Thursday, June 26, 2008

Post peak oil America.

Today, the national average for a gallon of regular gasoline is $4.067 and despite some belt tightening and an explosive increase in bicycle sales, the average American is pretty much living as they have for decades. In other words, the life Americans are leading today is indistinguishable from the life led a few decades ago, but that is about to change.

"It is increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity,...Despite the recent record jump in oil prices, oil prices will continue to rise steadily over the next five years." -- statement by analysts led by Jeff Rubin at CIBC

The great unanswered question is what is the dollar-per-fuel ratio which will make the current American lifestyle unsustainable? When does the average two-income American family decide that using two cars to commute between work, grocery shopping, school, soccer practice, church and girl scout camp simply cannot happen any longer? Furthermore, what does a world look like when the average American crunches the numbers and discovers the life they lead, indeed the lives their cities were built for, is no longer economically feasible on an individual level?

To find an answer to the future of America, we will need to look into the past.

America as we know it today has its beginnings during a 1919 Transcontinental Motor Convoy experiment which tested the mobility of military vehicles on American soil. A young Lieutenant Colonel named Dwight D. Eisenhower participated in the exercise which took 62 days to traverse 3,251 miles from Washington DC and to San Francisco. Thirty-seven years later, when the Federal-Aid Highway Act in 1956 was going through congress, automobile industry lobbiests found a powerful ally in President Eisenhower whose unsatisfactory two month long commute is the reason we can start a car in Washington, D.C. and arrive in San Francisco less than two days later.

Suburbs were born in the era of the trolley and commuter train but only reached brobdingnagian proportions in the age of the automobile and the super-highway. The creation of the Eisenhower interstate highway not only changed how fast Americans could travel but also the shape of their communities as well. The super-highway network had the ironic effect of both connecting remote suburbs to cities as well as dividing those communities through which they were built. As anyone in North Texas or Atlanta knows, the idea of hopping on a bike or walking to the local grocery store would be every bit as suicidal as jumping off a building if that store were on the other side of a major highway. The fact is that safely purchasing a gallon of milk or a pound of suger requires the turn of an ignition switch - not a bad thing when gas was less than half the price than milk.

However, as analysts forcast the price of gasoline rising to over 7 dollars a gallon over the next five years, the use of petrol fuel becomes far more problematic and, by extension, so does the very existence of the American mega-suburbs.

The fact remains that at some point (perhaps when Exxon credit bills look more like rent payments) America will undergo a very rapid and painful change but I believe this change will be for the better. Here are a few predictions for the next 10 years.

  1. Mass transportation, such as trolleys and light rail will make a comeback.
  2. "White flight" will reverse course, back into cities where trains can deliver food and products.
  3. Outlying suburbs will shrink or are abandoned to be changed back into the farmlands they once were.
  4. Cities and town will be restructured for a pedestrian existence, allowing families to walk to schools, work, shopping.
  5. Food will be grown locally, even in our own backyards, and our consumption of meat will be dramatically reduced.

In addition to these fundamental changes comes the very real effect on those people who must live through them. The price of suburb housing, by reason of supply and demand, would drop dramatically in an age of 7 dollar per gallon fuel, likely leaving people owing far more than what the property is valued at. However, this is merely one of many changes that America will undergo as we retool our economy, our cities and our lives to accommodate the post-peak oil century. Perhaps the only way to know how our lives will change is to live through the changes so we may look back and see where we have come.

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