Digressions & Diatribes

by Kort E Patterson, Editor

Scarcity Mentality And The End Of The Oil Era

The fear mongers have been predicting the end of the petroleum era for at least the last thirty years. There remains substantial doubt about the endless predictions that the world is running out - or at least short - of oil.

There are strong indications that there are vast untapped reserves in areas such as the Caspian Sea and the Continental Shelf off Alaska and California. There are also as yet unproven theories that oil might not be just a limited number of ancient dinosaurs converted into petroleum - that petroleum might be continuously created as a natural process of the heat and pressure within the Earth's crust.

But even if the doom-sayers are right and easily recovered oil is running out, that still doesn't translate into the kinds of socioeconomic and technological disasters that are being projected. The prophecies of eminent doom are a function of the scarcity mentality that afflicts those who don't understand how wealth and prosperity are created by a free enterprise driven free market economy.

Such limited understanding leads to the belief that the total wealth and prosperity available to all the people in the world is limited to just what exists at the present moment. They fixate on the distribution of existing wealth, believing that economics is solely a function of the flow of that finite amount of wealth between competing groups and individuals. Within their mindset, the only way for one individual or group to accumulate wealth is to deprive someone else of their share.

It's easy to look at the general incompetence, widespread corruption, and continuous malfunctions of government and bloated mega-corporations, and foresee impending disaster. And if the operation of the real core of our economy was actually a function of these artificial structures, that disaster would have already occurred.

The ancient Chinese curse "may you live in interesting times" is based on the perspective that disruptions in the status-quo tended to be accompanied by traumatic breakdowns in the always fragile socioeconomic system. The likelihood of a full bowl of rice was tenuous even during times of monotonous "uninteresting" stability. Adding in the complications of political upheavals, conflicts between petulant warlords, foreign invasions, etc., pretty much guaranteed wide spread famines. However, this perspective is an artifact of the kind of authoritarian socioeconomic systems that China has suffered under for thousands of years, where the wellbeing of the individual has been dependent on the performance - and often whim - of a highly stratified artificial authority structure. The various authority structures that have crippled China for thousands of years barely worked in the best of times, and it didn't take much to cause them to fail - with disastrous consequences for those dependent on them.

It isn't changing conditions that cause massive disruptions and hardship. It's the effects of change on the functioning of artificial control structures that have been layered on top of the socioeconomic system, that make change a source of trauma for the average citizens. Within a socioeconomic system subjected to authoritarian control by a ruling elite, change becomes traumatic as a direct consequence of the efforts of the established elite to preserve the status quo on which their personal wellbeing is dependent.

A free market prospers largely because its participants recognize that it's in their self-interest to voluntarily cooperate for their mutual benefit. It functions in spite of the distortions and manipulations of government, and old guard vested interests trying to preserve the obsolete paradigms on which their power and privileges are dependent. Within a truly free market, change tends to be a source of opportunity to create new wealth.

Disruptive technologies disrupt the status-quo, but in doing so create new opportunities for the creation of new wealth. They also tend to provide improvements in the quality of life for more individuals than are harmed by the disruption - which is why the free market is willing to support their development.

The creation of new wealth is one of the primary characteristics of western industrial civilization, and is the source of our unparalleled prosperity. It's also one of the primary reasons why change is viewed as positive from the mentality of plenty that results from free markets, while it is feared by the scarcity mentality that is the hallmark of socioeconomic systems crippled by top down authoritarian control.

The pending doom that is the stock in trade of those predicting disaster as a result of oil shortages, is based on projections of the impacts of energy shortages on the status-quo. These prognosticators fail to consider the ways that free markets and free enterprise respond to shortages. While it's true that many of the current practices and behaviors we take for granted today may become untenable without the availability of inexpensive petroleum supplies, that doesn't in any way guarantee that the alternatives created by free enterprise driven free markets will be less desirable. The status-quo, and those dependent on it, may find the solutions provided by free enterprise driven free markets traumatic, but the odds substantially favor the results being beneficial to those willing to adapt to change.

Many of the aspects of our current world that are regularly trotted out as endangered by the end of the petroleum era will likely result in solutions that will in turn provide substantial benefits once past the transition.

Cheap oil has protected a variety of inferior technologies, lifestyles, and social dynamics whose only "claim to fame" is that they became established early on, and were good enough in the absence of reasons to seek better alternatives. They have continued in spite of their flaws and the availability of superior alternatives because cheap oil, coupled with inertia, provided just enough market distortion to raise the threshold of change.

For example, petroleum derivatives became the fuel of choice not because they were better fuels, but rather because they were initially waste products from the production of lamp oil - which was itself a replacement for the whale oil that was the fuel shortage crisis of that time. Superior intentionally created fuels couldn't compete in price with an inferior fuel that was priced as a waste product. Once established as the fuels of choice, the inertia and rapidly expanding vested interests in petroleum derivative fuels have maintained their market dominance in spite of ever rising prices.

Consider the potential impacts of an oil shortage on just two interrelated aspects of modern life that have become favorites of the prophets of oil shortage doom: gasoline powered automobiles, and the suburban commuter lifestyle. Far from "the end of life as we know it", I can see significant benefits resulting from the kinds of changes that an oil shortage makes possible.

According to the research I did thirty years ago, alcohol is a much better liquid fuel than gasoline. Note that I'm referring to hydrous alcohol (80% alcohol/20% water), not the absurdly inefficient politically mandated anhydrous alcohol additive to petroleum fuels. The defenders of petroleum dependency routinely dismiss the economics of alcohol fuels based on the exorbitant costs of distilling beverage alcohol from edible grains. But contrary to the conflict of interest driven distortions of the old guard petroleum industry, fuel alcohol is much more appropriately - and economically - manufactured from a variety of agricultural and industrial waste products.

In theory, petroleum based fuels contain more potential energy than alcohol, but suffer from a number of inherent problems. The complex mixture of hydrocarbon components are a source of pollution, and make it impossible extract the full thermodynamic potential from petroleum fuels. As a result, as much as 70% of the potential energy in fuels like gasoline are not only wasted, but require ever more complex technological accommodations to limit their environmental impacts.

Not only can alcohol fuels burn cleaner and more completely, but their thermodynamic characteristics make it possible to extract more of their potential energy for useful work. So while alcohol may start out with less potential energy than petroleum, since less of that potential is wasted, an alcohol fueled engine can actually deliver more useful power to the wheels per gallon than gasoline. However, extracting the full potential from alcohol fuels would require engines designed specifically to exploit their unique thermodynamic characteristics.

Public acceptance of alcohol fuels would also require the kind of well established distribution network that is available for petroleum fuels. The existing infrastructure for distributing petroleum derivative fuels, and investments in engines designed to burn them, have previously posed insurmountable obstacles to the adoption of alcohol fuels even as the relative cost of petroleum derivative fuels has risen.

The reciprocating piston internal combustion engine is an inherently inefficient type of engine design. The primary reason it remains the dominant type of engine today is the inertia of long usage, and the lack of a strong enough reason to consider alternative types of power plants. The value of increased efficiency is a hard sell when the fuel that would be saved is priced as a waste product. The perceived value of efficiency increases with the cost of the energy that it will save.

The whole commuting lifestyle wastes not only vast amounts of energy, it also wastes tremendous amounts of time, and creates unnecessary stress and conflicts. The potential to live far distant from the industries that provide jobs has allowed a complacency in the kinds of social, political, and physical environments we tolerate. Before the advent of the commuter lifestyle, communities were formed out of the long-term participation of their inhabitants. These communities were largely self-regulated through the social dynamics of interpersonal relations that enforced the basic principle of personal responsibility. Individuals had a clear self-interest in maintaining the peaceful cooperative environment of their communities.

Today we suffer from a transient mentality where few individuals feel any meaningful long-term commitment to their community, and have an expectation of being able to avoid personal responsibility for their actions. The roles once served by social dynamics have been increasingly transfered to artificial power structures like the police and government. However, the abandonment of personal responsibility has had the unintended consequence of transferring powers that were previously the rightful domain of free individuals, to arbitrary agencies that inevitably develop their own self-interested agendas. The growth of the police state that increasingly threatens all of our individual freedoms is arguably at least in part driven by the transient distortions of the commuter lifestyle.

The one great danger looming at the end of the petroleum era is that we have allowed our once free enterprise driven free market socioeconomic system to become too dominated by entrenched elites, whose short-term self-interest is served by maintaining the status-quo at any cost to the rest of the citizenry. These entrenched elites will do everything in their power to prohibit the natural innovation and adaptability of our once free systems from responding effectively to the coming changes. If we're unable to shed these entrenched elites and their shortage mentality, they will undoubtedly create through their short sighted interference, the kinds of doom and disaster that have historically accompanied "interesting times".

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