Volume 2, Number 2, – February 2007
People you should con-
The Economy Will Bring Peak Oil To You tact about peak oil:
It won’t just be through high gaso-
line prices, either. Not only is just •Senator Barbara Boxer
about everything we buy dependent
on oil and gas, but economic growth
•Senator Dianne Feinstein
seems very dependent on oil staying
cheap. As I will show later in this is-
sue, economic growth tends to slow •Congressman Sam Farr
or reverse whenever the price of oil 1221 Longworth House Of-
rises rapidly, and commodities de- fice Building
clining in availability tend to exhibit Washington, DC 20515
wild price swings—both up, and (202) 225-2861
down. So destructive spikes and de- FAX (202) 225-6791
ceptive collapses should character-
•Governor Arnold Schw…
ize oil price movements over the
next few years.
•President George Bush
It is unlikely, sadly, that the cause
of these swings will be readily appar-
ent for many years. There will be
Now you can contribute a
unrest in Nigeria, hurricanes in the
cent to SMC every time you
Gulf of Mexico, drill rig shortages
do a web search—just go to
here and short-sighted national oil www.goodsearch.com, enter
companies there—to provide reas- “Sustainable Monterey Coun-
suring temporary explanations for ty” in answer to the “Who do
developing downturns, shortages you GoodSearch for” ques-
and price spikes. Someone, usually tion, and search .
in the pay of the oil companies, will
always be there to let us know that Thanks to all those who have
contributed help and funds to
things will be straightened out next
month, next quarter or next year,
and we won’t have to worry about
supplies in the future. And, whenev-
er prices drop for a while, as they
have in the recent past, many com-
February 1, Thursday: SMC Discussion April 5, Thursday: SMC Discussion Group:
Group: Economy, 6:45-9pm, Mty Youth Transportation, 6:45-9pm, Mty Youth
Center, 777 Pearl St. Center, 777 Pearl St.
February 17: SPG “Spring Cleaning, Keep it
Clean” event, Saturday, 10 am – 4 pm, PG
Natural History Museum
March 1, Thursday: SMC Discussion Group:
Food Security, 6:45-9pm, Mty Youth
Center, 777 Pearl St.
Mission: To ensure an orderly transition through the fossil fuel decline by co-
operatively developing a sustainable economy for Monterey County.
SUSTAINABLE MONTEREY COUNTY
Peak-oil’s effect on growth?
THE PEAK AND DECLINE
OF OIL PRODUCTION WILL
CAUSE A SERIES OF
When delays are unavoidable in re-
sponses to commodity gluts and
shortages, the responses over-
shoot and prices swing wildly.
And wildly swinging oil prices
have repeatedly caused recessions
(periods of negative economic
growth). Note in the top figure how
each big rise in the price of oil is
followed by a period of lessened or
Oil prices & resulting US GDP growth since 1970
negative economic growth. These
are always accompanied by job
losses and often by stock market
The bottom figure shows what
happened as overexploitation
caused the whale population to
crash—making whale bone virtually
unavailable. Before peak, price
fluctuations could elicit responses
in supply. After peak, a steady de-
cline in supply resulted in wild price
fluctuations superimposed on a ris-
It appears that oil is near its peak
and the price swings have begun.
Whale bone production and price history
Why should the price of oil behave so badly, rather than smoothly reflect increasing scarcity?
Because people and businesses need to continue functioning, and adaptations take time to imple-
ment. Plus, we’re always ignorant of the actual state of affairs. If gas goes to $10.00 per gallon,
everyone will try to keep driving to work—especially if convinced that the price spike is temporary.
But the price will rise until enough buyers are forced to cut back, so that the amount purchased is
no greater than the amount available (demand destruction). Only after prolonged pain can
enough drivers ditch Hummers for Priuses, and enough suppliers implement extreme measures to
ramp up supply, to blunt a price spike. However, a recession may result in the meantime, and the
declining demand curve can shoot right past the (rising?) supply curve—so the price crashes—to
wait for the next recovery…
SUSTAINABLE MONTEREY COUNTY
YOU CAN DEFEND YOURSELF AGAINST PEAK OIL
• Personal debt can make you vulnerable to economic downturns—get rid of it.
• Shorten or eliminate a long driving commute to stay afloat during price spikes or rationing.
• Get a very efficient car, if you must drive.
• Ride a bicycle wherever you can.
• Diversify investments, if you have some, especially against currency and sector risks.
• Insulate your living space.
• Make your lighting and heating as efficient as possible.
• Take political action to mitigate energy depletion, consistent with minimizing climate
• Buy from local farmers and manufacturers.
• Get to know your neighbors.
• Reduce your material consumption in general.
It seems that Americansoften blame poverty on individuals, rather
than on the policy failures that lead to widespread poverty. We
continue to witness a colossal energy policy failure—guess what
The Oil Drum http://www.theoildrum.com/
Association for the Study of Peak Oil--USA http://www.aspo-usa.com/
Energy Bulletin http://www.energybulletin.net
Oil Addiction: The World in Peril, Pierre Chomat
Beyond Oil, Kenneth Deffeyes
The Long Emergency, James Howard Kunstler
The Oil Depletion Protocol, Richard Heinberg
Happiest of February’s to you! This month brings our new “Cre-
ating Sustainable Communities” Lecture Series to the Monterey
Youth Center. It offers a more concise format for local solutions to
the global problems that face us today. Once completed this lecture
Phone: 831 648 1543
series will be available to all our communities, so we can increase
the livability of our region while reducing fossil fuel use and lower-
shift.net ing our CO2 emissions.
Our topic this month, Local Economies for Strengthening Com-
munity, takes a look at the history of currency, our national debt,
Steering Committee Members peak oil and the economy and how cities around the world are
Deborah Lindsay, Director deb@sus- adapting to lower energy inputs and declining economic growth.
What are some of the solutions? Start reducing your personal debt,
practicing voluntary simplicity, trading skills with your neighbors,
Ruth Smith, 831-620-1303
participating in local credit cooperatives, and producing goods clos-
Committee Chair and Budget Chair
er to the point of consumption to reduce long (and fossil fuel/CO2
Secretary and Co-treasurer intensive) supply chains.
Pierre Chomat, Consider the Genuine Progress Indicator (GPI) as a concept in
green economics as a replacement for gross domestic product
(GDP) as a gauge of economic growth. GPI measures nature's abil-
ity to provide services and generate water, air, soil and food. GPI
also reflects sustainability: whether a country's economic activity
over a year has left the country with a better future with the possibil-
Committee Evaluation Coordinator ity of repeating at least the same level of economic activity in the
Denyse Frischmuth, long run.
How’s the GPI in your house? In your neighborhood? In the
Volunteer Coordinator and Urban Envi-
ronmental Accords Coordinator
Everyday, in everyway, find even the smallest opportunities to
boost local economic security and protect the environment. But to
put this all in the simplest of terms, do as one of my bumper stick-
Annette Chaplin, ers suggests, “Consume Less, Share More”…thinking like this goes
831-372-8725 along way in creating sustainable communities.
Sustainable Pacific Grove
phone # 831-656-0664
Big Sur Powerdown
Oil and Investment
For the last thirty years, the price of oil has been the single most important de-
terminant of the economy and the stock market. Sharp rises in oil prices have
been deadly for the economy and the stock market, while steady or declining
Newsletter Design by
prices, or even prices that increase only gradually, have led to good times. For
investors, it’s what we dub your “desert island, one phone call” indicator. If you
email@example.com can know only one thing about the world, make it the direction of oil prices over
the preceding year, and you’ll do better in the stock market than almost anyone
We’re on the Web!
else following any other indicator, from interest rates to corporate profits. This
See us at:
has been true for the last three decades, and it will remain true throughout the
http://www.postcarbon.org/ early part of this century—until we kick our oil habit and develop and switch to
groups/monterey viable energy alternatives.
--Stephen and Donna Leeb, The Oil Factor, 2004