Global oil production peaked in May of 2005. Despite the "Drill baby, drill!" mantra we're never going to equal that production number even if we go at it with a will; the oil that is left is in small, or deep, or sour pools. Small means more work to find them, deep means more work to get to them, and sour means more time, capital, and energy has to be spent cleaning out sulfur and metals before they can be used. They won't be there in the volume we need and their EROI, or energy return on input, is too low to maintain our current high energy lifestyle.
Our banking system is crashing. The bailout accomplishes nothing except injecting nearly a trillion dollars we can't afford back into the casino on lower Manhattan; any pretense of investment has long been discarded – the word 'bet' appears far too often in the financial press in conjunction with activities there. There is talk of this problem getting into the "real" economy, which is both offensive and true at the same time; businesses that actually do something are closing due to the effects of the massive fraud of Wall Street.
Either of these effects would have killed Chrysler, Ford, and General Motors. Taken together it is obvious that it's time for a dramatic downsizing in many ways.
Bankruptcy For The Big Three
The Automatic Earth's Ilargi sums up the situation faced by the auto manufacturers in the November 6th Debt Rattle:
Look, the world simply has a giant surplus in car manufacturing capacity. Sales are sinking through the floor, and the credit crisis is only now starting to hit potential buyers, with many years of downward motion in the offing. In view of that, Ford and GM are likely to be the first to go, since European and Asian carmakers are better equipped to deal with the deterioration, in just about any shape and form
These companies are grossly overweight: Too many factories churning out too many large vehicles that are neither desired nor, due to the credit mess, even affordable despite the transient drop in fuel prices. Kossacks will pile on for this statement, but the unions have a hand in this epic fail – some plants continue to run because they've bargained for 95% of salary in the event of a shutdown. Bargains like that lead to bargains like your employer being sold to a Persian Gulf sovereign wealth fund for a nickel on the dollar and a pittance from PBGC instead of a proper pension for retirees.
Ilargi just can't leave this one alone – I believe it was he who predicted that Detroit would be hit by the equivalent of a neutron bomb between the day after the 2008 election and the 2009 inauguration, when politically there is less responsibility for the events.
Case in point: if Detroit scales back it operations by 50%, 2.5 million jobs will be lost. GM October sales were down 45%. We call that the writing on the wall. The cheerleaders who wrote this report can talk all they want about the terrible consequences of scaling back, but at least that is less idiotic than producing cars just to let them sit in the lot. Consumer demand is plunging throughout the entire economy, not just for automobiles. Are we going to let everyone keep their jobs at the expense of everyone else? How absurd would you like it?
So, downsizing it is in the traditional sense of the word, and it's coming very soon.
Downsizing The Automobile
European vehicle mileage is roughly double that of the U.S. fleet. Why? Their fuel taxes being high is a primary driver and the secondary issue is that most of their cities predate the automobile, with narrow streets and limited parking. The state governments are going to be in desperate need of revenue very shortly due to crashing property values.
A vehicle tax of $1,000 per liter for any car above 1.0 liters and any truck above 2.0 liters displacement for new or used sales would dramatically increase fleet mileage in fairly short order. Commercial driver's licenses should be required for any larger displacement vehicle used in service or delivery, discouraging the casual use of such machines even in the class who can still afford such a luxury.
Downsizing The Fleet
Gasoline prices are in decline now but this is coupled to the financial mess – call it demand destruction. There will come a day where our economic fortunes can go no lower, but oil prices will again begin to climb never to descend and more importantly access to fuel will become problematic. We saw a bit of this in Nashville after hurricane Ike earlier this year but that will become pervasive, perhaps slowly if we're lucky, or all at once should something let go with a bang in the Persian Gulf.
Policies selecting for smaller, more fuel efficient vehicles will help, but we have to start getting vehicles off the road. Rural areas may be an exception but otherwise young people do not need to begin their driving career until age eighteen. This might be news to those in the northeast, but much of the nation permits sixteen year olds to drive and some of the very large states in the mountain west allow fifteen year olds behind the wheel unsupervised.
Older drivers are slower, risk averse drivers and this serves them well until a certain age, but mandatory testing for cognitive as well as vision functionality should be instituted at age sixty five.
Flexible Fueling Options
No matter how aggressive we get about cutting vehicle miles traveled we're still going to need service and delivery vehicles as well as transport in rural areas for agricultural production. Today's gasoline only vehicles are pure madness when a $100 per vehicle change would permit them to digest gasoline, ethanol, or methanol. There are concerns regarding our current mode of ethanol production but everyone can agree that both of the alcohols can be produced renewably.
T. Boone Pickens has a plan involving natural gas and this may make sense in some sectors, most notably fleet vehicles with central depot visits as part of their daily regime, but a wholesale conversion to methane as a vehicle fuel would be exchanging one master for another. Set America Free's efforts at promoting the Open Fuel Standard Act seems a good way to get this part done.
Housing Triage
The economic crash is going to empty housing. We'll see 25% unemployment before too long and estimates are that somewhere between a sixth and a third of housing will go empty due to this. Like oil, natural gas will peak, perhaps not until the middle of the next decade, but this will cement the trend; fewer occupied houses, more people occupying them.
We went completely and utterly nutters this last decade, taking the bad idea of the suburb and sharpening it into the utterly useless exurb, which we packed with flimsily built, poorly insulated homes designed for the convenience of mass production rather than for durability or maintainability. We should do nothing at all whatsoever for a home owner without calculating the distance to the store, the post office, and a place of employment. If they all require a car the house is already over the peak oil event horizon.
Revitalizing Rail Transport
Eighty years ago you could start on the tip of Long Island and make your way to Milwaukee by hoping trolleys and riding trains with only two separate walks of twenty miles in the whole journey. Today the New York area retains its fine mass transit but Detroit conspired to rip out the rest of the nation's trolley systems seventy years ago. We rebuild it starting now and every city can be vibrantly alive like New York or Boston, or we fail and they become blasted wastelands like the largely abandoned city cores in the rust belt.
National rail was powerful enough to brush aside Detroit's machinations but their infrastructure is dated and creaky. Tracks must be upgraded, double or in some cases triple tracking must be done to permit sensible flows of goods and passengers, and flex fuel here means keeping our existing diesel engines and appending a tender car with a pantograph that will permit the engines to run purely on electric power in areas where electrification has been completed.
Much like universal health care, civilized societies elsewhere do things differently, powering their trains with electricity. One can step aboard a train in Scotland and with a little patience arrive several days later on the east coast of Russia, riding all the while in the clean, quiet comfort of electrified trains. The Russians electrified Siberia – we'll tolerate no argument that any part of the United States is too cold, too rugged, or too remote to receive such treatment.
Distractions
The world is full of things that seem to be good ideas but that later come apart under rigorous examination. Plug-in hybrids are one of those things that, sadly, must be filed under needless distractions. Sure, we're going to have vehicles built in this fashion, but it is simply not supportable that our entire fleet should be replaced wholesale with such machines. There isn't enough lead and copper in the world to do the job even if we had the financial wherewithal and time to implement such a move. PHEV school busses, police cars, and ambulances? Certainly. One in every driveway? That is a geological impossibility.
Alan Drake, the nation's foremost rail electrification expert, has a favorite word to describe a whole class of distractions: gadgetbahn. Dual mode rail/road buses? Overhead monorail based personal rapid transit? Maglev trains? All are gadgets of limited applicability to the real world.
A Sensible Future
National long distance travel and freight will go by electrified rail. Flexfuel police, fire, ambulance, buses, and delivery vehicles will dominate but PHEV will make inroads in certain areas. Personal auto use will decline dramatically while bicycle, electric, and flexfuel scooter usage will soar. The economy will grow.
No, you're not seeing things. Alan Drake has worked in conjunction with the folks from the Millennium Institute to create a Threshold 21 model of national rail electrification. We face a simple choice – prop up the dying welfare cases of Detroit's auto manufacturers, or see the world as it is and make a sensible transition.
This change seems to be in the political wind. Senator Biden, he of the weekly train commute from Washington to his home in Delaware will be taking the Vice President's seat and Henry Waxman seeks to unseat John Dingel from the Energy and Commerce committee. These are both good forward steps, but we will have to get behind them and start pushing or entrenched interests will run us further into the ditch.