The Future of the Auto Industry

As the administration looks for ways to help out the failing auto industry, I agree with Mr. Wipple quoted below, that this is the time to take an "out-of-the-box" look at the situation to see what makes the most sense as we move forward.

- Zev

The Peak Oil Crisis: Seize the Moment

by Tom Whipple

Earlier this week the Obama administration, now the effective owner of the U.S. automobile industry, put Detroit on notice that it has 30-60 days to come up with a believable plan to "restructure" itself or it goes into bankruptcy. This action makes it a good time to step back and ponder just where America's industrial base is going. With $2 gasoline and some incentives, recession-wracked American consumers seem willing and able to absorb another 8 or 9 million new gasoline and diesel powered cars and trucks this year --- but does this make any sense? The "restructuring" plan seems to be one of trimming overhead, shutting some factories, abrogating labor agreements, and stiffing shareholders, bondholders and debtors to the point where the manufacturers might be able to limp along with a minimal infusion of taxpayer dollars. This plan might be fine except for one glaring fallacy. In the next few years, oil prices are going up so high that ownership and use of the automobiles and trucks in their present form will be a totally uneconomic proposition. How many of the current flavor of cars and trucks is Detroit going to sell with gasoline at $10 a gallon or higher? full story

While We Were Sleeping

As the current economic realities continue to unfold, it is critically important that Americans understand that what we are experiencing is a global interrelated challenge.

Over the past year or so, while America slept, China went on a shopping spree. According to the March 17th issue of the Washington Post,

Even as global financial flows have slowed sharply overall, China has dramatically stepped up its outbound investment. In 2008, its overseas mergers and acquisitions were worth $52.1 billion -- a record, according to the research firm Dealogic. In January and February of this year, Chinese companies invested $16.3 billion abroad, meaning that if the pace holds, the total for 2009 could be nearly double last year's.

On Feb. 12, China's state-owned metals giant Chinalco signed a $19.5 billion deal with Australia's Rio Tinto that will eventually double its stake in the world's second-largest mining company.

China is now actively in the process of insuring their future by buying up mineral and oils rights all across the planet. They are moving down the path of material abundance which we have been modeling for the past 30 years; and very little we say or do is going to change this anytime soon. The challenge for us is that with 1.3 billion people in China if they want to play the consumption game, that will put unimaginable stress on our ability to do the same.

Americans will be faced with the necessity of a different sort of future when it comes to energy. As these massive Asian countries lock up resources for their future, we will be forced to either fight them... which is not very realistic, or seriously begin to re-organize our energy demands so we are not as effected by these huge global shifts in control of resources.

If we can be successful in building the systems to provide for our needs much closer to home, we can help assure a less stressful transition from an oil dependent society to one with built-in resilience from the coming environmental and financial shocks.

For cities and states who enact legislation to encourage these changes, they will find themselves in a far better position than those who doggedly hold to the fading dream of ever growing economies full of more and more stuff.

Reading Anything Good Lately?

Over the past month or so I have found myself engrossed reading a number of very interesting books. While they are all quite different, they all fall under the overarching heading of resource depletion.

The first book, Plan C: Community Survival Strategies for Peak Oil and Climate by Pat Murphy, describes in great detail a wide variety of actions we can do as individuals and as communities to deal with the coming challenges posed by the twin issues of Peak Oil and Climate Change. This book is packed full of information and should be required reading for any serious student of resource trends.

The second book which I suspect will become one of my favorites of all time is World Made by Hand by James Howard Kunstler. This near-future fictional depiction of life after the end of the oil age is both touching and disturbing. Because it takes place in the not-to-distant future, the remnants of our overly consumerist society are still very present. His attention to detail brings the challenges and success for the characters right into our hearts.

The third book, and one that is receiving a great deal of coverage these days, is Jeff Rubin's Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization. Jeff is the chief economist and chief strategist at CIBC World Markets and was one of the first economists to accurately predict soaring oil prices back in 2000 and is now one of the world’s most sought-after energy experts. Jeff clearly lays out his decades of experience and makes an extremely convincing argument why importing plastic toilet seats from China and caesar salads from across the continent, will be totally uneconomical in the not too distant future.

Time to End the 1500 Mile Ceasar Salad

"Food Miles" refer to the distance that your food has been transported between its source farm and where you buy it. Food miles are one measure of the amount of energy used to transport your food and the consequent pollutants released by that transport. Estimates vary but transport may account for 20% or more of the total energy use associated with the provision of a given food item. As such, Food Miles are a relatively simple statistic that can be used to demonstrate the ecological importance of local foods.

Seventeen percent of this nation’s petroleum consumption is dedicated to on-the-farm food production. Add on processing, packaging, refrigeration and transport of edibles and food takes a big bite out of affordable oil supplies and contributes to pollution. Domestic food as basic as lettuce we could grow in front yards most of the year, and green houses in winter, travels up to 3,000 miles from field to table.

http://www.lifecyclesproject.ca/initiatives/food_miles/calculating_food_miles.php explains how this takes into effect greenhouse emissions.

Sustainable Table: Buy Local: http://www.sustainabletable.org/issues/buylocal/

Do food miles matter? | ES&T Online News: http://www.nrdc.org/health/foodmiles/

Interview with Amory Lovins - Winning the Oil End Game

What Can Save Us?

With all the focus these days on the crumbling economy, it makes me think what can we do about all of this?

Well the answer seems to staring us in the face. If we were to decide it was OK to spend say $100,000,000,000 (100 billion dollars) to better our society what can we do? You guessed it - save the economy by a massive new New Deal Program - building environmentally sustainable cities and upgrading the ones we have to be more sustainable. We would use this money to add the renewable energy systems, mass transit and bicycle paths, and support the inclusion of urban agriculture. If we spend the money now on these items it will help us dramatically in the longer term and not just focus on the "bailout of the week."

Some Basic Reasons We Need a New Energy Policy

Thank you to Keith Schneider, the Communications Director for the Apollo Alliance for this.

1. America can’t drill its way out of addiction to oil.
2. Efficiency and conservation are consequential pieces of a comprehensive energy strategy.
3. Scaling up wind, solar, geothermal, clean fuel made from grass, and other renewables reduces the triple-barreled risk to our security, economy, and environment.
4. New technology – especially in the development of clean next-generation vehicles, and in dramatically reducing CO2 pollution from burning coal for electricity – is essential.
5. These steps will produce a blossoming economy and millions of good jobs that people can count on, reduce the risk of climate change, curb the $700 billion a year bill for foreign oil, and dramatically improve national security.

The choice is clear and the sooner we all act on it the better our chances of making a smoother transition for all of us.

Lets do it......

Zev Paiss