energy

Over the past seven years, The New Franklin Register has offered articles that attempted to help our readers to understand the relationship between energy supplies and the economy. In our issue in Spring of this year (NFR #22, Spring 2014), I laid out a brief history of energy use and tried to describe how fossil fuel energy became essential to our modern way of life. In this article, I’d like to bring the story up to date, with our present predicament.

We all know that we use a lot of energy, most of it derived from fossil fuels. Until now, it has been so abundant and easily available that we take it entirely for granted. We walk into a room and switch on the lights. That’s using electricity, much of which is generated by burning coal or methane gas. All our transportation of goods and people, all mining of resources, manufacturing of machinery and consumer products depend on diesel and other liquid fuels. Our workplaces are powered by fossil fuels; our vacations and amusements are powered by fossil fuels.

You see where I’m going with this: there is virtually no getting away from fossil fuel energy in our very energy-intensive lives – unless perhaps we go fishing. And even then, the fishing line is nylon (oil), the hooks are steel (coal), and the fishing tackle came to market in a truck (oil again). The fact that we cannot turn around without seeing or touching something that arrived courtesy of fossil fuels might explain most people’s reluctance to contemplate a life with ever less oil and other fossil fuels. It seems natural to think that things will continue as they have all our lives.

I have often written that the depletion of fossil fuels is not a matter of belief or technology but a question of geology. If you keep using something that comes out of the earth, eventually you use it up.
There’s another problem, however, and that has to do not with shortages of supply but with debt. In our system, money is not created by the government but rather loaned into existence by banks. The bank does not have the money it lends you; it creates that money out of thin air when you sign an agreement to pay it back – with interest. You, the borrower, create the real value of that money by going out and earning it at some productive task. The bank just collects the money you give them each month and pays bonuses to their executives.

In order for this system of money creation to function, there must be continual growth in the economy to produce the new wealth that the new money represents. But without growing our supply of energy, there can be no growth. Faced with the need to keep this precarious system functioning, everyone – producers, consumers, bankers, workers, governments – has resorted to ever increasing levels of debt, rolling over old loans into new loans. Lending standards are relaxed in order to allow the borrowing to continue as the real economy slows. Eventually the debt burden becomes so great that interest payments take up all the productive capacity of a society. When that happens, the bubble bursts, for no one will either lend or borrow. Government debt, corporate debt, student debt, credit card debt, underwater mortgages: we’re close to that point already.

How does the debt crisis affect energy availability? Leaving aside the urgent questions of climate change and environmental damage caused by fossil fuel extraction and use, let’s just pretend for a moment that using fossil fuels is not irreparably damaging our life support systems, so we can just drill, baby, drill. With the cheap and easily extracted fuels already gone, what remains is deep under the sea or trapped in deep rock formations that must be shattered at great cost by fracking to release the fuels. Deep-sea drilling rigs cost between one and three billion dollars each to build and as much as $500,000 a day to operate. That’s real money and must be financed.

At the same time, we’re trying to build so-called renewable energy systems. That means new infrastructure, new machines like wind turbines and solar panels. Factories must be built, ores mined and refined, equipment installed. All of that requires large amounts of energy and, equally, large amounts of financing.

Whether we’re talking about drill, baby, drill or so-called renewable energy, the debt burden is just too great. We can see the evidence in the world around us. The oil majors are all cutting back on exploration and new projects because the returns are not good enough to justify the investment. At the same time, the financial system is seizing up as it chokes on more debt than can be serviced. That leaves energy descent and contraction as our certain future, whether we choose to embrace it and try to learn to live simpler, less energy-intensive lives––or simply wait for collapse to arrive like a tsunami.

Back in 2007, when The New Franklin Register started publishing, our focus was often on Peak Oil. As we sought to explain, Peak Oil refers to the moment when the amount of crude oil that can be extracted from the earth reaches its maximum and starts to decline. We also discussed the dire consequences likely to follow, since almost everything in modern industrial civilization depends upon a freely flowing supply of cheap and abundant oil.

We now know that global production of conventional oil – the cheap and fairly accessible stuff most of us grew up with – peaked in 2005. The dire consequences first showed themselves to the average citizen in the prices of gasoline, diesel oil, and heating fuel. Back in 2005, gasoline cost about $1.88. You know what you pay now.

But gasoline prices are only the most noticeable sign of crisis. Oil does much more than heat our homes and fuel our cars. It is the essential resource upon which all of industrial civilization depends.

Up until the beginnings of agriculture, 10,000 or so years ago, our hunter-gatherer ancestors had only the sun for energy. As now, sunlight made plants grow, animals ate the plants, and humans ate both plants and animals, and burned fallen timber for fuel. There was neither need nor opportunity to use too much as there were not many humans and the population was kept in check by the availability of food. But when those ancestors settled down and became farmers, everything changed. Where farming succeeded, crop surpluses resulted. Crop surpluses led to growing populations, to cities and civilizations and the empires that arose wherever people needed or wanted to expand their influence and control. Empires grew until their populations exceeded the carrying capacity of the land and water that sustained them and then the empires collapsed. This happened to Babylon, to Rome, to the Mayans, and others.

Humans are clever and thousands of years ago learned to smelt metals, giving us the Bronze Age and the Iron Age. Making steel for armor and weapons takes a lot of charcoal fuel and by the late 15th century, Europe found itself with rapidly declining forests and a population growing faster than the food supply. How convenient it was, then, that they found the Americas with their vast landmass, abundant forests and water, rich soils, and people with no immunity to European diseases. The highly developed trading networks of Central and South America had concentrated in the Inca, Aztec and Mayan cities great quantities of gold which the Spanish and Portuguese promptly stole. The English and French stole some from the Spanish, and the gold got to Europe where it funded what we call the Renaissance, banks, the rise of the Atlantic slave trade, and the great expansion of science and technology that led to the Industrial Revolution.

When the Industrial Revolution really got going at the end of the 18th century, energy was needed and the English learned to mine coal from deep in the earth. The work of mining coal is very energy intensive: either you send men down the mine to toil with picks or, as now, you blast the tops off mountains and dig it out with great diesel-burning machines. So, when the first oil wells were drilled in Pennsylvania in 1859, having oil flow relatively easily from the earth seemed little short of miraculous.

With cheap and abundant oil, the world changed. Ships and, later, airplanes could swiftly cross the oceans and move raw materials and manufactured goods to markets, and people to wherever they thought they could make a better life. Petroleum gave birth to chemical industries, industrialized food production, and a previously unimagined ease of living.

But, alas, a century and a half of growing oil supplies and increasingly easy living has allowed us to forget thousands of years of struggle and hard work––and has encouraged some delusional thinking. For example: the fantastical notion that, on our finite Earth, we can keep growing our economy forever.

Well, we can’t. A growing economy requires a growing energy supply and we can no longer grow our energy supply. At present, we are barely managing to keep our energy supplies at level, and that only by increasingly desperate measures, such as drilling five or more miles beneath the ocean, or destroying hundreds of square miles of Canada to cook tar out of sand, or by fracking. These methods of extracting fossil fuels are very expensive and use a lot of energy. And they penalize the future by leaving a toxic chemical mess that will harm future generations, poison the sea and air, and damage the systems that sustain life.

Meanwhile, they deplete faster than the old free-flowing oil wells. The energy companies and some politicians understand the reality of declining energy supplies, but they seem intent on capturing the last nickels at the bottom of the oil barrel.

In a town like Franklin, we still have a chance to preserve a healthy life on clean soil, drinking pure water, breathing clean air. But only if we work together to protect these precious resources and use them wisely.

(To be continued.)