Monday, September 27, 2010

Why does Peak Oil matter to Yellow Pages?

I work in the Yellow Pages industry, in the Information Systems area - and I am a firm believer in the predicament of Peak Oil. I call it a predicament, rather than a problem, in that while problems have solutions, there are no solutions for a predicament – and there are no easy solutions for peak oil.

Oil contains millions of years of fossilized sunlight. The amount of energy we can extract from oil is far greater than any other resource we will have access to in the foreseeable future. The population of the earth currently uses approximately one cubic mile of oil a year. The United States population consumes one third of that astounding amount. To replace oil we would need to build more than fifty nuclear power plants each year for fifty years, or thirty three thousand wind turbines a year for the same period, or a hundred million solar panels a year until my teenagers retire, assuming there still is retirement when they reach that age.

That level of commitment to the future of society might have worked a quarter of a century ago. The oil shocks of the 70’s started us down a road to sustainability. We abandoned that road in the 80’s; without realizing it, we chose to sell our children’s future for a quarter of a century of reckless partying. We paid for that party by a system of trade that we call “globalization” - but historians, looking at similar societies in the past, call it a tribute empire.

Often we hear from Peak Oil skeptics that we are not running out of oil. This, at best, shows a lack of understanding of the principles of Hubbert's Peak. While it is true we are not running out of oil, peak oil is about reaching the point of maximum extraction and the inevitable increase in cost as the oil that remains is more difficult to reach. Peak oil is that top of the bell curve, where the ride down the other side begins.

The top of the curve is an interesting time to live. One only has to look at countries that have peaked in their production. Take Mexico for example, the Cantarell oil field peaked at 2.1 million barrels a day in 2004 and has been declining ever since. By 2009 this field only produced 772 thousand barrels a day, down two thirds in only half a decade. The Mexican government lost the revenue they were collecting on that oil and like all politicians, they tended to think the money would coming in forever and budgeted accordingly. How has that impacted their society, infrastructure and ability for the government to project its power throughout the country? By the latter, I mean law and order, which is always a good indicator of a government’s ability to have a meaningful influence on society.

While extraction rates decline in countries that were once net exporters, demand is increasing in other societies. Driven by the expectations of their population, who aspire to a future that looks like our present, they consume more and more energy. China and India are increasing their imports at an alarming rate, considering production of conventional crude has not increased since 2005 and is unlikely to increase again. A global chess game is developing as countries and power blocks maneuver to ensure their slice of the ever-decreasing pie.

Currently we make up the difference in what the oil importing markets want and what is pumped out of the ground with non-conventional sources. Tar sands, which use large amounts of energy and even more fresh water, manage to convert a sticky mess into something resembling oil. Even though this is highly inefficient, it is touted as the current solution. However, it hides the fact that millions of barrels of oil are used to power the extraction process. In effect, we double report the oil available since the oil and its derivatives assigned to extract oil out of tar sands is no longer available to power the rest of our 21st century economy. The same goes for biofuels, where petrochemical-dependent infrastructure is now used to grow crops for use as fuel for vehicles instead of food as fuel for humans.

Nuclear power faces depletion of easily extractable radioactive materials. Coal is not only environmentally damaging but is also well over the peak of the better quality coal. Having grown up in a coal mining village, I would have been very upset if what is currently being shipped out of the Appalachians to coal stations was delivered to my door for us to burn for our domestic hot water. Anthracite supplies are close to exhausted. Much of what we have left in the US is brown coal, hardly a net energy producer when all aspects of the process are taken into account. Natural Gas, often touted as a another alternative to oil will last maybe a decade or two at present consumption levels. While it can be processed into oil it is hardly efficient. Germany in WWII relied heavily on coal to liquid technologies and it didn’t work out to well for them.

Many potential solutions have been suggested. Most are sincere and the only flaw is in an understanding of the scope of the challenge that that Peak Oil presents us. Others are not much better than waiting for aliens to land and give us some new technology. A more practical solution is to develop coping mechanisms that will allow us to navigate each step down. In the case of Peak Oil, the predicament will be over when society exists on whatever energy sources are still available to us.

At the center of a society that faces these challenges is the Yellow Pages industry. Advertising touches nearly all aspects of commerce, business, and social interaction. Yellow Pages is undergoing its own evolution in the face of new technologies, in many ways in the opposite direction to that which Peak oil will lead.

As Yellow Pages goes digital, evolving into the wider concept of Local Search, the infrastructure required to support those Local Search platforms will require greater and greater amounts of energy. Local Search is the term given to the use of the internet to find geographically relevant information. Often tied to GPS, today it is beginning to become a key component in social networking. Check-in sites that allow a user to divulge their location will give rise to very specifically-targeted advertising. Local Search drives Google maps and many products you can download to your tablet or smart phone.

As with all systems that rely on modern technology, Local Search uses a lot of energy. That energy is used to power the cell phone transmitters and charge up your mobile phone while you sleep. It is used to build the transmission towers and every part of the infrastructure it depends upon. Energy went into the construction of the factories that made that smart phone. Energy for shipping of raw materials into the manufacturing countries. Energy to ship the finished product to the consuming economies of the West.

The arrival of Peak Oil impacts the economy in many ways. As energy costs rise, the economies of scale gained from centralizing production will be overwhelmed by rising energy costs. Decentralized, more locally based business will have a strong competitive advantage. Yellow Pages, printing a good, old fashioned book, will outlive their on-line only competitors. When consumers have to think about the cost of firing up the PC or the rising cost of digital infrastructure makes mobile phones luxury items, the Yellow Pages book will still be on the coffee table.

Yellow Pages Publishers, already part of the local communities, will be in a position to watch and influence that transition in more ways than one would otherwise think. In fact, they are influencing business in sustainable directions even today. Recently a number of Yellow Pages and even some online Local Search products have introduced recycling guides. By increasing awareness of recycling options in the community, they have increased the supply of materials people want recycled. This is driving growth in an industry that will be vital in a future when the cost to recycle materials is lower than that of producing them new. Best of all, this recycling information is delivered free to almost every household in the United States.

The same type of guide could be produced to encourage more reuse within society. As frugality becomes chic, we may see the development of guide sections that appeal to that emerging demographic. Advice on buying from second hand shops, flea markets, or concession malls. Where to go to look for product recall information. What not to buy second hand. Such a guide could offer advice from charity shops on what to bring in at different times of the year. Filler (adverts that abound in Yellow Pages and provide useful information and advice free of charge) containing public information on tax benefits of donating can help encourage reuse. The easy availability of this type of information could drive growth in the raw material – in this case people giving or selling their unwanted goods rather than simply throwing them in the bin.

Yellow Pages already publish many millions of community pages each year, providing useful local information. The printed book does not require 110 volts coming out of the wall to plug in a computer - or the cell phone tower nearby to get a signal on the smartphone.

As energy availability declines, opportunities will arise and markets will change. Yellow Pages is not only in a position to leverage its strengths in a time of change, but also to contribute to the communities they serve.

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