Oil & Money - Road to Ruin

Firstly, a big thanks to John for first pointing all this stuff out to me a few years ago. Otherwise I'd be wandering around in the darkness thinking that everything was ok. Rather be prepared for this kind of stuff or at least see it coming!

So, what is happening in the world? Various things seem to be going wrong at the same time. Economies are in trouble, banks going out of business, oil & food prices rising. How did this happen? Well as Al Bartlett puts it: "The greatest shortcoming of the human race is our inability to understand the exponential function"

Here is a very well presented lecture about what a percentage growth really means. It's all high school maths and stuff you probably know - but don't always appreciate the consequences.
Talk from Al Bartlett about the exponential function (approx 1 hour ~ 100MB)

With that basic background, you should then read a bit about the oil crisis:
LATOC (ignore the scare-mongering and just look at the facts. Still pretty scary!)

Finally, get an insight into the modern banking system and what money actually represents:
Money as Debt (Part 1) - There are 5 videos but you can get to the others from the first one.

So here we sit. Exponential growth is absolutely unsustainable no matter which way you look at it. So on the one hand oil (and coal) will never last at current growth rates so our usage will be forced down whether we like it or not, and soon. Alternative energy will never fulfill the same function as oil currently does - not as cheaply, not as well and not in the huge quantities we currently enjoy today. If expensive energy makes other forms of energy e.g. solar suddenly economically viable, it still means we are paying more for energy so the standard of living has to drop. We have less money to spend on other things because we need energy to live! Want to eat cold food in a dark and cold house with no refrigeration, and no way to get to work in the morning? Also don't forget that oil is a component of everything we do and eat so the price of everything goes up not just motorists' fuel bills.

Now on the other hand the banking system depends on constant growth or it collapses. If people, institutions and governments aren't constantly taking on more and more debt there won't be enough money in the economy to pay interest on current debt, meaning defaults on mortgages and businesses closing. If people have less disposable income because of high energy prices, I'm pretty certain shops won't be opening up (and taking out loans) and people won't be taking out mortgages at quite the same rate. Bad news all around.

The argument is that the banking system has worked ok until now why should it suddenly run into trouble? Well I think it's for the same reason that bacteria in a bottle (with a doubling time of 1 minute) only realise there is trouble about 2-3 minutes before they run out of space to grow. The same can be said of the current oil crisis, oil seems like such a huge resource. But imagine we're at the halfway mark, we've got as much recoverable oil left (discovered and undiscovered) as has ever been used in mankind's history. At a 7% annual growth in consumption we'll use the last drop in 10 years time. At a 2% growth rate it's gone in 35. And that's the difficult to extract, bad quality (expensive to refine) oil we're talking about. Not the "gushing to the surface" light sweet crude we've used up till now.

So what does it mean? Nobody knows - I certainly don't but you can find an awful lot of predictions out there ranging from optimistic to pretty freakin' dire. I'm guessing it means a decade or more of real economic hardship and possible civil disorder. Why civil disorder? Because poor people aren't going to meekly starve and freeze to death blaming themselves for the state of the world, they'll blame somebody else. Also, stronger countries will not be happy with weaker countries taking oil when they don't have enough. When the dust clears I'm sure things will be different. We'll be consuming food grown more locally, more people will be involved in the production of food, public transport will be more vital to local economies, there will be no more cheap flights, manufactured goods will be built to last & repaired instead of being built to be thrown away. Basically I think a semblance of our modern way of life will be possible if people can
a) Find a way to generate and store huge amounts of electricity in an efficient and sustainable way
b) Population can be reduced and growth halted

When will this all this trouble start? Gee... maybe in 10 years, maybe it's starting to happen right now. Doesn't hurt to start preparing now.

So what to do on a personal level? The general concensus is:
a) get out of as much debt as you can
b) try to be living somewhere with a bit of land so you can grow some food to supplement your diet
c) live close to a train line or within cycling distance to where you might work
d) don't be living in a densely populated area - high population density and low resources = trouble. Just look at Rwanda (it wasn't just ethnic tension at work there)
e) learn a skill that would make sense in a different world (bad news for me as a programmer, I can't do anything else right now)

Is it worth getting depressed about? Certainly not. Life will go on. But I'm pretty sure some places will be better to live in than others. We all have to make choices in life. Personally I battle every day with this stuff - if I make a decision to change countries and my lifestyle based on this information and it turns out I was lied to and this unsustainable way of life will change to a sustainable one seamlessly - what are the consequences? But think about it this way:
a) You believe it's true and change your life in a way that you'd be ok if it all really happened, but also ok if it didn't. If it hits then phew! You did the right thing and you come out fighting. If it doesn't then oh well, you're still ok. It's not like you sold all your possessions and went to live in a tree or anything.
b) You believe it's all lies and do nothing. If it doesn't happen then great! If it does though and you find yourself in a bad situation when it's too late... well... that would suck.

Sounds like crazy talk doesn't it but nobody likes to hear bad news. Just look around you - everything is ok! Nothing can possibly go wrong in our lifetime! But things do go wrong - we've all grown up in an unprecedented era of peace & prosperity but it can't last forever.

Please go back and watch the videos - they are very interesting! Then do a bit more reading and give it a few weeks to sink in. Here is some additional reading:
Easter Island's End by Jared Diamond
The Oil Drum
Kunstler's Blog
Some pictures of pandas