Category Archive

In the public forums you often hear concern expressed about “the economy” – what will we do to “the economy” if we take measures about changing our energy systems, if we take action about climate change, etc. And to measure what’s happening to “the economy” people invariably use the Gross Domestic Product, or GDP.

But as Jonathan Rowe spells out in a speech to Congress, the GDP was never intended to be used in this way, and actually the guy who developed it warned – nay, begged – government never to do so. But that warning went unheeded and now here we are: as Jonathan shows, the hero of “the economy” is someone with a heart condition going through a bitter divorce, and the villains are people who conserve, grow their own food and share with others, care for their own children, and so on.

Where GDP really gets it wrong, however, is when it tries to assess a resource such as oil. Its accounting is unable to apprehend the idea of limit or depletion, so again in Jonathan’s able phrase, it’s like a fuel gauge that reads fuller and fuller as it empties. I can’t help but think of the historical lessons in Collapse, the book by Jared Diamond, in which this sort of negative feedback loop spells doom for previous human civilizations.

Take a few minutes and read the transcript of Jonathan Rowe’s speech (pdf). And thanks to Harper’s Magazine, which published the speech in its June issue (subscription needed). Photo by wallyg via Flickr.

Just in time for summer vacation, the Manitoba Teachers Society has prepared a gameboard with 66 great web destinations (and World Without Oil is one). Fun! Edify yourself - visit all 66!

Friday wrapup: a month’s worth of headlines. They could all be part of the World Without Oil game (and many are dead ringers for ones that were) but no, they’re from our local paper, the San Jose Mercury News. Read ‘em and weep, as they say… (thanks Deb for the clipping services)

“We hear a lot of chatter about the price of gas these days. Most of it is just complaining and finger pointing. The few ’solutions’ bandied around seem to have to do with biofuels and drilling for oil in new locations –- both problematic in their own ways. How can we get people to start thinking out of the box and looking at other alternatives? Seems like the following approach to involving and engaging people with important issues could be used in a lot of other educational contexts.” — The Education for Wellbeing site, talking about the World Without Oil game archive and our Lesson Plans for high school teachers.

I’m mulling this morning over the similarities between the subprime mortgage crisis and the high fuel price crisis. Both strike me as little garden paths that the unwary were led along, by people willing to make a buck over the inability of others to visualize the future.

In both cases, people were sold a dream of the unaffordable made affordable, and sold the products that go with it: big new homes in the suburbs and plush low-mpg vehicles to make their long commutes comfortable. Now however the payment rates are being radically readjusted and the balloon payments are coming due. The purveyors of this dream - the subprime lenders of U.S. energy policy, the oil and auto companies and others aided and abetted by a subprime administration – are escaping with their gains and leaving people made destitute by their deception.

What’s needed is action that materially reduces our dependence on oil forever - higher fuel efficiency, plug-in hybrids, alternative energy. Solutions such as drilling for more oil are merely a continuation of the cruel deception. For starters, it will take about 10 years for any new well to actually produce any oil – no help whatsoever to those being squeezed hard right now by high fuel prices. But the main point is: more oil, from any source, amounts to no more than taking out a second mortgage on a subprime energy policy, something that only puts the inevitable foreclosure off another year or two.

Photo by DigitalHowie via Flickr. Click through for his narrative that sounds eerily like World Without Oil. All rights reserved by DigitalHowie.

“A top Ford Motor Co. executive urged the government to make a greater commitment to the development of plug-in hybrids on Wednesday… Mark Fields, Ford’s President of the Americas, said at a conference on plug-in hybrids that bold incentives are needed to speed up the development of advanced batteries that are key to the green vehicles….’This is a race we absolutely must win,’ Fields said,” then went on to say, ‘It seems clear that a business case will not evolve, in the near term, without support from Washington.’ Hunh?

Meanwhile, in an adjacent article, Toyota’s president Katsuaki Watanabe demonstrated a plug-in hybrid car, with a next-generation lithium-ion battery, at the Tokyo Environmental Forum. Toyota said its plug-in hybrid should be in the U.S. market by 2010; last year, Ford estimated its time to market at 5-10 years, or presumably never, if the government doesn’t help them out. Perhaps, if Ford had diverted one-tenth of its marketing budget for SUVs to hybrid research over the last 5 years, it wouldn’t be in such an embarrassing palm-out situation today? Bold never quits, but apparently it’s not above whining. And cutting pay and jobs; Mark Fields announced a 15% cut for white-collar workers last week. More reverberations of WWO themes, from AP articles on Thursday.

So said Peter Carroll, a representative for the trucking industry in the UK, about fuel prices, shortly after he parked his big rig on the A40, closing that major artery into London. The blockades are beginning again in Europe, in a manner prescient of the Petrol Wars of 2000, which pretty much shut down France and the UK at that time.

The problem is this: ordinary citizens can adapt to rising fuel costs by using transit or cutting back miles driven. But truckers, fishermen etc. have no such elasticity to their lives, and now that diesel is near $10 a gallon they’re not about to suffer alone.

Which brings up the question: when can we expect renewed blockades and truckers’ strikes in the US, where truckers are similarly stretched past the breaking point? Expect no warning, as these events, loosely organized by CB and cell phone, are classic flashmobs.

Photo by Robert Whitlock via Flickr

….possible within two years, says Sachs Goldman via Bloomberg and widely reported. Folks, less than a year ago “$200 a barrel” was shorthand for catastrophe. Witness our fellow simulation, OilShockwave, which in September 2007 posited a global geopolitical crisis precipitated by oil at $150 a barrel.

An article by John Wilen in the Business section today talks about how airlines are slowing down to save fuel. Meanwhile, Gary Richards, our local reporter on commute and traffic, advises his readers to stop whining about fuel prices and slow down - by his calculation, dropping one’s speed from 75 to 60 mph is like paying 30 cents less per gallon at the pump.

These articles bring out another finding of the World Without Oil game – that oil = speed. Americans consume an inordinate amount of oil largely because we don’t like to wait - for the bus or the train, for example, or for that cool new weight machine we ordered online. 747s fly everywhere loaded with cargo that could be sent vastly more efficiently by boat or train.

But of course, paradoxically, we also don’t like to be forced to rush all the bloody time. WWO people were quick to pick up on this silver lining to the dark cloud. Here, listen as Avantgame explains it in a phone call from Berkeley – recorded during Week 17 of the Oil Crisis of 2007. Or download the MP3:

The Upside to Slowing Down, by Avantgame

Photo by Lex in the City via Flickr.

Varin (who some of you know as Illiana_Speedster, or maybe his daughter) told me about fuel thefts in Indiana. I had just seen an article here about fuel thefts in California. So I Googled it. Not surprisingly, with diesel well over $4 a gallon and gasoline also in many places, there are reports of fuel thefts all over. Not just gas-n-gos, either, but pretty major stuff: Pump reprogramming. Tank drilling. Fleet and storage tank drainings. The sort of stuff, I’m thinking, that never appears in official scenarios but which impacts people’s lives hugely, the World Without Oil experience tells us. So I’m off to the store to buy locking gas caps, if any are still in stock. As Varin says, “It’s like we’re playing the game all over again.”

Nina Simon works on cool museum stuff (like the Spy Museum [cue theme music]) and posted a thoughtful post-mortem on World Without Oil some months ago in her richly ideated blog, Museum 2.0, pointing up the game’s educational side. She’s presenting museum-quality newtech ideas at a museum conference this week and sent me the slide above with this note: “Your pic on the left. On the right, cellphone pic we took yesterday in SF. Using it in upcoming presentation. Sometimes I wish games didn’t have to be so real.”

Was this not a game? Was World Without Oil indeed a look at the shape of things to come?

This article by Jacob Adelman in today’s paper tells of farmers in America who have seen the cost of fertilizer jump 20% a week in recent weeks. “We’ll get four or five price increases in a single day,” says a fertilizer distributor. In 50 years in the business, “I’ve never seen anything like this.”

“It’s like there’s no end in sight. It’s very scary,” one farmer says. The cause? Competition for fertilizer from China, India and other rapidly growing countries - and the rising cost of petroleum energy, which in turn is diverting natural gas from fertilizer manufacture into (more profitable) use as fuel. As we’ve already seen with corn-based ethanol, our demand for energy won’t stop even if it means less food for the table.

And make no mistake, there is less food for the table. “Global food prices surged 57 percent last month from a year earlier, according to the United Nations, and the World Bank warns civil disturbances may be triggered in 33 countries,” reports Bloomberg.com.

“Recent weeks have seen Philippine authorities scramble to augment rice stocks in the country, Indonesian officials warn of possible social unrest due to skyrocketing prices for basic foodstuffs, irate Egyptians protesting bread shortages, and international food aid programs unable to buy enough goods to meet their food distribution targets for vulnerable populations,” Voice of America reports. “This is the world’s big story,” said Jeffrey Sachs, director of Columbia University’s Earth Institute, reports CNN.

Doesn’t this sound like WWO? The alarming dependence we have on oil in order to grow our food was one of the major themes of the World Without Oil alternate reality game, and explored in depth by our players. We use oil to plant our food, to fertilize and pesticide it, to harvest it, refrigerate it and transport it great distances. We use oil to truck in its pollinators and pump in its water. Irrigation lines, row cover, and other essentials of the farm trade are made from oil. In the game, when the price of oil jumped up and its availability went down, the price and availability of food inexorably followed.

What to do? Get educated, especially about local sources of food. One of the WWO Lesson Plans can help.

Meanwhile, oil hit $117 a barrel, and experts say oil prices may remain high even if demand begins to fall. Photo by mattlemmon via Flickr.

…is fuel prices, according to a study released by the New York Times this week. David Leonhardt, who writes about economics for the Times, tells Renee Montagne of NPR that “eight in 10 people said they’re staying even or falling behind,” which basically means they understand what’s actually going on. “Household income set an all-time record in 1999, and we still haven’t returned to that record. That’s really remarkable. There is no other economic expansion in history that failed to give most people a raise.” And thus the worry about fuel prices: the jump at the pump is cutting directly into the income that’s already failed to keep up with prices; it’s the tangible sign that people are falling farther and farther behind; and as we found in WWO, it’s the thing that has the power to get people to change their lives. (Thanks, Laurel, for this lead.)

Across the country, truckers are beginning to engage in roadblocks or rollingblocks to protest the squeeze caused by high diesel prices, now over $4 a gallon nationally. Independent truckers in particular (1 out of 10 trucks is an independent) have been caught without a mechanism in place to compensate for rapidly rising fuel costs, and for them rolling down the road has become a lose-lose proposition. The alert “WWO Lives” reader will flash back to this post on this blog and wonder just how deep this resentment runs, and how far this protest might go.

Meanwhile, testifying before Congress, oil company executives characterize their recent profits as “in line with those of other industries.”

I’m in Phoenix, looking for WWO-worthy headlines in the Arizona Republic, and finding them. Front page box item: “Gas prices continue to top records.” The box blurb mentions an Iraqi pipeline bombing and cutbacks by refiners as causes for the inexorable march of gas prices, but of course that’s hogwash (the pipeline will be fixed in the next day or so, and the cutback by refiners is due to shrinking gasoline demand in U.S. local markets). The article itself (top story, Business section) barely mentions the true cause: oil prices still over $105 a barrel. They spend a whole paragraph talking about the refinery cutback, terming it “troubling,” but why? Refineries cut back when local demand lessens, nothing sinister about it. World demand isn’t decreasing, not if China has anything to say about it, and as long as that’s true the fundamental price of oil will stay high.

The rest of the article is quotes from drivers, and it’s all pure WWO: “Gas prices have really impacted our budget.” “We might not be able to take a vacation this year.” “I’m taking the bus and riding my bike more.” “I used to go back to Chinle, my hometown, every two weeks – now with higher gas prices, I only go up once a month.” Is this not a game?

Revealing AP article today by John Wilen, highlighting the trouble that US consumers find themselves in today: gas prices are going up, no matter what. And increasing fuel costs mean that the price of everything goes up, no matter what. Under price pressure from all sides, US consumers are “combining errands, sharing rides, eliminating pleasure trips and using public transit more” in an effort to control the cost of fuel on their budgets. But what’s not happening is any decrease in fuel prices commensurate with the decline in fuel usage. Gas usage is off by 1% in the past 8 weeks, instead of its usual 1.5% growth (to keep up with population growth). But gas prices have only retreated by a few cents in recent days. The result: a father in Pleasanton, CA, is considering cutting swim lessons for his kids. Which may not seem like much, unless you’ve played World Without Oil and recognize that this is how it all begins.

Not discussed in the article: the Tata Motor Company, which seems set to buy Jaguar and Land Rover from Ford. Tata is famous these days for the Tata Nano, a marvelously inexpensive car that seems destined to escalate India’s oil consumption at a rate commensurate with its economic growth. Why would cutting oil demand in the US reduce prices, when demand is increasing elsewhere? World oil consumption is expected to grow by 1.3 million barrels a day in both 2008 and 2009, according to the EIA update of March 11. (photo by goatopolis)

Real Life headlines from just the past week. Thisisnotagame?

…the price of gasoline in the U.S. broke records, pushed higher than it’s ever been by the high cost of oil (now at $110 a barrel) and the ever-weakening dollar. “Analysts see little reason for the dollar to stop falling, or for oil and gas prices to stop rising, any time soon.” “Strong global demand for oil will keep prices high despite a downturn in demand in the U.S., two prominent forecasters warned.” Was this not a game?

Price of a gallon of regular gas in Gorda, California: $5.19 a gallon. I’m just sayin’!

Presented without comment, from the front page of the San Jose Mercury News.

This is what happened in WWO: as rising fuel costs impacted businesses, they passed them on to consumers, often with very little warning. (More and more consumer contracts today have a fuel surcharge clause in them somewhere)

Presented without comment.

It’s a sign that investors think that crude oil prices “will keep climbing despite evidence of plentiful supplies and falling demand,” says John Wilen of AP. He goes on to say, “The fact that there was no overriding reason for such a price spike could be a bad omen for consumers already bearing the burdens of high heating costs and falling real estate values.” The reason: investors are moving to the oil futures market, driving up prices, as a hedge against the falling dollar. (And let’s not forget: demand from China and India continues to forge ahead, even as the U.S. economy sputters.) The Energy Department said that it expects gasoline prices to peak this spring well above the record – $3.227 a gallon average – set last May when the WWO game was going on. When, it should be noted, oil prices were “only” $65 a barrel.

Oil prices up over $2 a barrel, to $93 or so, upon tumults legal and illegal. In Venezuela, Hugo Chavez reacted with threats when a British court ordered over $12 billion in Petroleos de Venezuela SA assets frozen (PDVSA is Venezuela’s state-run oil company). In the Niger Delta, unidentified attackers fired on a vessel escorting oil workers, killing a sailor, and furthering fears that Royal Dutch Shell will lose yet more production in Africa’s largest oil-producing nation (an earlier attack on a Nigerian pipeline has already taken 130,000 barrels of oil a day off the market, possibly for months). To WWO players, this all seems familiar, as players forecast similar events in Venezuela and Nigeria during the game . . . especially since the nationalization of a multi-billion Exxon-Mobil facility in Venezuela (the action that caused the British court order), occurred in real life on Day 2 of WWO.

“General Motors has formed a new global engineering group to speed up development of electric and hybrid vehicles and get them to market more quickly, the company said Thursday.” Meanwhile, the Toyota Prius began its 11th year of production with demand for the hybrid car continuing to exceed supply.

Amid all the economic doom and gloom, you might have missed the little wire service blurb about the gas station clerk in Nitro, West Virginia (I am not making this up) who was caught selling gasoline to family and friends for 0.1 cents a gallon. We saw a lot of this sort of thing in WWO. It may seem relatively minor (although this clerk apparently pumped $50K worth before being caught) but it has a deeper significance: WWO players pinpointed this sort of fraud as the reason that any gas rationing scheme would likely fail in the U.S. - the lure of the black market would just be irresistible.

The saying goes: If you owe the bank $10 billion, the bank owns you. If you owe the bank $10 trillion, you own the bank. That is, you owe so much that if you default, the bank goes under too.

Since the USA consumes one out of every four barrels of oil produced in the world, we own the oil bank, so to speak. Or thought we did, maybe, until yesterday, when President Bush went to Saudi Arabia, met with King Abdullah, and asked him to please produce more oil or else the US economy would slow down and thus we would buy less of his oil.

Leave aside for the moment the absurdity of anyone giving the King of Saudi Arabia a lecture in Economics 101, and focus on what this means: Bush is saying “we buy so much, we own the bank.” The Saudi response? According to an article in the New York Times, the Saudi oil minister said that Saudi Arabia shared Bush’s concern that a recession in the US would have profound effects, but “Saudi Arabia would raise production only when the market justifies it.” In short: “No, Mr. Bush, actually the bank owns you.”

Quite understandable, from the Saudi point of view. Why invest money in additional infrastructure and sweat to pump a gallon of oil to sell this year at $100, when without any additional effort you can pump that barrel next year and sell it for $150? So what if the US goes into a recession and buys somewhat less oil? China and India are standing by, cash in hand. And the World Without Oil scenario continues, scarily, to become more real.

…but here comes the cruel part: I don’t spend the money on you, or anywhere near you, so no trickle-down either. I give it to Saudi Arabia and Russia instead.
That’s what’s happening right now, according to yesterday’s article by Steven Mufson in the Washington Post. Climbing oil prices have all of the negative effects of a tax increase with none of the benefits. “Clearly contractionary” and “Quite a wallop,” the pundits say, especially as the U.S. economy heads into recession. And this: “stagflationary.”

Makes me wish that we had begun taxing fuel a few years ago - starting out small but increasing over time, giving the economy a chance to adjust. And spent the tax revenue on meeting the demand for mass transit as it increased. Wouldn’t that have made our economy more resilient?

“Looking for lift: Airlines cut growth targets to deal with rising fuel costs.” The article’s first sentence: “Several major airlines outlined plans Tuesday to slow their growth and cut costs to deal with higher fuel prices and the prospect of an economic slowdown that could hurt air travel.” And: “Huge demand for tiny car” - “Thousands of motorists want to be among the first owners of the fuel-sipping Smart car in the United States, demand that is racing past production capacity, Daimler AG executives said Tuesday.” In the San Jose Mercury News.

A good catch today by Gracesmom (Marie Lamb): Thieves take truck, gallons of oil in the Kennebec, Maine area. Eerily reminiscent of many reports we got in WWO…

“CHINA has urged local governments to set up an early-warning system to ensure sufficient oil supplies at filling stations, which face shortages across the nation, the state-run Xinhua News Agency has reported…” So says The Australian, here. Is this not a game?

“The current surge in the price of oil is certainly not driven by a conviction that oil supplies have peaked and can only decline from now on. The dealers in the London and New York exchanges who make the market react to the daily flow of news  and don’t bother much about longer term issues like peak oil. The market is a simple-minded beast: Supply is tight and disruptions are possible, so the price goes up. But the market is so tight because demand has been growing faster than supply for years, and now the fear is that supplies may have stopped growing altogether.” Read the rest here.

As reported today in the WSJ. Just as a reminder, when WWO launched, oil was less than $70 a barrel. And gasoline prices were less than $3 a gallon. Ah, the good old days.

From The State.

Or so Time magazine predicts, right here.