I’m not concerned about peak oil

March 20, 2008

I believe it’s real and I plan to profit from it, but I’m not convinced it will be responsible for a major cataclysmic downfall of civilization, as some are predicting. If global oil production has peaked, that doesn’t mean oil will become scarce, it simply means oil will no longer be plentiful and cheap.

Who cares. We are not beyond the ability to eliminate oil from many of our daily activities. As the cost of transportation increases, the cost-benefit of living in suburbia will change and more people will move closer to work in urban areas. With a smaller geographical footprint, power line extensions, sewer expansions and road construction in general will all be minimized. Shipping costs for everything we consume will come down.

For those who value space more than time, there are substitutes for the internal combustion engine ready to go, they have just been neglected for economic reasons. New technologies are always more expensive when they first come to market, but at a certain price they become profitable and as supply ramps up costs ramp down. We need more electric cars.

We need to stop wasting petroleum products on activities with obvious substitutes, like the generation of electricity. How do we generate the electricity required to power all these new electric cars? We should double the number of nuclear power plants in the world and introduce tax incentives for individuals and businesses to install solar panels and mini-windmills on every roof. You may not be able to power your entire property with these devices, but even 20% is a significant improvement.

Overall energy consumption per capita will also come down with more people living in close proximity, we will have more energy efficient attached properties like condos and apartment buildings. For those who choose to live in detached family homes, we need better insulation and possibly more energy efficient designs. We need to minimize stand-by functionality in electronic devices.

We use way too much plastic for packaging, personally I always buy glass containers when they are made available and we need to encourage more producers to do so. I use the same plastic bags every time I go grocery shopping.

None of this is rocket science. All these changes will take place naturally if the free market is allowed to work, but we can speed up the process by encouraging responsible behavior with tax incentives. Tax breaks are almost always a good idea.

Most importantly, it could also be the answer to our current economic calamity by generating millions of new jobs manufacturing these products and installing them at client sites.