Avoiding "Church Lady" Thinking

[Glenn Saunders]

If there is one thing I've tried to accomplish in the last 6+ years of being peak aware, if not to have the off-grid permaculture paradise, is to at least get at the truth of the matter of where we stand at any moment in time.

 

When oil spiked to $147 a barrel, at the time, I took this as "the great vindication" of peak oil theory.  It was Matt Simmons' much-hyped superspike.  However, this happened to coincide with the housing bubble, and when the credit crisis exploded in the fall of 2008, oil prices crashed as well.

 

The sad fact is that my peers in the peak oil movement did two things that I think were fundamentally wrong and damaging to the movement.  After a few months of mourning, Jeff Rubin came forward to tell peakers that no, we can hold our heads up high even with $30 oil because peak oil caused the recession.  Before you know it, this meme of the stairstep collapse of price spike followed by demand-destruction price crashes had replaced Matt Simmons Mad Max of $300 oil and zombies.  I took this as much too self-serving a revision to the narrative, a way to get people who were now completely obsessed with the economy to change its focus from the "banksters" to oil depletion regardless of the underlying facts.  And just like the Climategate issue, with bad news like this, you MUST cross your t's and dot your i's or you will be roundly rejected.  It's the whole Boy Who Cried Wolf syndrome not unlike Harold Camping.

 

That's why for the last 3 years I've been beating this dead horse with my peers, and largely failing to change minds.  60 minutes posted a fairly detailed piece on how oil speculation worked, and how the same sort of "financial innovation" that opened up the housing bubble has also done the same for commodities like oil.  This piece was roundly ignored by my peers in favor of clutching desperately to Jeff Rubin's "Peak oil caused the credit crisis" narrative.

 

I call this "church lady" thinking, from the old SNL sketch.  The Church Lady blamed everything on Satan.  Peak oilers blame everything on peak oil.

 

Could it be.... PEAK OIL?

 

A more appropriate way of looking at the world is a holistic one, to acknowledge that it is a complex system and there are many moving parts, not the least of which is a capitalistic economy that seems to always lead to speculative bubbles, even in times of resource abundance, as this recent NPR piece talks about.  Some of the biggest bubbles occured in the 19th century when we were gulping down the virgin natural resources of the US.  So the idea that commodity bubbles are some sort of advanced sign of resource scarcity doesn't move me.  In fact, land scarcity (i.e. the "they aren't making more land" argument) was used to pump up real-estate and you can see how that played out.  People got evicted, moved in with mom and dad or roommates.  But these arguments from peakers tended to really evade complex analysis and I was never able to really make any headway because they were so ideologically driven.

 

So the entire issue had to be punted off to the future, to wait for the next price spike.  And so here we are again.  This time without a credit crisis to muddy the water.  So what is this telling us?

 

Certainly there is mounting supply pressure.  Oil has been following a steady upward trajectory since bottoming out in the low 30s.  However, the most recent price spike that has sent gas beyond $4 a gallon has followed a similar trend to that of the summer of 2008.  In other words, a bubble.  Oil probably should be trading in the high 90s, which is concern enough for the economy, but the parabolic upward trajectory is not something I think we're going to see with peak oil unless we have some really dramatic decline rates, which we don't have.  Things could change quickly.  In fact I think they probably will within the next 2-5 years.  But we're not living 2-5 years in the future.  We're living in the now, in a world that has already proven to be filled with greedy people who, having run out of traditional investment opportunities, have all piled into commodities and have pursued every loophole imaginable in order to game the system--just like the credit crisis.

 

It's really seductive to reduce the fate of the world to watching oil production and price charts and overlaying it onto recessions.  There's also a lot of pressure not to downplay the risks, as we all know it takes a lot of fear to motivate people to change, else the frog boils in the pot.  But it takes real courage to admit that one's preferred vision of the world is much too simplistic to be true.  The real world is complex and unpredictable and slow-moving and we've shown that we're all too capable of throwing a wrench in the works with our own stupidity, greed, and corruption.  This simply gets added to the mix of things to worry about.  Maybe this would all be part of the "Equity" E on the Transition manifesto.  As ideologically isolated as I feel from the mainstream, this appeal to a holistic viewpoint makes me even an island within peakers.  But it matters more for me to find what's true than it does for me to find approval through group-think.  I don't know what the future hold, but current oil prices are not all speculation and not all supply and demand and those who seek to frame it as all one or the other are both wrong.

 

Here are the two articles that motivated me to make this post.

 

NY Times

 

Bloomberg