Oil Depletion: March 2010 Archives


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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?

Mobility Choices

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  

Alternative Transportation

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. 

Real Estate

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.

Planning

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."
 
Technology

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.



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With all the efforts going into urban climate action plans and carbon reduction, will many cities and suburbs be caught unprepared for other sustainability crises, such as acute water or energy shortages?

In carbon reduction management, should efforts such as focusing on renewable energy and energy efficiency deserve the highest priority, when a city such as San Francisco produces 78 percent of its greenhouse gases from transportation and only 17 percent from buildings? 

These are questions that both policy makers and sustainability planners need to consider as we move into an era of climate change compounded by either diminishing resources and/or resources that are expected to continue to have extreme price volatility, such as gasoline.  

My last post reviewed the findings of a UK industry study, partially backed by Richard Branson's Virgin Group, forecasting a major "oil crunch" by 2014-15 that could potentially mean shorter supplies and much higher prices for gasoline. Because US cities do not use oil for electric power generation (Honolulu is the only one that still does), there should be much more focus in US cities on transportation and in other key areas that will be more severely impacted by the high price of oil. Cities should look at everything from citizen and business mobility options, to supplies such as asphalt for street paving, to regional food security.

At no time has effective planning, land use and public transit been so key to ensuring economic vitality, as well as equity (access to jobs and services with transit), environmental sustainability, climate security and health. That doesn't mean that increasing renewable energy and energy efficiency shouldn't be part of every community's planning, projects and budgets. It does mean that cities will need to simultaneously prioritize action plans for carbon reduction, peaking energy and peaking freshwater, which very few are doing, outside of those involved in the Transition Town movement.

To help illustrate the complexities of what I'm getting at, consider the following example. Water use in California accounts for 20 percent of electrical power use. This energy is needed to move water supplies from places with water to those largely without or to treat drinking water and wastewater.

Renewable energy sources such as solar thermal generating plants also require great amounts of water, competing for precious water supplies that can be used for drinking water and growing or processing food.

So where do water, oil or grain shortages fit in your city's or region's sustainability plan? There are no easy answers, and metro regions and cities will want to collectively consider their own energy, water and food sources when trying to assess combined carbon reduction goals and resource depletion risk factors.

I've developed some general urban resiliency rules of thumb for an upcoming chapter in the Post Carbon Institute's Post Carbon Reader: Managing the 21st Century's Sustainability Crises, which is coming out this summer from the University of California Press and Watershed Media:

  1. Planning: Enable the development of vibrant mixed-use communities and higher-density regional centers, that create a sense of place, allow for transportation choices (other than private automobiles), and protect regional agricultural, watershed, and wildlife habitat lands.
  2. Mobility: Invest in high-quality pedestrian, bicycle, and public transit infrastructure with easy access, shared connectivity and rich information sources, from signage to cell phone alerts.
  3. Built Environment: Design new buildings and associated landscaping--and retrofit existing buildings--for state-of-the-art energy (smart grid applications), and resource efficiency, integrated with mobility options.
  4. Economy: Support businesses in order to provide quality local jobs and to meet the needs of the new economy with renewable energy and other "green" technologies and services. Support local and regional economic decision-makers in adapting to the new world of rising prices, volatile energy supplies and national demographic shifts.
  5. Food: Develop regional organic food production, processing, and metro-area distribution networks.
  6. Resources: Drastically cut use of water, waste and materials, re-using them whenever possible.
  7. Management: Engage government, businesses and citizens together in resilience planning and implementation; track and communicate the successes, failures, and opportunities of this community-wide effort.

These categories are not meant to be "checklist" items for sustainability or resilience planning, but rather lay out the relevant areas that should comprise planning for integrated metro area systems. Each metro area and every city should be looking at these factors together, in order to model how well they are prepared to collaboratively contend with risks such as:

 

1.      Changing regional or local climate: extreme heat events, floods, droughts and other extreme weather events

2.      Prolonged drought, e.g. loss of mountain snowpacks or aquifers providing water for residential, commercial, industrial and agricultural use

3.      Oil crunches, including extreme price volatility; supply shocks from wars, political events, terrorism, natural disasters

4.      Food security risks from high oil prices, drought, energy-food competition (biofuels), large-scale contamination, etc.

Admittedly, the overlapping and inextricable problems that cities face today can be overwhelming, especially when budgets are tight or non-existent, and people's time is stretched to the breaking point.

Selective problem solving, such as climate action planning if it is done in isolation from resilience planning, however, may lend a false sense of security for cities on the brink of an era that promises to be very different than anything ever experienced in the past.


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.   


 

 

About the Author

    Warren Karlenzig
Warren
Warren Karlenzig, Common Current founder and president, has worked with the United Nations Department of Economic and Social Affairs (lead co-author United Nations Shanghai Manual: A Guide to Sustainable Urban Development in the 21st Century, 2011); United Nations Center for Regional Development (training of mayors from 13 Asian nations on city sustainable economic development and technology); provinces of Guizhou and Guangdong, China (urban sustainability master planning and green city standards); the United States White House and Environmental Protection Agency (Eco-Industrial Park planning and Industrial Ecology primer); the nation of South Korea ("New Cities Green Metrics"); The European Union ("Green and Connected Cities Initiative"); the State of California ("Comprehensive Recycling Communities" and "Sustainable Community Plans"); major cities; and the world's largest corporations developing policy, strategy, financing and critical operational capacities for 20 years.

Present and recent clients include the Guangzhou Planning Agency; the Global Forum on Human Settlements; the Shanghai 2010 World Expo Bureau; the US Department of State; the Asian Institute for Energy, Environment and Sustainability; the David and Lucile Packard Foundation; the non-governmental organization Ecocity Builders; a major mixed-use real estate development corporation; an educational sustainability non-profit; and global corporations. Read more here.

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About this Archive

This page is a archive of entries in the Oil Depletion category from March 2010.

Oil Depletion: February 2010 is the previous archive.

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