Smc Newsletter February 07


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Smc Newsletter February 07

  1. 1. Volume 2, Number 2, – February 2007 It won’t just be through high gasoline prices, either. Not only is just about everything we buy dependent on oil and gas, but economic growth seems very dependent on oil staying cheap. As I will show later in this issue, economic growth tends to slow or reverse whenever the price of oil rises rapidly, and commodities declining in availability tend to exhibit wild price swings—both up, and down. So destructive spikes and deceptive collapses should characterize oil price movements over the next few years. It is unlikely, sadly, that the cause of these swings will be readily apparent for many years. There will be unrest in Nigeria, hurricanes in the Gulf of Mexico, drill rig shortages here and short-sighted national oil companies there—to provide reassuring temporary explanations for developing downturns, shortages and price spikes. Someone, usually in the pay of the oil companies, will always be there to let us know that 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, whenever prices drop for a while, as The Economy Will Bring Peak Oil To You People you should contact about peak oil: •Senator Barbara Boxer act/email/policy.cfm •Senator Dianne Feinstein stein/email.html •Congressman Sam Farr 1221 Longworth House Office Building Washington, DC 20515 (202) 225-2861 FAX (202) 225-6791 •Governor Arnold Schw… •President George Bush Now you can contribute a cent to SMC every time you do a web search—just go to, enter “Sustainable Monterey County” in answer to the “Who do you GoodSearch for” question, and search . Thanks to all those who have contributed help and funds to SMC Mission: To ensure an orderly transition through the fossil fuel decline by cooperatively developing a sustainable economy for Monterey County. February 1, Thursday: SMC Discussion Group: Economy, 6:45-9pm, Mty Youth 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. UPCOMING EVENTS April 5, Thursday: SMC Discussion Group: Transportation, 6:45-9pm, Mty Youth Center, 777 Pearl St.
  2. 2. S U S T A I N A B L E M O N T E R E Y C O U N T Y When delays are unavoidable in responses to commodity gluts and shortages, the responses overshoot 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 negative economic growth. These are always accompanied by job losses and often by stock market declines. 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 decline in supply resulted in wild price fluctuations superimposed on a rising trend. It appears that oil is near its peak and the price swings have begun. THE PEAK AND DECLINE OF OIL PRODUCTION WILL CAUSE A SERIES OF RECESSIONS Peak-oil’s effect on growth? Oil prices & resulting US GDP growth since 1970 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 implement. 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…
  3. 3. S U S T A I N A B L E M O N T E R E Y C O U N T Y • 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 change. • Buy from local farmers and manufacturers. • Get to know your neighbors. • Reduce your material consumption in general. YOU CAN DEFEND YOURSELF AGAINST PEAK OIL 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 comes next. Further Reading The Oil Drum Association for the Study of Peak Oil--USA Energy Bulletin Oil Addiction: The World in Peril, Pierre Chomat Beyond Oil, Kenneth Deffeyes The Long Emergency, James Howard Kunstler The Oil Depletion Protocol, Richard Heinberg
  4. 4. Steering Committee Members Deborah Lindsay, Director Ruth Smith, 831-620-1303 Committee Chair and Budget Chair Virginia Chomat, Secretary and Co-treasurer Pierre Chomat, Resident Expert Mark Folsom, Newsletter Editor, George Wilson, 831-372-0659 Committee Evaluation Coordinator Denyse Frischmuth, 831-643-0707 Volunteer Coordinator and Urban Environmental Accords Coordinator Robert Frischmuth, Co-Treasurer Program Heads: Annette Chaplin, 831-372-8725 Sustainable Pacific Grove Linda Parker, phone # 831-656-0664 Big Sur Powerdown C O N T A C T I N F O R M A T I O N MARK FOLSOM: Phone: 831 648 1543 E-Mail: We’re on the Web! See us at: groups/monter ey Newsletter Design by Adrienne Allen Director’s Note Happiest of February’s to you! This month brings our new “Creating 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 series will be available to all our communities, so we can increase the livability of our region while reducing fossil fuel use and lowering our CO2 emissions. Our topic this month, Local Economies for Strengthening Community, takes a look at the history of currency, our national debt, peak oil and the economy and how cities around the world are 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, participating in local credit cooperatives, and producing goods closer to the point of consumption to reduce long (and fossil fuel/CO2 intensive) supply chains. 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 ability 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 possibility of repeating at least the same level of economic activity in the long run. How’s the GPI in your house? In your neighborhood? In the County? 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 stickers suggests, “Consume Less, Share More”…thinking like this goes along way in creating sustainable communities. Cheers! Deborah Lindsay Oil and Investment For the last thirty years, the price of oil has been the single most important determinant 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 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 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 else following any other indicator, from interest rates to corporate profits. This has been true for the last three decades, and it will remain true throughout the early part of this century—until we kick our oil habit and develop and switch to viable energy alternatives. --Stephen and Donna Leeb, The Oil Factor, 2004