My Daughter

My Daughter
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Tuesday, February 22, 2005

The Train To Nowhere

In many countries, oil has produced wealth and prosperity devoid of the effort that connects people to reality. This is the situation in many of the Persian Gulf countries where about half the population is now under the age of 15. In the next few years, these children will become reproductive adults, swelling the population with a baby boom like we experienced here in the US during the 1960’s. In spite of the recent surge in its oil income, Saudi Arabia continues to face serious long-term economic challenges, including high rates of unemployment (14% or greater), one of the world's fastest population growth rates (2.4% per year), and a very restless, young, and impatient citizenry. $100 billion dollars a year in oil revenues and they can’t make a go of it? Sounds like trouble just waiting to happen to me.

The United States is routinely criticized by the rest of the world for its’ profligate use of energy, albeit to fuel an economy upon whose success the rest of the world is also manifestly dependent. “If the US sneezes, the rest of the world catches a cold.” Alan Greenspan, in an effort to rein in some of that excessive “success” and stave off inflationary pressures, has actually fueled inflation by raising interest rates. Having interest rates so low for so long has now sparked a new rush of credit expansion with hopes of locking in those “45 year low” rates. Portents of hyperinflation, especially in the face of $50 barrel of oil once again.

Most consumers have only a limited, almost cavalier interest in energy efficiency, security of supply, and economic indicators. And they have come to expect personal convenience and unlimited commodity availability, and expect governments and business to handle those “other” issues for them. As this crisis unfolds, there will arise technological optimists who will assure us that human ingenuity will find technological solutions to our resource shortages. Technological optimists are usually not biological or physical scientists and do not harbor a grounded notion of “limits.” But politicians, business people, and a scared public tend to be eager disciples of these technological cornucopian optimists. And if all else fails, there will be the rapture, won’t there?

Right now, it seems the US economy train is running on a hope, a wish, and two fingers crossed behind the back. The curtains are drawn, the party is on, the engine has a new head of stream; all is well as we race toward a stark new reality awaiting us at the peak of the oil production curve, not the bottom. That is the irony of peak–oil.

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