Evolution Shift - David Houle, Futurist, Disintermediation, Future Trends, Future of Energy » conservation

This Great Recession is Actually Green

david — Wed, 18 Feb 2009 02:55:45 +0000

The Great Recession of 2008-2010/11 is going to be a very tough time economically. As I wrote in my Forecast for 2009, this economic collapse brings four words to mind.

The first word is contraction, which is the standard way to view a recession. Economic activity contracts and we are in a recession, economic expansion represents the end to the contraction. The contraction was severe in the fourth quarter and will be so in the first quarter and second quarter. Output and consumption are in a deep fall right now and will remain so.

The second word is cleansing which in this context means that old ways of doing business, of looking at only the upside, of embracing debt and extreme leverage must and will be cleansed from both the economy and the way that people think. The casino capitalism of the past 20 years will soon be viewed as an unsustainable exercise in individual and corporate greed.

The third word is reorganization. To quote from the linked column above:

“Reorganization of almost everything that is part of society and how humanity operates within society. This reorganization will happen to economic institutions, political and philosophical allegiances, geopolitical alliances, communications; all to a new global order that is getting ever more electronically connected.”

Finally, the fourth word is transformation. “Transformation of almost everything into new ways of seeing, doing, understanding and living. All of this will ultimately move us into new transformative realms of consciousness and understanding. That will take a decade, but the process is underway and the transition to it is what 2009 will be about.”

Now, there have been a number of stories in the media about how the credit lock down has imperiled green companies seeking additional lines of credit. There have also been stories about the perception that since â€˜green energy technology’ is more expensive than conventional energy technology the recession will slow the development of these new technologies because people are looking for cheap things across the board. Well, there may be examples of this in the micro sense, but in the macro sense this is a completely incorrect viewpoint.

First, the contraction part of the Great Recession has greatly reduced energy consumption as people are driving and buying less, which means less greenhouse gases and less goods destined for landfills. If the great economic machine that is contributing to the heating of the planet and the pollution of our environment has slowed, the damage it inflicts is lessened. The idea of reuse, reduce and recycle now has taken on real economic meaning across the country and around the world.

Second the stimulus bill that was just passed dramatically, and immediately increases the amount of government funding on green energy technologies and the development of a 21^st century grid in the U.S. Because of the dire economic situation a stimulus bill including this much needed and much delayed investment was passed. The Obama administration, and before that, the campaign was consistent and clear that a significant part of our economic future and well-being is dependent on the development of alternative and renewable sources of energy. The urgent need for a stimulus package allowed investments in this area to occur faster than might otherwise be possible.

This leads to the reorganization and ultimately transformation parts of the Great Recession. Yes this will be a couple of years of economic hardship, pain and suffering. Whenever there is a transition from one age to another there is creative destruction as the old order gives way to the new. Unfortunately this process cannot occur without pain.

The view here is that when the U.S. does emerge from this recession in 2010-11 it will be a greener country with a new vision actually taking root in the realm of alternative and renewable energy. It will prove to be true that this recession will change habits, stop rampant consumerism, increase conservation and provoke investment in renewable and alternative forms of energy. It is ironic that this Great Recession will actually accelerate the country into a greener future faster than if it had not happened.

The Oceans are Beginning to Die

david — Mon, 25 Aug 2008 00:57:25 +0000

It was two years ago that I first wrote about ocean dead zones. These are areas of the ocean that, due to a lack of oxygen, no longer sustain any life. While dead zones can happen naturally, they usually are caused by the results of human activity. A primary cause is nitrogen-rich nutrients from agricultural fertilizers that flow into coastal waters from rivers and streams.

Last week there was a report published in the Journal of Science that stated that the number of these ocean dead zones around the world has doubled every decade since the 1960s. There are now some 400 coastal areas that periodically or perpetually become dead due to oxygen starved bottom waters.

While the size of these dead zones is small relative to the total surface of the oceans, they account for a significant percentage of ocean waters that support commercial shellfish and fish species. This is due to the fact that these zones occur in areas that have historically been prime fishing grounds since these grounds are close to dense human populations.

In recent years there have been consistent dead zones in the Gulf of Mexico, Chesapeake Bay, the Baltic Sea, the coastal areas of China and even the Kattegat Sea where the Norwegian lobster industry has been decimated.. There is now a regular dead zone off the coast of the Pacific Northwest that was mentioned in the column two years ago.

The developing problem with these dead zones is that over time entire species are killed off. Additionally, they are preventing the rebound of many species that are under protection due to over fishing. We have over fished the oceans and are now creating dead zones on the coasts of all continents.

We humans know that all life comes from the ocean. That was where life first began on this glorious planet. We have often referred to ourselves as the highest form of life on this planet. How can we think of ourselves in such a manner if we are allowing our behavior and sloppy use of fertilizer to start to kill the cradle of life?

We have often referred to our planet as Planet Earth. That is because we are land animals. Actually, with oceans covering close to 70% of the surface of the planet, a better name would be Planet Ocean. We know how we have polluted and damaged the land on which we live. We are now doing the same to the 70% of the planet where we don’t live.

We need to immediately start to do whatever is necessary to stop damaging the oceans and the life forms that live there. We need to treat the oceans as our connection to survival. I have only half jokingly suggested that humanity should declare a year moratorium on eating seafood. Would you stop eating sushi and seafood for a year and refuse to eat food grown with nitrate fertilizers if the survival of your children and grandchildren depended upon it?

Congratulations America, Trend Lines to be Proud of

david — Wed, 25 Jun 2008 13:44:00 +0000

The two trend lines are the decline in gasoline consumption and the decline in miles driven. These two are obviously connected and are obviously caused by the price of oil. For the first time in close to 30 years, we have something to be proud of when it comes to our driving behavior.

Two different reports last week documented this profound turnaround. A report by the Cambridge Energy Research Associates documented that, should recent behavior continue, gasoline demand will likely decline in 2008 for the first time in 17 years. Over the course of the last 25 years gasoline demand in the U.S. increased by 40% due to the popularity of SUVs, minivans, increasing number of vehicles per household and the ever lengthening distance of driving commutes. All subsidized by cheap oil. This growth slowed significantly in the last two years and then in the first quarter of 2008, actually dropped 1.3 percent compared to the first quarter of 2007. While this percentage drop is slight, this observer believes it will be a historic turning point that, in just a few years will be seen as the turning point from the constant increase in gasoline consumption to the constant decrease that will the reality from now on.

The second report, from the Transportation Department stated that in the month of April, Americans drove 1.8 percent fewer miles that the same month a year ago. This was the sixth consecutive month of driving decline. This trend, also a reaction to the price of gasoline, is due to an increase in use of public transportation, written about here, and also the beginning of much more conscious driving behavior in this country. People are combining driving errands, carpooling, and just thinking a bit more before an impulsive trip in the car. There has even been a documented increase in commuting via bicycle.

In the last column I documented the dramatic and wonderful shift in vehicle buying behavior in America as consumers have stopped buying trucks and SUVs and are now demanding hybrids and small cars that have significantly better MPG. This new purchasing behavior will further decrease the demand for gasoline. This behavior is similar to what occurred in the 1970s after the first oil shock of the OPEC oil embargo. The significant difference is that the price of gasoline collapsed in the 1980s and Americans could buy ever bigger vehicles with no economic consequence. That will not happen again.

I have long stated that we are beginning to pass through Peak Oil, a time when both global demand has, and will continue to outstrip supply, and half of all petroleum has been extracted from the earth. This translates into gasoline prices that will not significantly drop below $4 a gallon and will most likely continue to increase to the $6-7 a gallon range over the next few years. This means that 2008 will become a significant year in the history of America. It will be the turning point, when, after a century of increases, America will have an ongoing decline in gasoline consumption. There may be blips to this trend, but the long term trend line will drift lower and lower over the next 12 years.

To have the peak year of gasoline consumption in our rear view mirror as we enter Peak Oil is a very good thing.

Finally, Enough Pain to Produce Some Gain

david — Sun, 18 May 2008 22:16:01 +0000

Well, it finally has happened. The price of gasoline has increased enough to cause pain to Americans so that they are changing behavior. The approach of $4 a gallon gasoline has, in the last month produced two positive results. First, after gasoline consumption increased 1.4% in March over the same month last year, it declined 0.6% in April. Second, ridership is up on mass transit systems around the country, in some cases by double digit amounts. The Minneapolis-St.Paul light rail line has increased ridership of 16% year to date over last year, and the Miami rail ridership is up 13% year in first quarter but an impressive increase of 28% in April

As regular readers of this column know, I have long predicted current oil prices. In April 2006 I predicted $125 a barrel price for February 2008, so I was off by two months. Also in that month I predicted $137 a barrel price for April 2009. I now think that might be low. In a recent column I predicted that the trading range for oil for the next 18 months would be an unlikely low of $95 and an elastic upper range of $135. I see many trends and market conditions that point to a trading range of $125-175 between now and the end of 2009. In other words, get used to today’s prices being the normal or the low normal.

America has 5% of the worlds’ population but consumes 25% of its energy. The numbers are even worse when it comes to gasoline. We consume 44% of the world’s gasoline. Energy scientists generally believe that the most important, immediate effort in the effort to stem global warming is conservation. It is predicted that across the board conservation would lover energy consumption by 20% relatively quickly. If you apply that math to gasoline consumption, we could quickly drop our percentage down to 35% of global consumption. Of course, China, India and the other rapidly growing economies would help us attain that number as their consumption is increasing.

I am still struck by how many people I meet that think this price increase is a painful yet short term price spike. The longer one continues to think that, the more economic pain one will feel. It has been two years since we first crossed the $70 a barrel price. If we had allowed that pain to change behavior we would now be better off as a nation. It astounds me that U.S. automotive companies continued to produce an excess number of pick-up trucks and big SUVs. Why? Because they could make more profit per vehicle. This of course is no longer the case as buyers for such vehicles have disappeared. It is even hard to trade in an SUV now as the value in the used car market has plummeted. Yet, it will still be cheaper to trade it in and buy a smaller, hybrid vehicle as gas is only going to go up or at best level off in price. When it costs $100 for a tank of gas, and one fills up once a week, the cost is $5,000 a year for fuel. Trade in your gas guzzler now, or please stop complaining about the price of gas.

To put this in perspective, there are dozens of countries with significantly higher gasoline prices. What do most of these countries have in common? They all have much smaller vehicles and much higher percentage use of mass transit than in the U.S. $4 a gallon gas is beginning to change behavior. It will be interesting to see how much more behavior is changed in the next 12 months when the price goes to $5.

My personal frustration is that, having lived with the certainty that oil would reach its’ current price level for a couple of years, it feels as though I am living a deja vu life. I am so tired of the daily alarmist news reports each evening about the price of oil. Get used to it folks. Drive less. Drive a smaller car. Use mass transit. Carpool. Plan your transportation life around the expectation that the price of gas will go up from where it is today. It will.

Future of Energy – The Short and Long Term Price of Oil

david — Sun, 27 Apr 2008 21:55:58 +0000

Two years ago in this blog, I wrote a futuristic column from April 20, 2009. The title of the column was â€œRemember When Gas Was Cheap?â€ At that time I predicted that the price of oil in early 2008 would reach $125 and that in April 2009 it would be $137.
In January of 2007 I was invited on the â€œFirst Businessâ€ syndicated business program to discuss the price of oil for the remainder of the year. At the time the price was $53 a barrel. I basically told the flabbergasted reporter that I thought the price of oil would most definitely cross $80 a barrel and would approach, but not reach the $100 a barrel price. The counterbalancing view was some â€œoil industry expertâ€ who said the price range for the year would be $50-70 a barrel. Of course we know what happened.

Last fall I wrote a column predicting that the trading range for the price of oil would be $80-125 for the next two years. I now want to revise that forecast. When I made that prediction, the price has recently crossed $80, charting new territory. While obviously not surprised, I did let all the disbelief I had been subjected to in my predictions to give me a sense of caution. Since $80 was the new high, and I was saying that it would be the price floor for the foreseeable future I thought it would be a correct floor. I did say in that column that there was little on the horizon to place downward pressure on $80 but much possibility in upward pressure on $125.

I now think that the core trading price range of oil for the next 18 months will be $95 â€” 135. I seriously doubt it will ever dip below the lower price, and if it does, it will be temporary. I do however think that that there are any number of scenarios that could provoke a rapid price run up to the $150 range. What if the price of oil was converted to Euros? What if rebels in Nigeria, or terrorists in Iraq seized control or disrupted the flow of oil through their pipelines? There is no excess global refining capacity today, and many of the refineries are old and in need of repair. What if several had to be shut down for periods of time? These scenarios are all what if, and may or may not happen.

What is reality is car ownership in China and India continuing to increase by millions of vehicles per year. What is reality is that electric cars, while starting to come on the market during the next three years, will not reach any significant share of the overall number of vehicles on the road until 2013-2015. Same for hydrogen cell cars and the compressed air car. There are scattered indications that gas consumption in the U.S. has declined slightly compared to 2007, but there has yet to be a discernable trend. Instead, there is developing research that shows that Americans, with the price of gas and food rapidly escalating are cutting back on all other things.

The long term price of oil will continue to go up for many of the reasons I sited in a column two months ago. It is entirely possible that prices in the range of $150 -200 a barrel over the next 4 years will occur. We are moving through peak oil now, meaning that we have somewhere between 30-75 years of petroleum left. There will be no large scale downward pressure on the price of oil until alternative energy sources approach 50% of total energy usage. Even then, the countries that have the largest remaining reserves will want to maintain price and not diminish the value of their remaining reserves by dropping the price. This is in no way pessimism at all, it is just reality.
Since I have been living with the expectation of triple digit oil for two years I get annoyed with this constant nightly breathless drumbeat of â€œoil reached another all-time high todayâ€ every night on the news. Yeah, get used to it. I feel like I am living a dÃ©jÃ vu life, there is no other way to describe it. When one fully expects something to happen and it does, it is not a surprise.

I do think that there is some bullish speculation in the oil marketplace, but it is not much more than a single digit percentage at best. The smartest thing to do is to accept and adapt to the fact that oil will remain at current or higher prices for the next few years. This will obviously affect the price of airline tickets and any other goods or services reliant upon oil directly or indirectly. We are a society that has been constructed actually and perceptually on the premise of inexpensive energy. That is no longer the case. We must all work for energy conservation and alternative sources of energy. We must develop an understanding that habits must change, governmental policies must change and fundamental changes in the workplace must occur. If we do not become proactive on these fronts, and soon, then expect disruptions to what has been referred to as â€œthe American way of lifeâ€. The reality is leading the general perception of it, which at times feels ostrich like to me, and that puts the country at risk.