would have been no ‘new deal’.
Oil fueled employment worked until 2005. That was the year conventional oil plateaued, and the world economy crashed in 08 as a result. (Economic forward momentum stalled because there wasn’t enough oil available to keep the economic pumps primed), people didn’t have so much spare cash to go on buying stuff. Now the expectation of the annual payrise has gone, because there’s no cheap oil to fund it, so we are able to afford less and less gas. If less is sold by the refiners, oil gradually becomes less economic to produce—this closes down the shale plays and other marginal supplies. As gas prices climb higher still its use will fall, because we have very little ‘excess’ money to pay for it. (the cost of food will use a greater proportion of our income). So the producers can only respond by putting up the price still more, in an attempt to make low yield oilwells viable, but of course this in turn bumps up the cost of food, making even less available to buy gas.
And so on. The phase we are entering now is in fact the start of our return to the pre-oil era.
So the oil producers begin the inevitable destruction of their own market base. Oil never runs out, it gets left in the ground because fewer and fewer people can afford it.
The oil companies will bankrupt themselves by denying this, convinced that throwing money down oilwells will continue to deliver wealth. Remember that much of our collective assets (pension funds etc) are tied to the success of continual energy production. Thus we find ourselves in the ludicrous position of demanding the prosperity that oil can bring, while being unable to afford to buy it.
As our oil leaves the market place, so our money will cease to have any value because what we imagine to be our ‘economy’ is in fact the insanity of infinite debt, supported by finite oil.
While gas might rise towards $10 gallon the strain that will put on food prices will take social cohesion beyond breaking point. Already 1 in 6 Americans are on food support, numerous other nations have the same problem in feeding their populations. Food shortage on a prolonged national level invariably brings down governments with violent revolution. In a modern industrial economy that means destruction of the fuel/food distribution network and the end of the oil era.
- Follow @end_of_more
The End of MoreBecause the economy of the developed world has locked itself into the delusion of infinite growth, we have no option but to demand more. Though the lives of seven billion of us literally depend on more always being available, we are collectively incapable of recognizing that our profligate lifestyle has reached its limits. Yet two billion more people are going to turn up over the next forty years, they too will insist on being fed.
But we remain in denial. It is in our short term interests to accept cornucopian economics and political wishful thinking so that we can have a little while longer to reject the reality of overpopulation, resource depletion and climate change.
We must face the fact that we have reached the End of More.
Doomsday ClockWatch the rate at which we are consuming resources, decide how long this can go on posted courtesy of www.collapseofindustrialcivilization.com