Curing the Peak Oil Disease

A Heavy Government Hand and the Future of Innovation

By David Alexander, Founder & CEO

AFTER READING THIS issue’s feature article, it should be clear now the very real challenges the coming age of Peak Oil will present.  In all, Peak Oil is a disease, one that will infect the modern world, cause a great amount of disruption and, if nothing is done about it, can lead to the gradual disintegration of society as we know it.  We saw a glimpse of this when on April 12^th, 2008, the government of Haiti collapsed due to wide-scale riots brought upon by skyrocketing food prices, caused by the skyrocketing cost of gas.

So what can the world do (especially industrialized nations) to try and avoid this same fate?  Here a holistic approach is needed.  Peak Oil will affect—directly and indirectly—every aspect of society; thus, the solutions acted upon must be many and work in unison toward the aim of reducing our energy consumption (and in turn, our carbon footprint, which is great for the environment as well).  The following are suggestions that, in this writer’s opinion, need to be enacted by the government to produce an environment that will allow the private sector to lead us out of this Peak Oil mess.

The Basics

To start they can get serious about limiting the amount of carbon that industry consumes (either through oil-derived electricity usage or direct oil consumption through transport of goods or the production of petroleum-based goods, i.e. plastics), possibly through a cap and trade program or outright caps on emissions that will get progressively tougher bi-annually.  This will have the side benefits of reduced CO2 emissions that damage the environment, will produce green jobs by retrofitting the old infrastructure of industrial buildings and make each participating company more competitive by forcing them to use their energy resources more cost effectively (thus reducing their operating costs).

Similar initiatives can be implemented in domestic buildings and their construction.  First, the government can enact stricter and greener building standards that reduce energy usage in every new house or building that is built.  This will have the secondary benefits of increasing the demand for green building materials, forcing its suppliers to increase the capacity of their plants, which will eventually bring down the cost of green materials and in turn make building greener homes cheaper.  As well, since (initially) these new standards will mean that all new homes will cost more (due to the more expensive building materials used), most new home owners will opt to purchase their next homes closer to the city, inside more affordable apartment buildings instead of stand-alone homes (reducing the expansion of economically unsustainable sprawl).  As well, all new buildings can be required to equip their parking spaces with electricity outlets to more seamlessly accommodate the coming reality of plug-in electric vehicles.  And for the homes that already exist, subsidies can be offered to homeowners to retrofit their homes with energy efficient appliances, lighting, furnaces, insulation, etc.

As for the transportation industry (which uses nearly 70% of the petroleum produced), governments must enact legislation that forces car companies to produce zero-carbon emitting vehicles (electric cars) by a certain date and thereafter, annually increase the total percentage of those vehicle’s production until all vehicles in production become zero-carbon emitting.  And while this may be a more impossible requirement to ask of transport trucks, cargo ships and airlines, the government can enact subsidies into research of energy saving designs and technology that can increase the efficiency of these transport mediums.  Together, such legislation can substantially reduce the amount of petroleum used on an annual basis, while at the same time, work to reduce man-made global warming.

With respect to energy production, just like the governments did with the first national railroads, highways and satellites, they must take the lead by investing in the wide scale implementation of alternative energies (eventually encouraging the private sector to follow).  Recent studies have revealed that the existing technologies of solar, wind, hydro, wave and especially geothermal can easily satisfy the full energy needs of the planet if only their use were scaled up.  Doing this will eliminate our need on relying on energy from burning petroleum, coal (which uses large amounts petroleum to transport coal from the mines to the plant) and nuclear (which also uses huge amounts of petroleum energy to mine uranium), as the cost of these sources of energy will only increase the further into the peak oil age we enter.  As well, this new energy transition will generate millions of jobs that will alleviate the unemployment peak oil will bring.

And as for food production, the government will need to enact policies to ensure that all food is grown organically, i.e. without the use of petroleum based fertilizers and pesticides.  As well, further regulation will be required forcing grocery stores to buy their packaged food, meats and produce locally (as much as possible), instead of importing them from across the country or internationally.  Implementing both these measures will make sure that less petroleum is used in the production and transportation of food and will have the added benefit of producing healthier food for the masses while providing struggling farmers with an increased income.

The Gravy

All these actions and more can be implemented (especially in the support of the Third World), but overall, the best way to fight against peak oil is to invest in innovation, in human ingenuity, that will create the technologies humanity needs to break out of our dependency on petroleum.  As of now, present patent laws do a good job of protecting the interests of inventors and the companies that support them.  They have also played a large role in the process of wealth creation across the world.  But though my research, I have found many commentators saying that the world is approaching a gridlock in the advance of innovation.  Specifically, there is a drag on the speed of progress in innovation and that drag comes from the patents themselves.