A Recent Chat With Benny Bernanke

On a recent elevator ride I had the opportunity to chat with Benny Bernanke about the current financial situation we find ourselves in.

Zev: So Benny how are you feeling these days?

Benny: Well Zev, to be honest I am a bit overwhelmed.

Zev: Really. What are you most concerned about?

Benny: When I was in grad school at M.I.T and went on to become a tenured professor at Princeton University in the Department of Economics, all we talked about were the best ways to achieve economic growth.

Zev: Well isn't that what we want?

Benny: Of course. But the problem is that no matter what I do, significant growth remains elusive.

Zev: What if we stopped focusing on growth and looked at scenarios that promoted sustainability?

Benny: Huh?

Zev: What if we were to organize our economy around sustainability and quality of life and not around growth at any cost?

Benny: I don't understand?

Zev: I think I see the problem.

The elevator stops and the door slides open.

Benny: This is my floor. Nice chatting with you and have a great day!

Understanding the Oil News of the Day

One of the more challenging aspects of the entire Peak Oil conversation is the fear of "running out of oil." I can stand here today and tell you with 100% confidence, we will never run out of oil! Why is that? Because there is still a lot it in the ground, and as we continue looking we are quickly seeing that the vast majority of the oil that is left is getting harder and more expensive to get out of the ground and refine into gasoline.

For example. A few years ago in 2006, British Petrolium (BP) announced that it hat hit it big with the Kaskida field in the Keathley Canyon region of the Gulf of Mexico. A very sophisticated and expensive submersible called Deepwater Horizon, drilled the well to 32,500 ft in 5,860 ft of water and encountered an 800 foot deep pocket of sand which was saturated with oil. In 2009 they drilled a second exploritory well and learned that the oil pocket extend into another part of the same canyon. Three years and two wells.

That sounds promising on the surface, but let's take a minute to drill down a bit deeper (pun most defiantly intended). This is not like drilling a 500 foot well in your backyard and hitting a gusher. British Petroleum went out 250 miles southwest of New Orleans, and with a very specialized submarine went down over a mile to the bottom of the Gulf and then proceeded to drill a 5 mile deep well to discover sand soaked oil.
That is an incredible feat. And a very expensive one as well. The bigger challenge is what will be necessary in both time and money to create an ongoing pumping and refining complex to get this oily sand out of the ground, pump or ship it hundreds of miles to the nearest refinery and do what needs to be done to make this liquid ready to be used in your car or truck. That process can easily take 10 years to accomplish. If BP is very fortunate and the oil field turns out to be a "Super Giant Field" with at least 5 billion recoverable barrels of oil, this discovery will feed the world at our current rate of usage for 90 days. If you want even more details about the challenges of this kind of project, please read this.

So this is what BP calls hitting it big!

The challenge we are faced with is not running out of oil but figuring out how we will ever afford oil that takes this level of effort to get out of the ground and into our gas tanks.

I suggest we seriously focus on how to re-organize ourselves to avoid needing that oil in the first place.

I think creating Peak Communities may be a big part of the answer.

Totally Uncharted Territory

The news these days is sometime hard to hear. The trend is ever downward for so many. The mantra seems to be "we have never seen this before," and it is true for anyone less than 80 years old. What I find so interesting is the continual expectation that these challenges will eventually smooth out and we will get back to some semblance of order.

My intuition tells me something much different.

A recent column by Pulitzer Prize winning columnist Thomas Friedman said the following.

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese ...

We can’t do this anymore.

“We created a way of raising standards of living that we can’t possibly pass on to our children,” said Joe Romm, a physicist and climate expert who writes the indispensable blog ClimateProgress.org. We have been getting rich by depleting all our natural stocks — water, hydrocarbons, forests, rivers, fish and arable land — and not by generating renewable flows.

What we are experience these days is nothing short of a re-structuring of what we have called normal for the past 60 to 80 years. We are now faced with an unprecedented combination of challenges including climate change, the end of inexpensive energy, and the unraveling of the economic fabric is crating a global situation we had NEVER experienced in our lifetimes, a culture changing perfect storm so to speak.

I firmly believe we will not "get back to normal" but that instead, we are in the early stages of moving to a new normal. As a species, we have had to make significant changes before so I am confident we have the ability to transition our culture to the next stage.

Deep, deep in our social and possibly genetic coding we know what to do. And we also know it takes great focus and perseverance. I do not assume it will be a smooth ride for everyone, transitions never are. But we have the opportunity to come through this with an American culture that is far more sustainable, reliant on the use of more local sources and having a high or higher overall quality of life.

We may very well consume far less stuff, but by refocusing ourselves towards those things that make live deeply rich and satisfying, we can replace what some may feel as "lost." These include a significant increase of interaction with people and the advantages of resilient and more self-reliant communities.

What Have We Learned So Far?

Over the past two years we have been blogging about the variety of way that we are both leading ourselves astray as well as a variety of creative solution that might offer assistance as we navigate the economic and environmental rapids ahead.

So what have we learned in this time?

Less Can Be Better
Mainstream American culture has promoted the very-present advantages of "more." Super-size me please! But in a finite world we are being reminded that not only may more not be better but it can also be much worse. Our household has taken a long hard look at what we really need and deeply enjoy and have been able to reduce our overall consumption significantly. This includes things like eating out less and cooking creatively at home more often.

Pay Attention
Once we made using less a stated goal, we began paying more attention to things and that spurred on even more practices that just used less. Shorter showers, family baths, turning lights off, replacing burnt-out lights with energy-efficient bulbs, riding bikes and walking when it made sense, renting movies instead of going out, growing some of our own food are all steps we can do that when added together can make a significant difference. Especially when done by groups of people.

Increase Community
As residents in one of the countries 120 cohousing neighborhoods we already have a closer connection to our immediate neighbors. But in addition we made space in our home for two additional high school students who moved to our town to attend school. This increased community not only has a financial benefit but more important has added a rich and very positive dimension to our family. I suspect we will see a very noticeable rise in shared housing arrangements as the economy continues to contract over the next several years.

Do More Ourselves
Despite the impact on local jobs, people are doing more for themselves where a few years ago they would hire out. The do-it-yourself "industry" has been growing consistently over the past decade and there is little chance it will slow down. Financial reality is forcing people to do more for them selves and those they care for. Having a family member with a steady hand cut hair, mending your clothing instead sending it out, as I said before cooking at home instead of going out as often, growing food, herbs and raising small livestock like chickens, are all visible signs that we are doing more for ourselves. When you combine these lessons and be creative the impacts are even more powerful.

Be Creative
The conventional wisdom is to work work work so you can pay for all that you need and want. Today by re framing that a bit and saying what is it I need really and how can I get it, we can come up with a plethora of creative ideas. We have been exchanging with a local farmer. We help him get the word out about his urban farming program and he gives us fresh veggies all during the growing season. Or trading article writing with a local martial arts dojo in exchange for our kids getting training in personal defense. The high art of barter and trade is in full bloom and it can satisfy a growing number of our regular needs.

So suffice to say that despite the challenges surrounding us, there is much to be learned and re-learned as we carve out a path on this ever exciting journey together.