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My Daughter
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Sunday, June 25, 2006

Canaries, singing, twittering, and silent

One of the continuing themes in Peak Oil is trying to predict the moment when peak oil hits. While arguably a pointless exercise, there is some intellectual pride involved in naming the instant when we transition from growing to dwindling energy availability. So, even though we cannot know when peak oil has occurred except in retrospect, let us consider whether we hear the twittering of birds.

I propose we can hear three species of canary. The first has foresight and is predictive – call it a leading indicator. The second type is concurrent. The last is reactive, and thus is a trailing indicator. Each species of canary adds its song, finally heralding in a new era of expensive energy.

Leading indicators might include cessation of construction of new oil refineries, or consistent failure to discover new oil reserves sufficient to offset extraction. These canaries are in full throat, singing their little hearts out. Concurrent indicators are spending on tourism, airline earnings, and current energy prices. Arguably, there is a small lag between the actuality of peak oil and the report these indicators provide. The latency will be on the order of months, and – perhaps – weeks. Presently, our concurrent canaries are twittering, warming themselves up for a proper aria. We see airline earnings down and heavy deficits; however, the companies continue with existing models. They conserve fuel by carrying less water in the galleys. They avoid carrying blankets. Energy prices are high from a historical perspective; however, fuel remains plentiful. People are adapting by shifting spending patterns; they continue to travel as before. Tourism and the hospitality industry appear strong. This canary seems reticent to sing, noting people’s determination to travel on business and enjoy vacations. Given the large numbers employed in the tourism and hospitality industries, this bird may signal a deep economic shift. It would be well to keep an eye on this particular canary.

The lagging indicators will confirm conclusions gained from the leading and concurrent birds. These include auto industry sales and earnings, and the average mileage of cars bought. Demographic trends, with people moving inward from exurbia and beyond is another. Average house size might be one. The greatest lag would be in large government programs, since these typically need years of planning and multiyear contracts. We can expect to see massive new highway programs even as people cut short journeys and abandon tourism. Although the U.S. auto industry does not enjoy robust earnings, the global industry is doing better. Toyota’s earnings remain strong. The news media mention commutes and some discussion of declining house size, but the trend is not yet in place. Government building and highway projects continue, the NAFTA highway being a case in point. Our lagging canaries are determinedly silent, as we might expect.

What shall we infer? With lagging canaries singing, concurrent canaries beginning to make a less than unanimous noise, and lagging canaries silent, we are close to but not at the peak. When we hear more of disastrous earnings by hotels and other travel and tourism oriented industries, we will know the canary is getting ready. When we see increased unemployment, especially from these industries, we’ll know the canary has taken a deep breath. When we witness extensive ad campaigns importuning us to travel, with reports of the failure of the tourist industry, we can safely say the canary is singing.

It will take a time, probably several years, before the lagging canaries sing their lugubrious dirge. Mass cancellation of government highway programs because of expected travel declines will give full and final confirmation to the peak oil symphony. Given the likely attempts to use hybrid and electric vehicles, along with more fuel-efficient vehicles of every sort, we may expect at least two, and more likely 5 years will pass.

Only after the final canary begins his song will the world unite in efforts to mitigate the outcomes of peak oil. From this, much will follow; but that is a subject for another time.

1 comment:

Kate said...

I don't mean to be critical of your analysis mate, but I think you're getting your metaphores muddled. You've crossed the canary in the coalmine metaphor with the "it ain't over til the fat lady sings" concept. The canaries in the coal mines didn't warn of bad air by singing but by stopping - permanently - by falling off their perch - dead.