[W]e know that big, dense cities are greener; that the energy used in shipping food is a small portion of its overall impact, that transit is more energy efficient than driving (and indeed, that cars are the largest contributor to climate change), and that the benefits of urban living in compact, walkable, wired communities can extend far beyond living in smaller homes, served by more efficient infrastructure and not owning a car, to include a dramatic overall drop in one’s environmental impact. What’s more, we know why these things are so[.]

Unfortunately for people living in rural areas, we know a lot more about how to live a prosperous-yet-low-impact urban life than we do about how to live a rural life of equal prosperity with a small ecological footprint. Rural areas are poorer than urban areas, and offer fewer opportunities. Envisioning how people in rural areas  will be able to prosper and live decent lives  in an environment bereft of cheap and abundant energy is a challenge that has yet to be faced.

This decline in oil exports is consistent with the Export Land Model. Consumption within oil producing countries continues to increase even as production lags or falls, leaving less available for export to oil consuming nations.

Luis de Souza writes this situation bodes ill for Europe.

It is hard to envision how Europe will fare in this race for the dwindling international oil market. One thing is for certain: Europe, with its heavy foreign dependence and its now very small internal production, is the Economic block with the most to lose.

But it’s hard to see how the U.S. will fare any better.  At least Europe has an infrastructure of cities and villages that mostly developed prior to the automobile age. Population centers have some semblance of a relationship to the surrounding countryside, a relationship that could conceivably be renewed and strengthened without too much disruption. And Europeans have long been used to high transportation fuel prices. High population densities and high fuel prices are two factors contributing to the survival of viable transportation alternatives in Europe . The U.S. has kept fuel prices low and subsidized sprawl since the end of WWII.  As a result, much of the built environment in the U.S. will prove to be  “stranded investment”, infrastructure whose fate is to be abandoned.

Souza warns that energy scarcities mean the end of  an economics we erroneously believe is the natural order of things.

An unsustainable economic paradigm is coming to an end. If economic recession is the only way for Europe and the OECD to reduce its reliance on fossil fuels, then economic recession is what it will be.

He’s writing of Europe, but what he says applies more generally to the post-WWII enshrinement of growth and free markets. After causing untold damage to human societies and to Earth itself, the wheels are finally coming off and that age is grinding to an end. Walt Whitman Rostow and The Stages of Economic Growth, RIP.

But then there’s the non-establishment Institute for Integrated Economic Research – which is unafraid to think the unthinkable.

The IIER suspects the odds of business-as-usual coming to an end are pretty high.

Nate Hagens at The Oil Drum: Campfire suggests it might be entertaining and perhaps even enlightening to begin asking our politicians, what will you do if growth is over?

Today’s agri-food systems are almost entirely dependent on fossil fuel energy for everything from food production to transportation to food preparation and storage. The structure of agriculture production, aided and abetted by government policies, has spurred the expansion of farm specialization and consolidation, monocultures, the delocalization of agricultural production, and the adoption of industrial farming practices. The increase in globalized food production, which has come at the expense of local production, is sustainable only as long as cheap energy supplies can subsidize the transportation of goods across long distances. It will take deep-rooted structural and institutional changes as well as lifestyle changes on the part of individuals, their governments, and societies to transition to a more sustainable, non-petroleum based food system which oil depletion and rising costs will inexorably force on us.

Farming itself has become the least profitable and least energy intensive segment of the entire economy of agriculture. Only one-fifth of the energy that goes into our mouths is actually used for growing food. The rest goes to transport, processing, packaging, marketing, and food preparation and storage. Farmers end up with only 10% of the total food dollar, while 25% pays for farm inputs and 65% goes for transportation, processing and marketing. A century ago, farmers ended up with closer to 40% of the food dollar and most farm inputs were produced by the farmers themselves by using draft animal power, storing seeds, and using animal manure for fertilizer.

As oil declines, industrial agriculture in its current form will become impossible. It will prove increasingly difficult to feed the world with diminishing fertile land and water resources. The current structure of power relations and resource control in the United States prevents the widespread move away from fossil fuel based agriculture and transition to localized, sustainable agriculture. Without a change in the status quo, small local and sustainable producers cannot compete against fossil fuel subsidized agribusiness. But the reality is that the present agricultural system cannot be maintained for much longer. Decreasing oil production and rising oil prices will effectively bankrupt the American agri-food system. Without petroleum and all of its benefits, there will be little choice but to revert to a system of local, organic production and consumption.

Peak oil will turn our entire world upside down. There will be a return to localized, small-scale photosynthesis-based, appropriate-tech agricultural production and an end to the domination of economic and power structures that place profit above all else.

Now, I can buy all of this except the last part of the last sentence. I’ll believe in the end of avarice only when I see it.

The chart, posted at Pragmatic Capitalism, shows Robert Shiller’s famous inflation adjusted home price index.

Jeff Rubin has recently pointed out the real legacy of Three Mile Island wasn’t the event itself, which happened back in 1979, but rather what happened (or more precisely didn’t happen) over the course of the next 40 years in the United States. Literally overnight, the near-meltdown of the reactor core changed public acceptance of nuclear power plants. No company in the U.S. has built a new one since.

BP’s Deepwater Horizon event may prove to have similar consequences. A major new report from insurance giant Lloyd’s and UK think tank Chatham House argues that a rapid shift towards low carbon energy sources represents the only way of tackling the energy industry’s soaring risk profile.

Commenting on the report, titled Sustainable Energy Security: Strategic Risks and Opportunities for Business, Lloyd’s chief executive Richard Ward, said that the environmental and economic costs of fossil fuels are simply too high to justify on-going investments.

The current generation of business leaders need to rethink their approach to energy risks or be left behind as energy becomes less reliable and more expensive. We need a long-term plan to reduce consumption and diversify our energy sources.

“Peakers” have toiled for decades now to raise awareness of the precariousness of our predicament, working towards the moment when the rest of the world would finally realize that you can’t extract an infinite amount of oil from a finite planet. The moment of awareness that oil supplies are finite will be followed by dawning awareness of the implications of peak oil, to our economy and our way of life.  As seers such as John Michael Greer and James Kunstler have been saying repeatedly, the technological, economic, and social arrangements predicated on endless supplies of cheap oil might soon turn out to be “a good deal less clever than they seemed”.

It is beginning to look like the first moment of awareness has finally arrived. The second moment of awareness can’t be far behind.

According to the EIA report U.S. Carbon Dioxide Emissions in 2009: A Retrospective Review, U.S. energy-related carbon dioxide emissions fell by 7.0% last year. The downturn of the economy was responsible for only 2.4% of that reduction.

Population, per capita GDP, energy intensity of the economy, and carbon intensity of the energy supply all contribute to emissions. The only factor that increased in 2009 was population, by 0.9%. The remaining three factors – GDP, energy intensity, and carbon intensity – combined in roughly equal proportions to cause emissions to fall by 7.0%

The financial crisis hit the industrial sector of the economy the hardest, and energy usage by industry correspondingly fell the most – by 9.9%. Output from energy-intensive industries such as primary metals (-33.9%) and nonmetallic minerals (-17.4%) fell much faster than total industrial production, reflecting the fact that we’re outsourcing such production at the same time the service sector has been growing relative to the industrial sector of the U.S. economy. Also, carbon intensity fell due to fuel switching as the price of coal rose 6.8% from 2008 to 2009 while the comparable price of natural gas fell 48% on a per Btu basis.

But where CO₂ emissions occur doesn’t matter to the climate system. The fact that U.S. emissions (or those of other developed nations) are falling doesn’t matter much if those emissions are merely being “exported” elsewhere, primarily to China. And we’re exporting more than industrial production – we’re exporting energy and carbon intensity, as well. The result? China has now overtaken the U.S. to become the world’s biggest emitter of greenhouse gases – and shows no sign of easing off. Coal is the basis of the Chinese economy, fueling over 80% of electricity generation. China’s already-enormous coal consumption – now three times U.S. consumption – is still growing, for example at an astonishing rate 28.1% from first quarter 2009 to first quarter 2010.

Even if falling U.S. emissions are a trend and not just a recession-related blip, falling U.S. emissions mean nothing if global emissions continue to rise.

As Gail the Actuary points out at The Oil Drum, what can’t happen, won’t:

Combine unprecedented consumption levels with furious growth rates and you quickly arrive at absurdities and impossibilities. As in, it won’t happen. The wheels will fall off the wagon first.

Reducing emissions will require reducing the production of “stuff” – and not only in the U.S., but also around the world. Global economic shrinkage is the only way out of our climate predicament, and our current focus on economic growth will have to be replaced by concern with economic justice.

Limited supplies of fossil fuels mean that “economic growth” as we know it will come to an end, sooner or later, whether we like it or not. The question that remains to be answered is, before the wheels do come off, will we have already set the world on a path to unstoppable warming? Or will we accept the inevitable and act in time to save the ecosystem that sustains us?

There’s also a chance that the yearly record for highest conventional crude production – 73.72 million b/d in 2005 – may be broken in 2010.

Conventional crude oil – the cheapest and easiest to process of liquid fuels – has been on a production plateau of between roughly 72 and 74 million barrels per day since late 2004. Production dropped to a low of 71.47 million b/d in May 2009 as demand fell several million barrels per day due to the economic crisis.

In March 2010 world production of all liquid fuels fell to 86.59 million b/d, down by 220,000 barrels per day from February, according to the International Energy Agency (IEA). Liquids production for February 2010 was revised upwards in the IEA Oil Market Report of April from 86.59 to 86.8 million b/d. Average global liquid fuels production in 2009 was 84.94 versus 86.6 and 85.32 million b/d in 2008 and 2007.

Governments have, for the moment, returned the global economy to a fragile growth track by bailing out the global financial system and assuming huge chunks of bank and corporate debt. But the debt problem hasn’t gone away – the IMF in its latest report warns of growing sovereign debt risk to the global financial system and of pressing need to continue repairing the financial sector in advanced and the hardest-hit emerging economies.

During the 1980s and the 1990s, expectations about short-term oil price behaviour rested on the assumption that changes in oil prices would induce supply, demand or policy feedbacks – or a combination of them – which would prevent prices from rising above a certain ceiling or from falling below a certain floor. These perceptions of strong feedbacks stabilised long-term expectations about oil prices. However, as oil prices rose sharply during the boom years, uncertainty about the existence of and the timing of feedbacks from prices to oil supply and demand markedly increased. The perception of strong feedbacks in the oil market was replaced by the perception of limited feedbacks.* * *

It is possible to dissect the 2008-2009 price cycle into three distinct phases:

• Phase 1: In the first half of 2008, doubts about the existence and timing of feedbacks from prices to oil supply and demand became pervasive. This destabilised short-term expectations and created a wide band within which the oil price could oscillate. . . .
• Phase 2: The sharp reversal in oil prices from July 2008 to February 2009 came in two distinct phases. The first was a cooling off in prices from their peaks, brought on primarily by the combination of a supply side response from the key marginal producers, following the Jeddah meeting in June, and by mounting evidence in the rear-view mirror that OECD demand had weakened far more than initial expectations and provisional data flows had suggested. The second phase was more directly associated with the intensification of the global financial crisis, and the consequent rapid fall in consensus expectations for global economic growth. Until expectations about the global economy began to stabilise, there was, and probably could not have been, any recovery in oil prices.
• Phase 3: In the second quarter of 2009, the powerful shocks that affected global oil demand were counteracted by perceptions of global recovery and the perception of tight future market fundamentals — fuelled by increasing concern that the credit crunch and the low price environment would limit investment flows in the oil sector and in alternative energy.

Fattouh notes that some economists think there is an “inverse relationship between oil price changes and economic growth” – in other words, that increasingly strained supplies could bring an end to economic growth.  But being a two-handed economist, he also notes there’s an opposing school, which believes that oil price shocks are not special and can be offset by appropriate policy responses – although he cautions that this view “undermines a key element in the conventional wisdom on the relationship between GDP growth and oil prices”.

Fattouh’s observation above is a startling one: to believe that economic growth can continue in an environment of increasing constraints on oil supplies and consequent rising prices is inconsistent with economics as we have come to know it.

And the ducks have arrived, special delivery by U.S. mail, 19 day-old ducklings squashed together for warmth in a 12 x 10 x 6 cardboard box. Here they are – seven Pekins, six Rouens,  and six Khaki Cambells – in their new quarters in the brooder room of the poultry shed.

In addition to the ducklings, you can see the heat lamp for warmth, the automatic feeder, and the plumbing for the automatic waterer (hidden behind Zooey the duckshund). We’ll have six Muscovys arriving in late May or early June.

Zooey has never shown much interest in the sheep, but she’s fascinated by the ducks. Her new assignment, when the ducks get old enough to be outside on their own, is going to be to round them up every evening and herd them back into the poultry shed for protection from night time predators. We’ll see how that works out.

You may ask, why bother to raise a few ducks? It’s most certainly not going to provide an income stream worthy of mention.

John Michael Greer has a post this week that helps explain why it’s not only worthwhile, but an enriching endeavor. It’s all about reinvigorating the household economy.

Here’s a chart from Wikipedia, showing how the labor force participation rate changed from 1948 to 2006:

United States' Labor Force Participation Rate 1948-2006. Source: United States Bureau of Labor Statistics

And this chart from a post at Calculated Risk breaks the labor participation out by gender:

A good part of the gain in per capita GDP over the last 60 years is the result of increased labor force participation, especially by women. Americans have been abandoning the household economy for the money economy. And as Greer describes, people are often worse off as a result of the trade.

What’s all this got to do with ducks? Ducks are hard to find, and expensive. Check out Willamette Local Foods: ducks range in price from ~$30 for a small one to ~$45 for a large one. Duck eggs are expensive, too – $7.20/doz. Ducks and duck eggs are a luxury we could seldom afford, if we had to pay cash. But we can raise them ourselves, and live richly.

Same thing goes for lamb. Leg of lamb goes for ~$8/lb, and lamb loin chops even more. We first raised sheep ourselves because we can’t find good lamb at local supermarkets, and we couldn’t afford it if we could find it. Now we raise a little, sell a little, and live wie Gott im Frankreich.

And then there’s wine. A decent bottle of Pinot Noir fetches ~$15/bottle. We grow our own grapes, make our own great wine (if I do say so myself), and have a bottle on the table every night, plus plenty to share with friends. That adds up to a minimum $5,500/year – way more than we could afford, in after-tax dollars, if we had to buy it from a wine shop.

Plus we don’t have to commute to work, we don’t have to do shit work,  we don’t have to put up with bosses, we don’t have to worry about getting laid off or fired. We get to putter around the farm most of the day, enjoying the sunshine or the rain, the fields and the woods, and the company of each other and our critters.

Now, if we could only raise doctors and nurses . . .