A fairly comprehensive look at the mess we're sliding into

A pretty good, lengthy interview with author James Howard Kunstler about peak oil and the problems caused by trying to maintain the suburban lifestyle. Some excerpts:

JHK: Well, I think that because the subject matter is so terrifying there’s a tendency to put me and what I’m saying in a crackpot folder. But, look, since I published that, the price of oil has tripled, the economy is tanking, the housing bubble imploded exactly the way I described it imploding three years ago.

The truth of the matter is: We’re not going to run Walt Disney World, Wal-Mart, and the interstate highway system on any combination of wind, solar, nuclear, bio-diesel, ethanol, or used French-fried potato oil.

Or dark matter. Or any other combination of anything you can imagine. But the wish to continue doing that is tremendous.

The main symptom of where our heads are at collectively and the failure of collective imagination in this country can be seen in the fact that the only conversation that’s going on about this all over the country is: how are we going to run the cars on some other kind of fuel. That’s all anyone wants to talk about.

And it’s not just the stupid people and its not just the NASCAR people, it’s the policy wonks and the environmentalists. The conversation is the same, and it is a huge fantasy, because that’s not going to happen. We have to really, comprehensively make other arrangements for daily life in this country—and [yet] we can’t think about it. And there’s a reason we can’t think about it: It’s called “the psychology of previous investment.” And what it means is that we put so much of our national treasure and invested so much of our identity in all the infrastructure of daily living and happy motoring that we can’t imagine letting go of it. We can’t even imagine reforming it.

On the way that oil imports will decline even faster than the oil fields themselves, as oil exporters use more of their own oil (and it requires ever-more oil investment to get a barrel of oil out of the ground):

JHK: But my point is that a lot of the people in charge in the oil industry and in government are always invoking the idea of advanced technology as being our route out of this problem—our pathway to what they call energy independence. They don’t get it—there are huge diminishing returns to technology. And in this case, you find an oil field and you only succeed in draining it more efficiently.

RB: Then what happens to all the equipment that they use? It just lays fallow?

JHK: Oh no, the equipment is used and reused—but that’s another problem in the world—and this is not generally understood either by the public or the media—that the equipment that is used all around the world for drilling and for transporting oil, and the pipelines, and the refineries are very, very old and decrepit, and they’re not being fixed and we’re not reinvesting in them, largely because the people who run the oil industry know that it’s a twilight industry. They’d rather spend the money buying back their own stock and paying enormous bonuses to their executives. There are many layers to this problem. And there’s a new one: the oil export crisis that is gathering now. It’s only really been recognized in the last 18 months or so since my previous book came out. The story is that the nations that send oil out to the importers—to us—are seeing their export rates decline more steeply than their depletion rates. So, in other words, if Saudi Arabia is depleting at three percent a year, their export rates are going down more steeply, between five and 11 percent, and what we’re also discovering is that the export rate decline is accelerating—the export rate decline is accelerating. The reason for this is that they’re using a lot more of their own oil even while they have entered depletion. So they’re getting less oil out of the ground, they’re using more of their own oil—

RB: For society or to actually get the oil out?

JHK: For both. And that’s a very astute observation because a lot of people don’t realize—they think it’s all about the Saudis and the Russians buying more cars, which they are—but it’s also a matter of them requiring more energy to lift the oil out of the ground every year, because every year the oil they have left is the stuff that’s harder to get out of the ground.

So this is the new picture that’s resolving, along with yet another new feature which is being called “oil nationalism,” which is that the oil markets are now dominated by the national oil companies—Aramco, owned by Saudi Arabia; Pemex, which is Mexico; Petrobras, which is Brazil; etc.—and they are more and more making geopolitical decisions over the allocation and distribution of their oil. They are increasingly making favored customer contracts with other nations and withholding that oil from the auction block in the futures markets. The problem with that being that the United States is less and less a favored nation.

RB: Well there’s also Nigeria and Venezuela.

JHK: Well, there a lot of them. Nigeria is kind of a mixed picture because they tend to make licensing agreements with oil companies, including American ones, so that ExxonMobil will set up a platform in Nigeria and pay royalties to the Nigerian government—that’s not necessarily controlled by the Nigerians, you know? But for all practical purposes, the operations of the Russian oil companies are directed by the central government, even though they are supposedly private companies.

Mexico is really the poster child for both of these problems. Sixty percent of Mexico’s oil production comes from a giant oil field called the Cantarell Field. It’s the second-largest oil field ever found in the history of the oil industry, and it was one of those fields that was found relatively late—in the 1970s—and drilled with the latest and greatest technology: horizontal drilling, nitrogen injection to goose the oil out, and all sorts of other tricks. And it’s now depleting at a minimum of 15 percent per year. That’s 60 percent of Mexico’s production, so it’s very easy math to do to figure that they don’t have a very long horizon on their ability to send oil to other nations. Plus they’re using more of their own. Plus the Mexican government depends on Pemex for 40 percent of their revenue.

On the media:

So there are all kinds of implications there. And, look, the New York Times isn’t paying attention—they’re doing a lousy job of covering the story. The Wall Street Journal is doing a slightly less-lousy job of covering the story. Cable news, forget about it. NPR is clueless.

On the hunger for "Big Answers" and the reality that small accommodations are going to be more effective:

As I go around to the colleges and the environmental meetings, there’s one word that keeps on coming up in the context of people saying, “give us solutions.” What I’m starting to realize is what they’re really asking for is a desperate plea for a set of miracle rescue remedies so they can keep on running Wal-Mart and suburbia and the interstates and everything. They don’t really want to hear what it is that we really can do.

What we can do is, well, there is a comprehensive menu of intelligent responses to this set of circumstances. They mainly have to do with downscaling most of the activities of normal life, reorganizing them, doing them differently, doing transportation differently, fixing the passenger railroad system—

RB: To be run on what energy?

JHK: Well they could be run on electricity. You know, this is what the Swiss showed us in World War II. They were faced with a six-year oil embargo during WW II and they reorganized their train system, and that allowed them to continue having a civilized life.

I mean, you can make electricity out of a lot of things, and that would be the intelligent thing to do, but we’re not even talking about it; it’s not even part of the presidential campaign rhetoric; it’s not there, it’s off the chart.

We need to understand that things like Wal-Mart and Target—they’re not going to function on the leaner energy diet, they’re not going to be able to run the warehouse on wheels. The just-in-time delivery of products that are made 12,000 miles away, that’s over with. We have to rebuild local networks of economic interdependency. We’re going to have to grow our food differently—because this whole trip of pouring oil and gas-based soil amendments onto the ground and then harvesting the cheese doodles, that’s going to be over with.

RB: Isn’t the new interest in organic foods a step in the right direction? . . .

JHK: Oh you bet. But I’ve rubbed shoulders, or rubbed elbows—whichever one is correct, both maybe—I’ve rubbed elbows with a lot of the organic farming organizations and they are some of the most clued-in people in America, and some of the most heroic. They really know what the score is, and they’re doing something that’s very, very important out there. Even in my region, which had been a kind of derelict dairying region where the farmers were just getting older and their farms were crapping out and their kids didn’t want to take over and they wanted to sell out to developers—that was the scene over the last 30 years. Now that’s turning around and you’re getting people who are running very mixed kind of farming there, it’s not all dairying anymore. Now it’s small lambing operations, small market operations, and the scale is correct.

RB: Meaning that they’re not interested in shipping more than, what, 50 miles, 100 miles?

JHK: Well, meaning that they’re not being organized like the pig farms in Iowa, which are just basically industrial operations.

RB: And with the expectations that this would travel far and wide.

JHK: Well, agro-business is still alive and well in the Midwest, and every year there are more giant hog operations in Iowa, there are more giant pig farms in North Carolina. It’s a terrible, tragic way of doing this.

RB: Right, but those businesses need incredible volume to sustain themselves, while a local or regional farmer who doesn’t expect to supply more than his locale—the economics of that operation doesn’t require huge volume and huge increase in volume. That’s the thing, right?

JHK: Well, the agro-business model is very different from the local organic model, in many ways, but what we’re going to find is that it’s not going to be that different in Iowa than it is in the Northeast. We’re going to have to grow food locally wherever we are in the United States, and the places that can’t do that, like Las Vegas and Tucson, you know, forget about it, they’re going to dry up and blow away.

RB: So in any case, all the locales will have to be much more diverse. Iowa is going to have to grow a lot more than corn and pigs.