Peak Oil and its Inevitable Effects

I just started reading $20 Per Gallon by Christopher Steiner. The book essentially describes what changes must occur as the price of oil rises (due to increasing scarcity and demand), with chapters being $2 intervals (i.e. $4 Prologue serves as an introduction, since that's currently the highest that gas has been per gallon (in certain parts of the country, in 2008), and the first chapter is titled "Chapter $6").

So far I've gotten through Chapter $6; my impressions thus far is that Steiner can be too repetitive at times, but the ideas are sound (indeed, the whole premise of the book is common sense, though most Americans are extremely reluctant to admit it). Still, the book takes an optimistic approach, arguing that once gas prices hit the $20 per gallon mark, our society will be the better for it.

One of the most shocking statements that I read so far was that evidence indicates that we've already hit peak oil, in 2006. Specifically, in the summer of 2006 oil production hit a record output of 81-82 million barrels per day, and has been on the decline since. I've heard projections that peak oil would hit between 2010 and 2020, so this came as a bit of a surprise! Part of it has to do with the fact that the price of oil went down in 2009, which the book nonchalantly attributes to the recession (makes sense).

But more than just peak oil threatens the fossil fuel age; apparently, the infrastructure (refineries, pipelines, etc.) are nearly at the breaking point, and will have to be overhauled soon if oil production is to continue as it has been. The amount of accidents occurring due to faulty/aging infrastructure is on the rise, including a major leak in BP's pipeline from Prudhoe Bay which resulted in 270,000 gallons of oil being spilled "in pristine Alaskan bush." The problem here should be obvious; overhauling the infrastructure to continue oil production which is guaranteed to steadily decline is foolish from an economic perspective. Not that drilling will stop; rather, I predict that aging infrastructure will be stretched to its limits, resulting in a decrease in safety (both for workers and the environment).

Now to move onto the first benchmark, $6 per gallon. The subtitle of this chapter is "Society Change and the Dead SUV." It details the rise of the SUV due to incredibly cheap oil prices, and notes that SUVs had fallen into disfavor during 2008 when gas prices were hovering just below $4 per gallon. Obviously when prices exceed that, smaller cars will become increasingly more popular. Most interesting was the following passage: "according to some of American automakers' own research, the type of people who tend to buy SUVs are insecure and vain. They're people who are frequently nervous about their marriage and uncomfortable about having become parents. They have little confidence in their skills as drivers.* And more than anything else, they're they're self-absorbed and narcissistic, with little interest in their communities and neighbors."

*Ironically, SUVs are incredibly unsafe, so this association tends to result in more collision-related deaths. Obviously these huge vehicles protect the drivers and passengers from injury during collisions, but their size and height makes them less maneuverable and prone to flipping over (in other words, it's more difficult for drivers of SUVs to avoid collisions). And obviously in a collision with a smaller vehicle, an SUV is more likely to cause fatalities (namely to those in the smaller vehicle). Statistics of deaths associated with certain models of cars, SUVs, and trucks back this assertion up. In summary, poor drivers tend to prefer vehicles that are more difficult to handle, exacerbating the problem.

The chapter goes on to discuss some of the benefits of gas prices reaching $6 per gallon, most of them tied to there being fewer cars on the road. Obesity may decrease as people walk and bike more (even if it's just walking to catch some form of public transportation). With fewer cars on the road, pollution and pollution-related illnesses/deaths will decrease. Police foot/bike/horse patrols will increase, resulting in the general populace feeling safer, and police officers feeling more connected and involved in their communities (research shows that the average person doesn't notice an increase in the amount of patrol cars, but when more officers are walking or biking, the public notices their presence).

Some other changes are a decrease in the distance travelled for middle and high school sporting events, as well as division II and III college teams. Schools will also be less able to provide bus transportation (school buses average about 6 miles per gallon), and maximum walking distances are already increasing in many school districts (these are distances where bus transport isn't available for students because it's close enough to walk). Hopefully with more police foot patrols, parents will feel more at ease letting their children walk longer distances to school. And finally, one other change will be in our transportation infrastructure. Right now, the US has a set gas tax of 18.4 cents per gallon, regardless of the price of gas. As gas prices rise and people drive less, this means that the government gets less money to improve roads and bridges. A percentage tax would be an intuitive next step, but few politicians would support that because it would be extremely unpopular, albeit necessary (imagine trying to convince people that as gas prices rise, they'll have to pay even more with increased taxes!). Steiner predicts an increase in tolls for heavily used roads, as London and Stockholm have already implemented such systems which, though they faced opposition at first, are generally viewed as a positive change by residents of those cities. Going along with this, more roadways will likely be privatized.

Interesting start to the book. I like the structure, how the author attempts to predict what changes will occur at which dollar "thresholds" ($6, $8, $10, $12, $14, $16, $18, and $20). It will be interesting to compare what really happens (when gas prices inevitably reach these thresholds), as the author's reasoning is sound thus far.