Job recovery is prevented by Peak Oil but is possible if:
- Transport is re-tooled so efficiencies approaches that of long haul freight rail, 400 ton-miles per gallon.
- Power generation is re-tooled so net energy exceeds 25:1 (energy produced to energy required to get the energy)
Decay of Economic Momentum:
Between 2002 and 2006 working class families in the US lost $2,000 of disposable income as the cost of energy increased:
- Without disposable income, consumers cannot consume.
- Without disposable income, more and more families fail to maintain their mortgages; housing values and the banking system collapsed.
- Without disposable income, there are fewer and fewer customers forcing businesses to ratchet down employment.
Peak Oil is the Cause
The economic paradigm of GDP growth based on Oil Production Growth is broken.
GDP Growth and jobs growth will never again come from oil supply growth.
In 2005 oil was $45 a barrel and world production was at 74 million barrels a day. By 2008 oil was at $145 a barrel and production remained at 74 million barrels a day. Oil suppliers did not increase production to take advantage of increased price because they could not, the world reached Peak Oil, the maximum rate that oil can be extracted.
There still plenty of oil but the rate it can be extracted and new fields developed have fallen below the rate existing fields are depleting. Peak Oil is not about the amount of oil but the size of the spigot. The size of the spigot is shrinking.
Re-tooling Power Generation
Net energy is also declining. Jobs depend on a net energy of 25:1. Chris Martensen does a great job explaining net energy, these Energy Cliff graphs are from his presentation:
This quality of output versus input will add to the crisis of oil supply and price. In the following graph the Blue area identifies the total amount of oil available but the Gray area indicates the net oil energy available to power the economy.
Both solar and wind have Net Energies sufficient to create a jobs recovery. If biofuels can be improved to provide even 20:1 return on energy invested, they can be a major aid in transitioning to sustainable infrastructure. But at their current 1.1:1 or even 3:1 ratio, they just add to food prices.
Most of us have ridden in an airplane, few of us purchased an airplane. We enjoyed the service without a capital penalty at a low cost to use. The same is true for ground transport in New York City where families have an extra $2,500 of disposable income because transportation is available as a service. It is practical to deploy Personal Rapid Transit (PRT or PodCars) in most cities and towns. It is practical to achieve twice the density of NYC or 70% access, resulting in an extra $5,000 per year per family of disposable income.
PRT is the solution to the 1973 Oil Embargo identified by the Congressional Office of Technology Assessment, study PB-244854. The PRT network built at Morgantown, WV has delivered 110 million injury-free passenger miles. With capital costs of $4-30 million per mile and energy required to operate a 85% less than cars/trains/buses, modern versions of PRT are being deployed around the world:
- 59 Swedish Cities have commited to deploying PRT networks.
- POSCO has committed to building PRT in Korea.
- ULTra System is being deployed at Heathrow.
- Masdar, Abu Dhabi, is a zero-carbon city that will have PRT.
- JPods, Inc. has come to agreements to deploy networks in China, Huntvillle, Cupertino and other US cities.
JPods version of PRT operate at about 260 mpg and uses the distributed nature of the networks to harvest distributed energy sources. Ten times transport efficiency gains are reinforced by 25:1 power collection (Disclosure, author is the founder of JPods, Inc.).
To understand the nature of this paradigm shift five books are recommended:
- The Black Swan, uncertainty and rare events.
- Nothing Like It in the World, how the transcontinental railroads were built.
- The Tipping Point, how things cascade.
- Outliers, who makes things cascade.
- The Wisdom of Crowds, why free markets and democracies work.