When the juice runs out

Much has been written about the environmental effect of the profligate use of fossil fuels. And rightly so. But as well as the harm that we are doing to the planet, we should also be concerned of the economic consequences of our wasteful use of diminishin


It’s indisputable that we are running short of traditional sources of energy. And it’s our seemingly insatiable use of these sources that could prove calamitous for the global economy unless we make a serious attempt to redress the balance.

Some facts. We depend on oil for 90 percent of our transport, and for food, pharmaceuticals, chemicals and just about every aspect of modern day life. But some oil industry experts calculate that current reserves will last for just 40 years. So if we continue down this route we’ll need to find new reserves. But where? Although developments in technology have made oil extraction more efficient, the struggle to find alternative oil sources means that we’re now using less productive methods like deep sea drilling, often in environmentally sensitive regions like the Arctic.

Supplies of gas are finite too. And, although there’s still plenty of coal in the world, its use is difficult without causing even worse pollution to our already over-polluted planet.

Energy alone won’t determine the global economic landscape of the future – but it’s a major factor, and is already influencing the shift in political power, demographics, population movement and the dominance of what are now the burgeoning economies. Put simply, the rising economies of India, Indonesia, China, Brazil and Russia, and probably a few others still waiting in the wings, as either major users or producers of energy – or both – will shift the global economic centre of gravity. And, like everyone else, they’ll have to battle with the problems of energy shortage.

Who’s to blame?
Although the new economic powerhouses like China and India are major energy consumers, it would be unfair to point to these new kids on the economic block as the sole villains of the piece. While China’s consumption of oil is rising as a consequence of its rapidly expanding manufacturing base and the demands of its growing affluence, it doesn’t come close to the appetite for oil of the United States, whose population is a mere 300 million compared to China’s 1.3 billion. Currently, the US uses 2.7 million barrels of oil a day – more than India and Pakistan together.

But let’s not put all the blame on the US either. They’re just such a big target it’s difficult to miss. The UK government’s experts have estimated that 56% of energy used in UK homes could be cut using currently available technologies. We can install solar tiles, or miniature wind turbines the size of a satellite dishes. But how many of us can be bothered?

The penny is however beginning to drop with most of the world’s politicians. As energy sources decrease a whole new set of issues will surface – the main one being, of course, ‘Where will we get our energy from, and what will it cost?’

Already, the energy for our fuel, heat and light travels vast distances to reach us, and as recent events have shown, that means it crossing not just continents but political hotspots. An uncomfortable reminder of what the future could hold happened when Russia cut its supply of oil to Europe because of a row with Belarus. Russia accused Belarus of siphoning off oil from the pipeline en route, while Belarus countered that Russia hadn’t paid the tax for moving oil through Belarus – itself a ‘tit for tat’ move following Russia’s doubling of the price it charges Belarus for gas. It was when Belarus began legal action to recover the tax that Russia halted its export of oil.

While the disruption to supply was short lived, it brought home just how reliant Europe is on Russia for its energy supply. And of course, events like this only serve to trigger price rises too. EU Trade Commissioner Peter Mandelson succinctly summed up the situation – and the possible solution – in a speech at the EU-Russia Centre in Brussels last October.

He said that the key to improving the strained relations between the EU and Russia would be for Russia to join the World Trade Organisation, as this would create an obligation to more equitable trading conditions, and for Russia to commit to providing a secure and steady supply of energy to Europe. And when you think about it, both parties would benefit from that. But even if that did happen, it’s still a relatively short term answer – the problem is still that the world’s traditional oil resources are drying up.

What then is the answer?
New, sustainable sources of energy are being developed, and when they get here no doubt they’ll help us – or rather our grandchildren – live longer, healthier lives.

But till then our world will change to reflect the geographical and ethical shift in power, wealth and poverty created by dwindling supplies of energy. Pretty soon, we’ll be living in a world whose make-up is far removed from the one that we know today. International borders will still exist, but they’ll be different borders and they’ll have a different meaning.

We’ve seen already how the flow of people, ideas and information across borders bring into question ingrained assumptions about the nature of sovereignty and politics. How many of us can truly say that our beliefs of right and wrong, good and bad, progressive and reactionary, are neatly aligned to ‘party’ politics anymore? In the future, as this extension of cosmopolitanism continues, and power shifts from governments to individuals, markets and private enterprises, so new kinds of community will grow up, built around common values based on the way we live now, not how our forefathers lived. What we describe as ‘Western’ values will be challenged as economic and political power is redistributed. And growing migration for economic, political and, increasingly, environmental reasons will mean we can no longer define ourselves by where we were born.

Utopia or dystopia?
Predicting the future is always a dangerous exercise. Our predictions can always come back to bite us when they turn out to be wide of the mark. Science pundits in the ‘60’s often painted a picture of 21st century citizens being transported on hover-shoes to their pristine paperless office modules for their eight hours a week jobs: the rest of their time taken up with hi-tech pastimes from three dimensional chess to virtual golf. But occasionally they were right. A BBC programme from that time – ‘Tomorrow’s World’ – previewed hole in the wall cash machines in 1969, the digital watch in 1971 and the compact disc in 1981.

Now we are beginning to see the early signs of a world economy changed by the scarcity of energy, and we can predict with some accuracy that it can go one of two ways, depending on the action that our governments – and we as individuals – take.

Left to their own devices, the countries that own the sources of energy could theoretically hold the rest of the world to ransom. The price they charge countries which have no energy resources of their own will determine the economic competitiveness of those other countries. But in the end that would be self defeating. No country – even one self sufficient in energy – can exist wholly on its own. That’s like the selfish school kid who won’t let anyone else play with his football. Eventually, if he’s got any sense at all, he’ll see that cooperation has far more benefits. Similarly, it would be far better for nations, however they are defined in the future, to find ways of reaching agreement on a consistent and controlled supply for everyone.

And to control their own use of scarce fuels until sustainable alternatives are readily available. Yes, that would mean legislation and additional tax, but it’s a price well worth paying.

There’s also of course a genuine need for individuals to take responsibility for the sake of the planet. We can all take steps to conserve existing sources of energy. The vehicles we drive – if we drive at all – the way we heat our homes, our choice of holiday destination and how we get there. Maybe it will take some harsh law making to steer us in the right direction – many of us would far rather that it was a matter of conscience and intelligence. Perhaps that’s a little idealistic – but I’d like to think it isn’t.