Nice Article

Here I go again........Posting on my personal and professional Blogs, but this article is pretty great. Well written, and a good forward looking snapshot......



The Next West

What $7 gas means for the West

Higher energy prices will drive change in the sprawling West,
and its exurban development, recreation-based economies

By Courtney White
for Headwaters News
July 11, 2007



During the spike in gasoline prices last summer, our Representative, Tom Udall – a co-founder of the Peak Oil Caucus in Congress – warned us that one day we would be “wistful about $3-a-gallon-gas.”

Filling up my gas tank the other day in Santa Fe, and paying $3.49 a gallon for the privilege, I thought “Hey, I'm already wistful about $3 gas!” I just didn't think I would be so wistful so fast.

I had better get used to the feeling. All indicators suggest that gas prices are heading in only one direction ultimately: up. Perhaps way up.

If this is true, it has serious implications for the New West – implications that perhaps we should begin to consider.

The reasons for the upward trend in gas prices are complicated but boil down to the principal of supply and demand.

Globally, crude oil production rests at about 84 million barrels per day (mbd). Global demand is also about 84 mbd currently. A few years ago, however, demand was only 66 mbd; and it is projected to rise to 120 mbd by 2025.

Can production keep up with demand? Not likely. In fact, experts in the field are now suggesting that the current rate of 84 mbd may be about as much as the world can produce annually, give or take a million barrels.

In other words, oil production, in their parlance, has “plateaued.”

That's because while production of light crude oil in some parts of the world is increasing (slowly) it is declining in others (rapidly in some cases). So far, it's been a wash mostly – thus the plateau – and that's just the cheap, easy stuff. The rest of the globe's oil reserves are harder to reach or more expensive to produce – which is why we went for the easy stuff in the first place (we've burned up half the planet's known light crude oil reserves in less than 100 years, by the way).

This is why Peak Oil is so important, not because we will “run out” of oil – we won't – but because when production “peaks” and then drops (for good, by definition), even a tiny bit, it means the gap between supply and demand will expand relentlessly over time, resulting in higher prices. And if production drops by a lot, as some predict, then prices will rise substantially. Author's note: For a recent, readable analysis of Peak Oil see an article by Gail Tverberg

It's old school economics – and in the old days, high prices normally had two effects: it “crushed” demand while stimulating new production. Unfortunately, neither one appears to be happening today on a scale that matters.

In fact, despite higher prices at the pump, gasoline consumption in America has increased by 1.5 percent in the past twelve months. Then there's China, India, and other rapidly developing nations. Their demand for oil will not be “crushed” any time soon – not if they can help it.

As for increased production – well, as westerners know first hand oil companies are giving it their best shot. But none of the current exploration frenzy (and high profits) has changed a simple fact: the global “peak” of new oil discovery happened decades ago.

This is the basic reason why gas price have risen over the past six years. It's not a "refinery problem" or a "hurricane problem" or a "Middle East plot" or even an "oil company plot." It's a supply and demand problem. Look at the numbers: in 2000, oil sold for around $10-a-barrel. Today it sells for over $70. Many experts, including many in the oil industry itself, think that $80-a-barrel oil is inevitable, and soon.

Don't hold your breath for technology to ride to the rescue. An economic hydrogen-fuel cell car is a long way off. Ditto with solar. Besides, technology is only useful to those who can afford it.

Forget ethanol. It's a fraud.

So, what might $7 gas then mean for the New West, with its dependence on tourism and its embrace of urban and exurban sprawl? For that matter, what might it mean for the West as a whole – Old or New - with its extraordinary bounty of natural resources, its aridity, and its long distances?

The answer, I suspect, is this: we're going to be wistful about more than just $3 gas.

Old Wests

Change, of course, is inevitable – as are the inevitable laments.

In his memoir, A Walk Toward Oregon (2002), noted historian Alvin Josephy, Jr. quotes the famous western artist Frederic Remington in 1902 mourning the passing of the Old West and the arrival of something new: “I knew the wild riders and the vacant land were about to vanish forever,” said Remington. “I saw the living, breathing end of three American centuries of smoke and dust and sweat, and now I see quite another thing where it all took place, but does not appeal to me.”

Josephy is sympathetic – but only up to a point. “As a historian of the American West, I also knew that, before and after Remington, each generation in the West had lamented in its own way the passing of its Old West.”

The original Old West of the Native Americans was replaced by a New West of missionaries and mountain men. That West was replaced by the brave new frontier of miners and soldiers; which gave way to homesteaders, farmers, ranchers, capitalists, doctors, city folk and so on. The next New West included artists, movie stars, dudes, automobiles, picnickers, oil men, and land speculators. Next up were bureaucrats, environmentalists, backpackers, migrant workers, Land Rovers, latte and, well, more land speculators (I'm filling in for Josephy here).

His point is this: every New West eventually becomes an Old West which is replaced in turn by something new, whether we like it or not.

It happened to Josephy as well. “The Old West that I had experienced was now gone too,” he wrote, “changed by industrial and military centers, interstate highways, recreation developments, trophy ranches and urban sprawl, conformity, high-tech pop culture, television, and economically stressed cattle and lumber operations struggling to survive against global competitors.”

“Components,” he concludes, “that will become someone else's Old West.”

My guess is that this inevitable transition has already started. $7 gas simply means this transition will pick up speed. This news is neither good nor bad necessarily (though it's hard to imagine indulging in a Remington-esque lament for the passing of parts of this New West) – instead, it just is.

But what does this mean exactly? No one knows. As someone once quipped “prediction is difficult, especially about the future” (I think it was Yogi Berra). I'm not a professional geographer or demographer, but since no one in either field has yet (as far as I know) plugged the variable of $7 gas into their models of the region's future, I'll take a stab at it.

I'll start with five principal effects that $7 gas will have on the New West:

1) Don't Bet the House on Recreation Anymore.

One of the early casualties of rising gas prices will be long-distance tourism, a victim of the West's legendary wide open spaces. As gas prices rise, recreation will become increasingly localized. Why drive to northern Wyoming to camp or stay in a B&B in southern Arizona when they are plenty of good choices closer to home? It's not just driving – higher air fares (and hotel room rates) are inevitable as well. In fact, it's a safe bet to say that any tourist activity involving fossil fuel will become more costly, which means all of them. Some people will still be able to afford to play, of course, but I'm not sure it's wise to build an economy based only on the whims of the wealthy.

2) The Juggernaut of Urban & Exurban Development Will Falter.

Cheap gas begat our love affair with the automobile which begat suburban and exurban (ranchette) development which begat an intense period of economic prosperity all across the West. But what will $7 gas beget? The entire suburban/exurban experiment of the past 60 years was built on the foundation, and the promise, of cheap fossil fuel.

Think about the two-hour one-way daily commute into Los Angeles for work, or the costs associated in reaching that second home in the woods, or just driving to the grocery store. And it's not just about driving – fossil fuel permeates nearly every aspect of suburban development and maintenance. When costs rise, we may reconsider our behavior. We may have to.

3) Water Will Become More Expensive:

Mark Twain famously quipped that in the West “Whiskey is for drinkin' and water is for fightin'.” And we know why – in the arid West water is our life source. Much of western history can be explained by the availability of cheap (i.e. subsidized) water – for agriculture, for new homes, new cities, and endless growth. But much of this water is pumped or otherwise dependent on fossil fuels for its delivery. Rising energy costs mean higher water costs, which, along with water's general scarcity, mean we'll be making more changes to our behavior in the future.

4) Economic Hardship Will Spread Upward:

As the basic necessities of life – food, energy, and water – become more expensive, the economic pain will be felt among the poor and disadvantaged of us first and hardest. This fact will have all sorts of ramifications, from increased crime to social unrest possibly. A recent study by the Santa Fe-based nonprofit Local Energy showed that while the annual median income of New Mexicans has remained relatively flat for the past thirty years – at approximately $29,000 – the cost of energy has risen steadily. In that widening gap lies trouble for many of us.

5) Expect More Oil & Gas Development – Perhaps a Lot More.

Our economic (and emotional) dependence on cheap fossil fuel as a nation means you ain't seen nothing yet in terms of oil and gas development. Marginal oil and gas fields, for example, are already looking not-so-marginal to oil companies. Eventually they won't look so marginal to the public either, I'm afraid. I worry about protected areas the most. Pressure is already building in the Midwest to crack open land that was set aside for protection in the Conservation Reserve Program (CRP) in order to grow more industrial corn for ethanol production. If this happens, how safe are our parks, wildernesses, and refuges?

And if these sacred places aren't safe, what does this mean for society as a whole?

The Next West

There are things we can do – now – to prepare for the inevitability of change. In fact, the sooner we do something the better.

Again at the risk of making predictions, especially about the future (maybe it was Vice President Dan Qualye who said that), I'll hazard a few best guesses about what's coming next and what we might be able to do today.

I believe that a new word is going to dominate our lives in the upcoming decades: relocalization (it's not even a word yet – at least my computer's dictionary doesn't recognize it!).

Rising energy costs mean more and more of our daily lives, from food production to where we work and play, will be increasingly localized. This won't be by choice, as it is currently, but by necessity (that economic hardship thing again).

The key is to look at relocalization as an opportunity, not just a challenge. It can be a form of rediscovery – learning about our roots, about community, neighbors, gardens, and doing with less in general. One could even look at relocalization entrepreneurially – those individuals and organizations that get into the game early, by providing re-localized goods and services, will stand a very good chance at a profitable living as the transition begins to unfold.

In my opinion, relocalization includes the following (at least):

The Development of Local Food and Energy Sources:

Working landscapes will become critical again. So will the innovations currently taking place at the nexus of agriculture and ecology (this is where I would bet my money if I were a betting man) – a nexus that requires working lands. This is not to dismiss wilderness or the needs of wildlife – I believe $7 gas means we'll have plenty of wilderness again someday, in fact – but it does mean concentrating our efforts on answering an important question: could New Mexico feed itself? Could Utah? Or Montana? And if not, why not, and what can we do to stimulate local food and energy production?

Farm and Ranch Land Will Become Important Again:

So will farmers and ranchers (see the previous point). Local food and energy, as well as recreational opportunities, require local land that is available for these uses. We'll need local people to do this work too, as well as their local knowledge.

This means figuring out how – now – to keep the current generation of farmers and ranchers on the land, as well as encourage the next generation to stay, come back, or give agriculture a try. Furthermore, we're going to regret paving over all that prime agricultural land, I suspect – which will eventually raise another important question: how do we unpave some of it?

Restoration Will Become An Important Business. Producing local food and energy from working landscapes, especially in quantity, will require healthy land as well as best management practices that work "within nature's model." Unfortunately, while the "toolbox" of progressive stewardship is now well developed, a great deal of our land is in poor condition (for a variety of reasons), requiring restoration and remediation. The good news is that this work could afford local communities a bounty of jobs at good wages, if only we would begin to value it properly.

County Governments Will Rise In Influence:

Almost by definition, relocalization means political action and policy-making will become increasing redirected to local levels. In fact, as historian Patricia Limerick said recently, there's a good chance counties could become the key unit of governance in the West in the future.

Partly that's because the federal government is proving increasingly incapable of meeting the needs of citizens at the local level, but mostly it's because there's been so much grassroots innovation across the West in recent years that need for federal involvement is no longer as necessary as it once was. However, some sort of reform of county governance (increasing the number of commissioners, for example) will likely be necessary as things begin to change.

Co-Management of Public Lands Will Evolve Into the Norm:

For the reasons cited above, pressure will build on the federal land agencies, which control one-half of the West's 425,000 square miles, to adopt co-management principles with private organizations and associations on public land. The feds not only can't do it all currently, they won't be able to handle the upcoming transition either, due to staffing and budget reductions as well as other limitations.

Partnerships with private entities, including a new generation of grazing permittees, that aim at progressive, relocalized activities on working landscapes will become the norm in the 21st century, I believe.

But I could be wrong. As I said, no one really knows what's coming next. All we can say with confidence is that $7 gas (and higher) means that things will be very different here in the West. Whether it will be for better or worse depends on your point-of-view. I think it presents tremendous opportunities – even a new frontier, if you will. Hopefully, we can keep the latte and avoid the gunfights this time.

As for me, I'm trying to get over my wistfulness by making fewer visits to the gas pump. It's hard, I'll admit, but then no one said change is ever easy.

(1) For a recent, readable analysis of Peak Oil see an article by Gail 1) For a recent Tverberg at: http://www.energybulletin.net/31332.html