How to fight austerity in a context of peak oil and economic decline.

While austerity is causing chaos, continued government spending cannot last because of peak oil and economic decline, so how do we go forward?

Peak oil, will, without a doubt, be one of the most important events of the century. By slowing and eventually reversing economic growth, it gives us an unprecedented challenge, how can we fight austerity while being conscious that continued government spending is not an option?

Peak oil is the point at which the world has consumed approximately half of the world's resources in oil, and the production rate per year starts to decline. The reason why that point is so important is that the exponentially growing demand for oil cannot be met by production anymore, causing chaos in the economy. Secondly, as we extracted the most easily accessible oil first, we are left with less convenient oil fields such as offshore, deepwater or even tar sands. Hence the energy return, i.e. the amount of energy gained over the energy invested in the extraction, will be considerably lower. Even though there will always be oil in the ground, we will get to a point when the oil is so hard to extract that it will take more energy to extract than the energy equivalent of the recovered oil. At that point, the extraction becomes pointless.

When we say peak, the actual manifestation of it turns out to be a plateau in production. This means that the production ceases to rise year after year. In 2008 only 14 of the 54 oil-producing nations were still increasing their oil production, as shown in this list. All other nations were either at their peak or below. Furthermore, since 2005, the production has not significantly risen yet the incentive to sell was there as we have reached an unprecedented price of 147 dollars a barrel in 2008 (while it was around 40 dollars a barrel up to 2004). This is a fairly significant indication that we are at a peak in oil production.

Some experts claim that this rise in oil price was one of the major factors that caused the 2008 crash. Indeed, the most affected by high oil prices were lower middle-class American families living in suburbs and who are highly dependent on low fuel prices and had mortgages they could not afford.

Needless to say, this is a serious problem. It is going to be hard, even impossible, to shift from our oil-dependent economy to alternative energies while maintaining our standard of living. Our status quo of a growing economy will not hold under contracting supplies of oil. So, what will the future look like?

The common discourse on the future revolves around two scenarios : either the government keeps spending lots of money or they enforce a brutal austerity program targeting the most vulnerable in our society. The austerity measures are unfairly targeted at the working class, however we must consider that continued government spending depends on economic growth. And, economic growth depends on expanding oil production. Hence, in a context of peak oil, economic growth cannot be sustained, neither can big government spending.

Of course, governments are wastefully spending money on corporate welfare. The little real wealth that remains should be in the hands of the people to decide how to fairly transition away from fossil fuels. While austerity measures are brutal and unfair, how can we reasonably deal with the end of economic growth?

The dichotomy between austerity and government spending is indeed a dangerous one as both drive us into the wall. Austerity will not be successfull, and hopefully will not be fully enforced, while government spending will push governments towards bankruptcy, as economic growth is ending. Hence, the most obvious answer to the oil crisis is community-building.

We can use and transform initiatives such as Transition Towns to come together as communities and imagine our local area without fossil fuels. By forming local groups on food, energy, water, health, education, we can find ways how these can be transformed to be functional in a low-carbon world. Hence, we will "unleash the collective genius of the community" as put forward by Rob Hopkins, the founder of the Transition Towns Initiatives. One does not need experts to make all the decisions when we have a revived community full of initiative, as we do, here, in Montreal.

Resilience is a better indicator for the health of a community as it measures the capability of a community to withstand shocks such as high oil prices. Many cities now depend on supermarkets for food when these only have three days worth of provisions. A resilient community has many backup plans so that is stays functional even if major supply chains are broken. This would typically involve having a healthy local economy. Hence, while we fight against government austerity, we must imagine and set up our future without oil, in order to avert the possibly catastrophic consequences of peak oil.

This approach of reappropriation of our communities while being conscious of peak oil and economic decline may be the best way to fight austerity.

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