American Prospect published a very worthwhile article entitled “Work in the Age of Anxiety – The 40-Year Slump.” You can read the whole thing at http://prospect.org/article/40-year-slump.

Seriously, it would make sense to go read the article now, before continuing here. What is said here will make much more sense (I hope) if you read the original article.

Unfortunately, there’s no way to comment on the article on their website; no way to engage in a discussion. But fortunately, this is the internet. There are numerous ways to continue a discussion. This post is one of those ways, and comments are available on this blog.

Describing the turnaround decade of the 1970’s, the article discusses the 1973 and 1979 oil shocks, but fails to mention the fundamentals of oil production that made the USA so vulnerable to oil shocks. In 1970, production (actually extraction, but commonly called “production”) of oil in the USA hit an all-time peak. For the century before 1970, American oil production had steadily increased. After, it erratically declined. See, for instance, the chart at http://earlywarn.blogspot.com/2013/03/us-crude-oil-production-1920-2012.html.

Alaska’s North Slope oil made a temporary reversal of the declining trend, but that lasted only a few years and total production never came near the total of 1970. Later, as wells in the Gulf of Mexico came on line, the rate of decline was considerably slowed for some years.

Even more recently, oil produced by fracking in the Bakken Shale (North Dakota) and the Eagle Ford Shale (Texas) has produced the same sort of blip that North Slope oil did. Given the great decline rate of fracked wells, plus the expense and environmental damage of fracking, that blip should prove as temporary as the one from the North Slope. Regardless of how quickly total production hits its next localized maximum, the oil produced by fracking is much lower in net energy than oil from conventional wells.

Historically, oil production in America has been on a bumpy decline since 1970. Declining oil production has been a fundamental contributor to slow or negative real growth in the American economy. It explains, among other things, the increasing desperation of the American Empire to control the world’s remaining oil reserves, the bulk of which are in the Middle East.

And if world oil is peaking, doesn’t that mean controlling the remaining reserves is in the long run a futile strategy?

A lot of thought is needed to understand the world peak of oil production. If production is measured in barrels, then what we see is very slow growth in spite of very high prices for the last decade or so. You can find a chart of world oil production in Gail Tverberg’s thoughtful article at http://ourfiniteworld.com/2013/01/06/2013-beginning-of-long-term-recession/.

This gets tricky, because the last decade of high prices have brought into the world market many new barrels of natural gas liquids, tar sands synthetic crude and heavy oil that has less absolute energy content per barrel than conventional oil and very much less net energy. (Net energy equals energy content minus energy used in extraction, for a first-order definition.)

In other words, measuring oil production in units of volume rather than in units of energy gives a false impression of increase, while energy supplied to the world economy is actually declining. This decline is a fundamental driving element of the world’s declining real economy.

Understanding this point illuminates the desperate measures the financial institutions and their political parties are taking to capture wealth through austerity measures for the rest of us. In the United States, declining per capita energy use is closely linked to declining real wages since the 1970’s, as increasing energy use was previously linked to increasing real wages.

To follow world politics, follow the oil, and more broadly the energy, in the same way as you follow the money. Most importantly, understand that oil depletion, and resource depletion generally, is permanent – not reversible by any possible change in political policy. The consequent decline of the American Empire is also permanent.

This means the whole concept of prosperity for all Americans through economic growth – more and more roads, cars, houses, etc. – is not going to work in the future as it did during the great consolidation of the American Empire following World War 2. The resources to support that empire have largely been used up, and the “secondary” consequences of empire-building – pollution, climate change, acidification of the oceans and so on – are also eating at the foundations.

We can still have a society run for the benefit of ordinary people, but that society will not look like either Smallville or Metropolis 1947-1974. In our future, local resilience will work better than central planning by facists or communists or technocrats.

That leads to yet another article very much worth considering – Seth Godin has given us a direct and clear explanation of the logic of resilience:
http://sethgodin.typepad.com/seths_blog/2014/01/accuracy-resilience-and-denial.html.

In short, all the efforts to prop up our failing corporate economy by financial fraud, politics by commercial advertising, austerity policies, censorship of the internet and other types of state terrorism will not restore the American Empire any more than similar attempts restored the Roman Empire. If we want a viable, sustainable society, we are going to have to create it in opposition to the empire builders.

Art Myatt

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