Last week, a report was put out by a Kuwaiti research institution (chart above) forecasting global peak oil production by 2014. This follows a report last month by a broad-based British industry group that also predicted a global "oil crunch," or shortage of supply, by the same period.
Very few metro regions, cities or businesses are prepared for the impact of these potential global issues on their economies or finances, operating budgets and mobility.
I asked Richard Heinberg, author of numerous books about peak oil and other peaking resources (freshwater, fisheries, soil, etc.), if he agreed with the British industry report, which was partially backed by Richard Branson and the Virgin Group. Heinberg said that it appeared credible, and added that having a billionaire transportation industry CEO assert that we better get ready should make people at least take more notice.
Cities, households and the economy will be impacted, as will industries. Some industries will be hurt (agriculture, retail, petrochemicals) and some sectors could be positively impacted (smart growth planners, alternative transportation providers, "smart city" technology providers, alternative fuel producers, mixed-use and infill developers)
Whether it's bonafide peaking of global oil supplies, or a short- to medium-term "oil crunch," the initial result will be the same. Rapidly rising gas prices and price instability should become evident by 2013, or even earlier if there are any supply shocks because of natural disasters (hurricanes in Gulf), political events, war and terrorists acts.
So let's assume that these two reports, Heinberg, and the CEOs of companies such as Total and Shell oil have been correct--we will be facing at least a temporary oil crunch that drives prices up to or near levels reached in 2008 when oil hit $147 a barrel. What will likely happen and how can regions, cities and business in particular prepare?
The most obvious area of impact of rising oil prices is transportation and mobility. During the gas price rises of 2006-2008, U.S. citizens turned to public transportation in record numbers. Light rail ridership was the biggest winner, as was an old and reliable form of gas-free transportation, the bicycle. The biggest losers: SUVs (RIP Hummer) and personal automotive use. Across the nation, people substantially reduced their driving for the first time in decades, particularly in metro areas that had other mobility options.
One of the smartest steps communities can take to prepare for oil price and supply volatility is to maintain public transit service levels. It is especially ill-advised to cut public transit systems to fund highway or automotive-based initiatives: a transit district in suburban San Francisco, for instance, is cutting public transit service to help pay for a $75 million road improvement project.
Getting light rail funded and built by 2014 or 2015 is not likely in areas without pending efforts, so metro areas should also investigate other means of mobility investments, including:
- Bus Rapid Transit systems or routes
- Pedestrian-cycling infrastructure
- Multi-modal transportation hubs
- Car-sharing programs for city employees, businesses and residents
- Designated carpooling stops and incentives
- Technologies enabling transit use, car-sharing and car pooling
The need for higher-mileage vehicles is a given, with climate change concerns and resource constraints. Hybrids are one solution, as are electric vehicles or plug-in hybrids. One consideration for using electricity to power vehicles, however, is that it puts more demand on grid energy. In large parts of the country primarily using coal to make power (Eastern, Southeastern and upper Plains states) this causes more coal to be burned, exacerbating regional air pollution, global climate change, and coal mining's nasty environmental impacts.
In terms of automobiles or light trucks, the ideal transportation technology is photo-voltaic charged plug-in hybrids. After up-front investments are completed, these vehicles can perform low carbon and pollutant-reduced service over many years, with minimal relative fuel costs.
Biofuels are a promising solution if they are not competing for food supplies, which is the challenge of using corn-based ethanol, for instance. Celluosic biofuels from crop or forest waste products are at least five years off in terms of mass production. Hydrogen fuel cell R&D has been de-emphasized by the current US Department of Energy administration, so don't expect any big advances in that technology in this country during the next decade.
The biggest winners during 2006-2008 were mixed-used developments near transit, with walkable shopping, jobs, entertainment, and other services. Apartments and townhouses are likely to fare much better than single-family houses unless the houses are in walkable communities served by transit and local amenities. Biggest losers: Exurban sprawl, where car dependency can be near 100% in some communities for jobs, shopping, school, entertainment and socializing. The higher gas prices go, the more isolating and bankrupting this type of living becomes: and the less anyone else will care to pay for it.
Hardest hit exurban areas are in sprawled inland Southern California, Florida and greater Phoenix. Said the March 17 New York Times of Phoenix: "The worst-off of these projects were built in marginal locations on the outskirts of the metropolitan area, and stand completely empty months and even years after completion."
"We've got some see-through shopping centers," said David Wetta, senior vice president and managing director in the Phoenix office of the real estate brokerage Marcus & Millichap.The Economy
Jobs will need to have access to public transportation, car sharing and walkable or bikeable shopping, versus the isolated exurban corporate office park. Employers or regions that cannot offer these "table stakes" might as well get out of the game, or be prepared to pay ultra high prices or extra costs, whether they are trying to attract employees, companies or industries.
Reducing long-term fuel operating costs in government vehicle fleets can be accomplished with electric, natural-gas powered flex-fueled vehicles, and alternative fuels such as biodiesel, which became more economical than oil-based fuels in certain markets during 2006-2008.
Alachua County, Florida, is the first county in the nation to begin formally assessing how long range land use and transportation planning can be optimized to address peaking oil. A handful of US cities, including Denver, Oakland and Portland, Oregon have launched peak oil task forces. My colleague at the Post Carbon Institute, Daniel Lerch, has written Post Carbon Cities, the first primer for communities on preparing for peaking oil, and that should be first on any list for recommended reading for government officials.
"Since World War II, our energy 'normal' has been a cheap and stable supply of oil, and we built our economies, cities and suburbs on that assumption." said Lerch. "That era ended in 2008, and the 'new 'normal' is an increasingly expensive and volatile supply of oil. Those cities that recognize this and adjust their planning, infrastructure, and revenue assumptions accordingly are the ones that will succeed in the 21st century."
A variety of information and communications technology advances are being deployed or tested that will be invaluable during the next oil crunch: examples include hand-held transit system alerts and dedicated websites for car-sharing, carpooling, and for group walking or biking to school (safety in numbers). Even Twitter is being used for tweets when people need to, say, share a cab to the city from an airport.
In 2008, when oil reached its historic high, Walkscore began to be used by people who were considering buying a home, renting an apartment, getting a new job or traveling in a different city. Now Walkscore has introduced maps of whole neighborhoods so people know which locations have what types of walkable destinations surrounding them on a district-wide basis.
It's a brave new world out there when it comes to problems that will result from peaking oil. We can either continue to live in complete denial, or we can start the process of adaptation to the post-oil economy.
Warren Karlenzig is president of Common Current, an internationally active urban sustainability strategy consultancy. He is author of How Green is Your City? The SustainLane US City Rankings and a Fellow at the Post Carbon Institute.