Global Warming, Oil, and American Supremacy
Posted in Unfounded Speculation
on December 15th, 2009 by
Stephen DeGrace
Topics:
Crystal Ball,
Energy
I recently read a couple of very interesting books. Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization by Jeff Rubin (blog) is about our rapidly diminishing capacity to keep up with demand for oil and its consequences for the world economy. The other, Climate Wars by Gwynne Dyer, is a frank and realistic assessment of the global strategic challenges posed by global warming. The topics of these books are heavily interrelated, but each has its particular concentration. I believe that a synthesis of the arguments presented by these authors leads to some interesting and disturbing conclusions about our future.
I think now is a good time to pause and reflect. We are, at the moment, apparently recovering from a global recession. Jeff Rubin argues that this recession was caused not by greedy bankers and subprime mortgage defaults but by triple digit oil prices, which in turn were caused by fundamental structual shifts in the supply and demand of oil. I believe he is correct. A clear prediction of Rubin's analysis is that an apparent recovery will cause the demand for oil to revive, causing prices to spike and creating a second recession in rapid succession to the first. I believe this is also true.
So, we're in a little breathing space. The vast US dollar scam where Western consumers buy vast amount of Chinese goods funded by Chinese savers buying vast quantities of our debt has not yet collapsed, and oil, while at a historic high (if we hadn't seen the summer of 2008, we would say that $70-$80 oil is ridiculously high - now we're conditioned to think it's cheap!) has not yet spiked again. We mostly want to think that we succeeded in dodging a bullet, those lost jobs are coming back, and the old world can continue. Normal service is resuming.
I really think it's not, but for all of us, doomsayers and pollyannas alike, it is far from sinking in. This provides very fertile ground for climate change deniers because their pronouncements very much feed into what we want to believe.
Oil
So here's the deal. The crux of Rubin's argument is that supply is no longer growing faster than demand. These constant announcements of so-called mega-finds are miserable scrapings of the bottom of the barrel in the most remote and hostile places on earth (physically and/or politically). The oil that's left, like the Alberta oil sands, is extremely expensive to extract, requiring an enormous energy input and consequent huge CO2 emissions. We're taking this sort of unpleasant source seriously because increasingly, that's all that's left. We're rapidly losing supply to depletion and not enough new supply is coming online to properly offset it. Meanwhile, demand continues to accelerate, driven by the emerging economies. And the OPEC nations themselves are drawing off an increasingly large fraction of their own supplies for heavily subsidized local consumption. Scarcity has become an issue, such that increased demand is incapable of producing the expected increase in supply. In other words we are at or very close to peak oil.
These factors led to $50 oil by 2005, a prediction which was casually dismissed when Rubin originally made it, and yet which came to pass, and to almost $150 oil by 2008, a prediction which was again dismissed by the industry when Rubin made it and which again came true. The same factors kept oil from falling below $30 (a high price historically, and it didn't stay that low for long) in the wake of the big crash in 2008 and is keeping oil at $70-$80 now in the midst of a recession.
Rubin argues that oil shocks cause recessions, and the new structure of the oil supply combined with fundamentally unchanged demand structure will lead to a new normal of short expansions punctuated by frequent oil shocks and recessions.
Globalization depends on cheap transportation and hence cheap energy. If the cost to transport cheap Chinese goods to American markets is prohibitive, the wage advantage doesn't matter. Transportation costs, in other words, act like a tariff. Once actual tariffs were reduced worldwide in trade agreements starting roughly in the 1980s, the availability of cheap energy made globalization inevitable.
New, high oil prices act like tariffs barriers, and economies will react by restructuring themselves to the heavily domestic trade patterns reminiscent of the pre-globalization 1970s. The goods you buy, and (significantly) the food you eat, will come from factories and fields much closer to home. As Rubin says, your world will get a whole lot smaller. Note how I emphasized food, there. Rubin talks a lot about where our food comes from, but in combination with Dyer's work, it is possible to draw some conclusions a good deal more interesting than Rubin's about what localized food production really means.
Rubin's book and his outlook are ultimately very chipper. He emphasizes the many positives to the economic consequences he foresees, and it is certainly true that his predictions would offset the global growth in greenhouse gas emissions by reducing demand in response to prices trending ever up. I believe he is completely sincere, and I also feel he wants to emphasize that he is not a scaremonger or a prophet of doom. Neither is Dyer, but Dyer is far from chipper, and the rose-tinted glasses are nowhere in evidence.
Food and Population
Before talking about the climate, it's worth taking a minute to talk about food. Since 1999, world grain reserves have been declining, and agricultural production has not increased. We have already been hit with significant food price inflation. But the world's population is around 6.8 billion right now and is currently projected to top out around nine billion people before starting to decline. So plainly something has to give before then.
Back in 1968, Paul Ehrlich wrote a best-selling non-fiction horror novel called The Population Bomb. It was filled with lurid predictions of mass starvation by the 1970's and 1980's that obviously never came to pass. But given the simple fact going back to Malthus that all things being equal, population will always eventually outstrip the availability of resources to support it, it's interesting to look at why these predictions failed, because while extreme, especially in their accompanying policy predictions, the science is more than sound, it's common sense.
A couple things happened in the years after World War II. One, effective birth control became available to the increasingly affluent and urbanized populations of the developed world. Given a choice, and a lifestyle where children are a significant financial liability and more of a lifestyle choice than a vital asset, people chose to have small families. It helps that advances in medicine give a very high probability that your children will live to adulthood, so there is not the pressure to have many children to offset losses to infant mortality. This has gone on to the point where the birth rate is below the replacement level in much of the developed world. In other words, we found a way to circumvent one of Malthus's immutable laws, that of the passion between the sexes and its usual results.
Of course, affluence is an important element. In other parts of the world, the same basic public health measures have similarly lowered infant mortality and raised life expectancies. However, due to poverty, both access to birth control and the motivation to step away from traditional mores and limit family sizes have not been present, and populations in the developing world have exploded even as the rate of increase has declined and even stopped in the developed world.
So why have we been spared mass starvation (except for local famines which often have a major political component)? The answer lies in the Green Revolution, the massive application of technology, including irrigation, pesticides, chemical fertilizer, selective breeding to improve crop varieties, and mechanization, to agriculture.
To call this a revolution is not an exaggeration - despite massive population growth, food production actually grew faster, and food prices in real terms fell to historically low levels in much of the world. Today we pay a much smaller proportion of our income for food than our grandparents and their parents paid in the early part of the 20th century and in the 19th. And due to cheap transportation, local crop failures are more of an economic worry than an existential worry for most of us, a unique situation in human history.
However, as both Rubin and Dyer point out, it is not unfair to say that modern agriculture is essentially a scheme to turn fossil fuels into food. It is enormously energy intensive (not to mention water intensive). Ammonia fertilizer, which is made using natural gas, deserves particular mention. The Green Revolution is finally topping out in terms of increased production (we are reaching the point where applying still more fertilizer meets diminishing returns), and the production we have depends on continuing to pour enormous amounts of energy into it, meaning that enormous amount of energy have to be reserved for it.
Rubin likes to point out that a typical food item might make its way around the planet twice before it makes it to your grocery store shelf. The current global trade pattern for food is very globalized, with food being transported long distances for processing and to market on top of the energy that was expended to produce it. He predicts that higher oil prices will add a premium to food which is transported long distances and that therefore the pattern of food production, processing and sale will become more local in order to keep food affordable. This certainly has an impact on exotic and out of season food items for countries like Canada.
This is certainly a good point, and it must be remembered that due to the intensive use of energy to produce food at current population-sustaining levels to begin with (by the way: if we all switched to organic farming tomorrow, millions of us would have to starve, because organic farming is not capable of sustaining the massive yields of mainstream modern practices. That's part of the reason why organic produce is so expensive), even food prices for locally grown food are very sensitive to the price of energy (which for now and for the foreseeable future means fossil fuels). Let's not forget that all-important ingredient in the Green Revolution, too, water. These types of crop yields and affordable prices cannot be maintained without plentiful water for irrigation.
Climate Change
Climate change is much in the news right now, with the Copenhagen summit and the Climate Research Unit e-mail hacking incident. "Climategate" notwithstanding, the scientific consensus that the earth's climate is warming is based on much more than the research of the CRU and is still not in any serious doubt. Just ask anyone from the Arctic. However, the scandal is adding octane fuel to the climate change denial movement, both the professional movement funded by Exxon-Mobil and the legions of ideological sympathizers drawn in by left-right politicization of climate change in the English-speaking world.
Regardless of this, it is probably already too late to seriously avert the negative effects of climate change. The CO2 content of the atmosphere is growing at such a fast rate that even with sharp reductions, the CO2 content of the atmosphere is unlikely to top out below 450 ppm, and the climate will overcome its inertia and catch up with higher greenhouse gas levels. On top of this, even if the nations of the world were sincerely trying to address the problem and not simply squabbling and plotting to grow their own emissions without interruption, it is politically enormously difficult to commit to greenhouse gas emission cuts that will seriously impact people lives before we start to see serious negative impacts from global warming. By the time things have advanced seriously and the deniers are reduced to a tiny, ignored rump, positive feedbacks may have already kicked in and it will definitely be far too late to avert problems like decreased food and water supplies. Any cuts at that point will be to avoid still more catastrophic effects that will come later.
Before coming around to Gwynne Dyer, I want to discuss climate change in general, not human-made climate change specifically. The earth's climate has changed radically in the past, everything from times when there were pleasant, temperate conditions from pole to pole, to times when the earth was ice-locked with glaciers, or nearly so, the so-called Snowball Earth. Doubtless, there will be just as radical swings in the future. Within human history we have had everything from ice sheets covering significant parts of the northern hemisphere to our present pleasant, warm conditions. Anthropogenic climate change doesn't necessarily have to produce anything radically out of the ordinary in the context of these swings, and in fact probably won't. So why worry about it?
The answer, looking at Gwynne Dyer's survey of the probable effects of global warming, is that just because something is natural doesn't mean it's good, particularly not that it's good for us. Human societies thrive on stability. Disruption rarely has good results. In human history, shifts in climate generally mean that somewhere, some populations which are already at the full capacity of the local environment to provide food and water suddenly find themselves with drastically reduced resources. They then have two choices - sit and starve, or migrate. Migration often or usually means war - you take away your neighbors' land, and they are forced to flee and do the same thing to the next tribe down the road. Modern national borders add a new and ugly dimension to this equation. What will states and their populations do if a particular nation-state cannot feed itself?
Natural climate change is certain to happen to humanity again at some point (unless we get into planetary engineering and decide to take measures to try and keep the climate in some state we prefer...), and despite or because of modern technology, it is bound to mean trouble. But that doesn't mean we have to actively court it, which is what we're doing right now. Natural climate change is more likely to be local and easier to mitigate. Anthropogenic global warming has implications which are global in scale and likely to happen faster than we can successfully accommodate.
How much trouble are we courting? Leaving aside longer-term effects such as major shifts in sea levels, a shorter-term effect is more energy fuelling the Hadley cells which are responsible for the trade winds and for the earth's desert belts. While global warming overall will increase rainfall, this atmospheric circulation will cause a major reduction in rainfall over the tropics and an expansion of the world's deserts. Less water equals less food. This is aggravated by the melting of glaciers in the Himalayas which are the sources of rivers providing vital water to both China and the Indian subcontinent, and the (coincidental but unfortunate) depletion of aquifers such as the huge fossil (i.e., non-replenishing) aquifer providing much of Saudi Arabia's water, and the Ogallala aquifer in the western United States, which is draining faster than it is being replenished.
On top of the water issue is the direct effect of higher temperatures... in much of the world, temperatures are already very close to the thresholds above which yields will decrease significantly for staple crops on which the population depends.
Combine that with high oil prices making the cost of transported food more prohibitive, not to mention making Green Revolution agriculture more expensive. Indeed, as Rubin says, we will be eating locally. So what happens if your current locality is supplying less food to a growing population? Even areas with stable or increased agricultural capacity may have problems if they experience a bad year, or a string of bad years.
Many countries will find that they are no longer able to feed their populations, and poor people everywhere will increasingly be priced out of the food market (bloodless economic language for an awful reality). Many of the victims this time will not be helpless, technologically-backwards failed states, but technologically competent and considerably developed nations. The list includes Pakistan, India, China, Mexico and Central America (the United States is projected to have a much more serious illegal immigration problem as starving masses try to beat down the doors), and even the Mediterranean tier of European states. History tells us that people will not quietly watch their children starve if they have any option at all. These nations have abundant options, up to and including threshold or actual nuclear capabilities, and fully modern conventional weapons.
Parts of the United States will fall in the climate change losers column, but other parts will fall into the winners column, so there's a chance it will be a wash for the Americans themselves, although they will be directly affected by attempted migration of more desperate populations to the south, plus internal migrations away from areas with inadequate water supplies.
Gwynne Dyer is a military historian, and he looks at issues of climate and resources in military and political terms. He contends that the General Staffs of the world's armed forces are taking global warming very seriously and generating scenarios for the likely military implications. In his book, interspersed with interviews with experts and discussions of major issues surrounding global warming, Dyer also outlines a number of interesting potential military and political scenarios arising from global warming, as sketched out above, and several alarming ones have to do with the effects of decreased agricultural production and availability of water. Without a question, countries absolutely would go to war over food and water.
If there is one thing we cannot do any more, it is go to war. The level of technology available in World War II produced horrific and unprecedented destruction of lives and infrastructure, so awful that that generation formed the United Nations with its cynical structure acknowledging power realities specifically as a mechanism to prevent war. Weapons have improved greatly since then, and on top of that we have the capacity to destroy our whole civilization with nuclear weapons. Recent wars of powerful, developed nations against weak and impoverished failed states fail to give an adequate idea of just how dangerous war has become.
Gwynne Dyer's argument, then, is that we have to accept politically possible targets for global warming and greenhouse gas emissions of 2 °C and 450 ppm, and then immediately get to work on the task of getting the CO2 content of the atmosphere down to a "safe" level of 350 ppm as quickly as possible. In the meantime, he asserts that we have no choice but to seriously consider using geo-engineering solutions such as spraying sulfates into the upper atmosphere to mimic the sunlight screening effect of volcanoes to mitigate the impacts of global warming, since all of those impacts probably cannot be stopped at this time, and the above-mentioned destabilization needs to be avoided.
American Supremacy
Another thread which needs to be considered is the coming fundamental shift in the world's power structure. In the past, major changes in the balance of power have led to Great Power wars, of which the World Wars are just the most obvious examples, which have served a function in rearranging the international pecking order. Everyone can see that we are headed for such a realignment now from the inevitable rise of China, as well as other regional great powers such as India and Brazil.
What I think may be less obvious is that coinciding with the rise of competing powers is that while the emerging powers rise, American power is heading for decline, not only in relative but in absolute terms. America has mortgaged itself to the hilt, in a large part beholden to the Chinese. In order to attempt to escape the consequences of the most recent recession, the Obama administration as well as governments around the world have engaged in an ill-advised orgy of Keynesian "stimulus," driving deficits and public debt to unprecedented levels. If Rubin is right, there will be a second recession right on the heels of the first, and with debt levels so high, piling on more debt to spend our way out of that one too will be, or should be, out of the question. In fact, the debt uselessly piled on to fight the current recession will just make things much worse in the end.
America's political clout depends on having the world's largest economy and the world's largest and most advanced armed forces. But that economy is a hollowed out shell of its former self, apparently maintained by a mountain of private and public debt. America doesn't seem to make much of anything any more - it mostly buys things. At some point, this fragile pyramid must collapse. And then there simply won't be the money to pour trillions and trillions of dollars into those bloated, state-of-the-art armed forces.
These problems have been building for years under multiple Presidents of both parties. America's eventual relative decline was inevitable due to the necessary rise of competing powers. But the process has been hastened by the monstrous hubris of the neo-conservatives and ultra-nationalists in thinking they could impose a Pax Americana on the world and ignore the institutions of world order created in the wake of World War II. The invasion of Iraq destroyed America's moral credibility, and a record of failure and compromise in Iraq has taught the world the limits of American power rather than the intended lesson about the irresistible might of American power.
The legions of America-bashers might be gleeful at this news, but this development is actually a bad thing. Some notorious counter examples notwithstanding, America has been a force for good and for higher ideals to unite humanity for much of the 20th century. Certainly America is not the indispensible nation - ideals of freedom and democracy are a human birthright, and plenty of other nations have succeeded in grasping democracy for themselves with no help from the United States. But nevertheless, the United States is a symbol of freedom and democracy, and that symbol is tarnished and preparing the fade. Increasingly, regimes which do not share these key values are going to be calling more of the shots, and we will have no choice but to get along with these countries.
What does that mean for the other challenges we face? Put simply, America will not be in charge any more. Practically every person living has spent their whole life in a world where America was the leader, however mixed our feelings may have been about that. Even the existence of a parallel Communist world didn't negate that fact. It's almost impossible to imagine a world where that just isn't true, but not only is America going to be a major force of retrograde obstruction in the matter of adjusting to peak oil and combating climate change, the option of ever taking leadership will increasingly be out of their (our) grasp. I think it will actually be a rude awakening, and we will have cause to look back on the era of American leadership with real nostalgia.
Putting It Together
So, first of all, we're vastly unlikely to do anything with any significant effect to stop climate change, before the effects are so pronounced as to completely destroy the credibility of the denial industry, i.e., not before it's far too late. On the plus side, imminent peak oil will act as a natural, rising carbon tax, helping to somewhat curb rising emissions. The kicker, though, is that we have more than enough coal and oil sands to keep the engine running for a long time, albeit much more expensively, so we have more than enough fossil fuels left to get ourselves in a lot of trouble.
Secondly, peak oil will raise the cost of transported food, making it less practical to offset food shortages in the global south due to global warming with the increased food yields that northern nations such as Canada are likely to see as a result of global warming. It will also make the energy-intensive agriculture that makes it possible to feed our huge population more and more expensive, even as yields fall due to overheating and reduced availability of water for irrigation.
Thirdly, steadily increasing population and flat food supply would get us into trouble in terms of food sooner rather than later even discounting global warming. This is particularly true in the developing nations where most of the population growth is coming from.
These factors will have a profoundly destabilizing effect on a world already destabilized due to shifting power arrangements and a possible catastrophic collapse in the tidy but unsustainable relationship between China and the United States, where China makes basically everything and America buys it on credit, much of it also supplied by China. Especially complicating will be the fact that two of the rising powers, China and India, will be early victims of the effects of climate change, for which they will inevitably blame the West and particularly the United States.
Basically, I think prevention and mitigation to maintain a stable semblance of the good life we enjoy at present will prove impossible, that the negative impacts of climate change, starting with contractions in supplies of food and water in key regions will prove unavoidable, and that mitigation will be extremely challenging in light of the likely much more tense political environment. I think we and especially our children and grandchildren are doomed to live in Interesting Times. I really don't think technology is going to step in and save us with any miracle this time, either. Even if there were more miracles to be had, powerful vested interests are in place that will likely be very successful in suppressing these developments, at least until it's getting to be too late to do enough good.
The combination of climate change and peak oil creates a perfect storm. The causes and the solutions are interrelated. In order to maintain our population levels we need to maintain a high-energy industrial civilization, so we need to aggressively seek alternatives to burning fossil fuels (and not harmful fake solutions like corn-based ethanol), and we need a mechanism to drastically reduce greenhouse gas emissions. The simplest way would be to attach a price to carbon emissions in some way and then rely on the ingenuity of the free market to create efficiencies and find alternatives. It's clear what we need to do, but it's also clear that we're probably not going to do enough, fast enough.
The Role of Canada
First of all, not all countries will be losers on account of climate change. Canada stands to be a huge winner in the climate change and peak oil lottery. We are at a high latitude, so we probably won't experience the drying of other regions (although our water supply in parts of the country may be affected due to melting glaciers, as pertains to rivers which are glacier fed). But our water supply will be comparatively unaffected, or may actually improve in areas due to increased rainfall, and we will enjoy longer growing seasons and expanded agricultural range.
In a world where people are increasingly hungry, a nation which actually has an increased agricultural abundance stands to get very rich. Even if imported food is prohibitively expensive due to high shipping costs, people will stay pay whatever they have to, because they have to eat. Canada will make a killing.
Additionally, we have huge reserves of oil, especially expensive, dirty oil which will be very profitable to extract at high oil prices - as long as efforts to mitigate climate change don't cut even further into demand than high prices will, that is.
Because of these factors, it is absolutely not in Canada's naked short-to-medium-term self-interest to have any world-wide scheme to reduce carbon emissions. Obviously over the long term we will suffer along with everyone else, but long term considerations are unlikely to be particularly motivating, particularly when there is widespread wilful disbelief in the central facts.
For now, for practical reasons, our government is openly saying they will do whatever the Americans do, no more, no less. But over time, look for Canada to play even more of a spoiler role in climate change negotiations than we do even at present (and we are already a significant impediment to progress). Canada will absolutely become a major climate change villain. I absolutely foresee a day when Canadians will sew American flags to their backpacks to obtain a better reaction from people when travelling abroad.
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