Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 5, 2018. Oil production has been causing a sudden influx of money especially for local Texans despite the consequences to the natural environment. (Photo by Benjamin Lowy/Getty Images)
You may have noticed that the nation entered a political crisis after election day. However all that turns out, and whomever occupies the White House, a Pandora’s box of pressing problems and quandaries lie beyond this battle, and they will determine how we arrange daily life in this land, especially the question of what our towns and cities will look like, and how they’ll function, which has been the focus of this monthly column the past year.
Due to the incessant blathering of economists who only follow the movements of money, most Americans do not understand what supports our techno-industrial economy and all the familiar comforts and conveniences that come with it. Oil supports it, and has for the past 100 years, and it makes all our fabulous amenities possible. Oil has been heading for trouble for a couple of decades and now it has arrived at the crisis point. Our supply of oil is dwindling because it costs too much to pull it out of the ground. It’s that simple. Our basic business model is broken.
The shale oil “miracle” is a bust. It was a fabulous stunt while it lasted. It lifted U.S. oil production from under five million barrels per day in 2008 to 13 million barrels per day in 2019, but it could never operate at a profit and the companies involved are quitting and going bankrupt. U.S. oil production is down two million barrels per day since March, and informed observers predict it will fall as low as six million in 2021—half what we produced in 2019.
At the same time, the lockdowns of the Covid-19 emergency have killed so much business that the demand for oil remains low, and with low demand come low prices wreaking more havoc among the oil producers, driving them to bankruptcy. This is going to continue at a steepening rate. We could be done with oil altogether in a decade.
We’re not going to make up for it with solar and wind power, or any other so-called renewable energy sources much fantasized-over in the news—at least not in the high-tech sense. All those wind turbines, solar arrays, and the electronics to run them require oil (or coal or natural gas) to manufacture and to maintain, and that support won’t be there. Same for nuclear, which requires fossil fuel to maintain operations. There are no other known energy rescue remedies. Of course, the sun will still shine and the wind will still blow, and they do produce energy that we can use, but at a much smaller and lower scale than what we’re used to. Which points directly to the place that we’re going: a much lower-scale, less technologically complex way of life. This has little to do, by the way, with climate change, which, if anything, is but a sidebar to the greater predicament of economic contraction, and which, unlike depression, will be a permanent condition.
Our arrangements for daily will have to change to make provision for all that, and not in some abstruse theoretical sense, but physically, on the ground, in a direct relationship with wind, water, soil, and fire. It’s dismaying these days to encounter so many current plans for future development proffered by urbanist reformers of various stripes. They seem to assume that most of today’s prevailing arrangements will just continue and that all we have to do is tweak some zoning policies, conjure some grants and government outlays, and adjust our cultural attitudes to admit more “diversity and inclusion” to provide the commodity called “housing” (notice how that’s an abstraction, by the way).
The conditions we take for granted in the construction of buildings are coming to an end. Architects, planners, and impresarios of government housing all suppose that the fabricated, modular, snap-together building materials of today will keep rolling off the assembly lines a decade or so from now: steel beams, aluminum trusses, plate glass, cement, gypsum board, plywood, fiberglass and foam insulation, asphalt roofing shingles, copper pipe, plastic PVC pipe…you name it. Without affordable fossil fuels, we’ll be making very few of those things, at least not at the mass production scale or the volumes we’re used to.
Salvage will be one of the leading enterprises of the 21st century, disassembling buildings and sorting out the parts for re-use. Human beings are very good at this. If you present a work crew with an abandoned strip mall, and give them a few rudimentary tools (many of them perhaps salvaged, too), you can come back three days later and find all the cement blocks in one pile, the steel beams in another, the wooden studs in a third, and so on. There will be a lot of that. Salvaged materials will have to be used in combination with materials found in nature, mainly wood and stone, for new construction. We will be lucky if we can make modest batches of concrete mortar (a very high-energy process) for building in masonry. We don’t know yet if the nearly eight billion people on the planet will destroy the remaining forests in their struggles to stay warm.
The harsh truth may be that the disorders that attend contracting economies and discontinued resource supply lines will reduce populations shockingly fast. This will affect the business model for high-tech agri-business, which made it possible to feed so many people through the 20th century into the present. We have no idea what kind of geopolitical strife will go with this, but historically that’s what happens when kingdoms and nations find themselves in a desperate competition for resources. One calculation, by Deagle, the government-connected military technology and intelligence consulting company, predicts global population drops of 50 to 80 percent by 2025, with the U.S. population reduced to 100 million from the current 330 million. I know that sounds severe, but there it is.
Even a less drastic population decline would change the picture for retrofitting a lot of the stuff on the American landscape. Buildings in the vast reaches of suburbia were never great candidates for adaptive re-use. Everything is so far apart in sprawl that walking is out of the question and the Jolly Green Giant is not going to move things closer together for us. Densifying these places, making them into urban nodes, as many who promote “suburban repair” advocate, won’t make a whole lot of sense if the population is going down and GDP with it. Rather we should devote our dwindling capital to fixing the old centers of the existing towns and cities, which almost always exist for a good geographic reason—a river, a harbor, a strategic position on a trade route. In any case, our cities eventually will be smaller and more compact than they have been for many generations.
Another problem with the adaptive re-use of existing buildings is that they were built with materials not designed to last. A lot of these materials, used widely in recent decades, were actually marketing experiments run on “consumers,” i.e. builders and buyers of mass-produced “homes.” Plywood delaminates as soon as water invades it. So-called strand-board—panels made from waste wood fragments and polymer glue—have even less integrity. Vinyl siding becomes brittle and breaks after a few decades of exposure to ultraviolet light. Spray-on plastic stucco turns to powder. Plastic window frames warp and crack easily over time. All plastic building materials and asphalt roofing shingles are products of the fossil fuel industry. Where’s that going? Will we have the energy to even make small panes of window glass to set in wooden window sashes? One wonders.
The reformers of the current moment aren’t concerned with any of this. One of the few discernable issues of the recent election campaign was a fight over the Democratic Party proposal to write new federal laws that would overcome local zoning codes in order to build housing for the poor in suburbia. Any way you look at it—altruistic social justice, an assault on property rights—nobody questioned our ability to make it happen. Rather, I believe you’ll see the government get out of the housing business by necessity as we turn the corner into 2021 and beyond, because the country is worse than broke.
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That aforesaid quandary with our oil supply means that we’ve entered the age of de-growth. We’re no longer able to produce as many quality goods as we used to, so our aggregate wealth is declining. As a perverse side-effect, whatever wealth we do generate tends to be unfairly concentrated among those who are already wealthy, because those are the people who work in, and benefit from, the financialized activities that have replaced industrial production. Anybody paying attention to the world around them can’t fail to notice how the middle class is being gutted from its lower blue-collar base on up into the professional strata. This is killing the business model of the so-called “consumer economy,” but it has actually been on the ropes for a long time. Reckless borrowing is what kept it afloat.
Indeed, at the most macro scale, borrowing money from the future has held at bay the terrible consequences of de-growth since the Great Financial Crash (GFC) of 2008-2009. Back then, the oil industry had just entered a slow decline, and that was enough to spark epic financial instability. Now that the oil industry is definitively going bankrupt around shale oil, the global banking system faces something worse than instability. Since the GFC, we’ve generated monumental debt just to keep our networks of complex systems going. Debt only works if there is some plausible prospect that it can be paid back. A society has to produce surplus wealth to pay back its debt or, at least, service the interest due. In the absence of real surplus wealth, the plausibility evaporates. What passes for surplus wealth these days are just games played in the financialization arena with vaporous instruments that pretend to represent money, and money itself is more and more a pretense now. You can say financialization is money with the value removed.
The so-called “recovery” of 2009 to 2019 was an illusion provided by 10 years of the shale oil orgy combined with all that new debt (which also financed the shale oil) that will never be paid back. It manifested as a bubble in bond, stock, and derivative markets, with some additional novelties such as Bitcoin. The Covid-19 virus appeared to prick the bubble in late winter 2020, but the problems it caused only provoked greater new waves of central bank “money” to be loosed upon the scene to “prevent a depression.”
The markets “recovered” as soon as the “stimulus” was proffered, because money doesn’t sit still; it migrates to places where it might theoretically increase, even if the “investment” model is a self-reinforcing fraud. The markets kept going up, up, up through November of 2020, when the Dow Jones index pierced the 30,000 hashmark—while scores of thousands of small businesses, representing 44 percent of total American business, failed in the months of Covid-19 lockdowns, and families and households were left ruined. The finance sector had finally decoupled from the economy like a space capsule dropping its boosters, with the catch that the capsule had not actually escaped the gravitational field.
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Rounding the corner of the new year in a few weeks, whoever is president faces a new and spooky disposition of things. De-growth with all its awful consequences is upon us. There will be less of everything for the same number of people who were here ten months ago, fewer businesses that can generate enough cash flow to survive, fewer employees, fewer customers for anything. It will look like a depression but it will be de-growth, the collapse of complex systems, a long emergency.
The mortgage forbearances plus rent and loan postponements are due to run out after Christmas. The government won’t let these people be turned out homeless, you can be sure, but what can they do besides shovel more “money” into this quandary? It’s all they know how to do. It won’t work. It will only destroy what’s left of the value in the dollar. The net effect will be a descent into disorder—both civil and economic—where a lot of things just stop working. Big businesses will follow the small businesses into failure as their supply lines wobble and their customers go broke. If the dollar loses value significantly, say 30 percent in 2021, the gigantic federal and state governments are sure to be rendered ineffectual, unable to discharge their duties, or fix things, or offer any reassurance to the struggling masses. As a general principle going forward, anything that operates at the giant scale is liable to fail. The small and nimble are more likely to thrive. The disorder could go on for quite a while, until the people get their minds right about the paradigm shift that has occurred.
Eventually this society—or agglomeration of societies in North America—will settle into the next chapter of history in which we learn to live with a lot less. It won’t be the end of the world; it will be the end of an era: the age of the fossil fuel orgy. We’ll do what our circumstances require us to do and instruct us to do. The ideological frivolities of the pre-collapse years will be bygone and the people will be concerned with the basics of getting enough to eat, sheltering themselves, and producing real necessities for daily life, all at a very local scale. Our big cities will be a lot smaller, though many abandoned mega-structures and skyscrapers will remain standing as an eerie reminder of a receding, wondrous past, just as the Colosseum remained standing for centuries in Rome when the population shrank from one million to 11,000. They’ll supply building materials, too, as the Flavian amphitheater yielded its marble claddings to the churches, palaces, and hospitals of later times.
Vibrant districts and neighborhoods will self-reorganize, many of them in parts of the city that were lively and busy before the long emergency. Sturdy neighborhoods endure, a lesson from the European cities (and Europe will have gone through a similar convulsion of de-growth and disorder). In our cities of the future, you won’t see any cars on the streets. That’s over. It remains to be seen whether railroads will reconnect the cities and the towns. We may have missed the window of opportunity for that, having spurned the reconstruction of our networks back at the turn of the millennium when there was still a lot of money, oil, and steel around to get the job done.
The age of fossil fuels brought such spectacular power to human endeavor that we fell for the illusion that nothing could stop ever more fantastic technological progress—and if any threat arose, even a big one like climate change, we could find a way to overcome it with our human innovative genius and just blast forward. Hubris is a harsh master. We’re going, unexpectedly, to a different destination, a much more modest place, and no one knows for how long. But consider this: it will be a real place, not a virtual place, and we will call that place home, many such places, actually, and we will fit in them more comfortably than we did in the colossal alienating environments we created in the era now passing. We will regain an understanding of our relations with this planet, and probably regain a sense of gratitude for being here.
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