The Hindu Business Line : Fuelling demand, foretelling ecological disaster

THE global economy, increasingly fuelled by cheap non-renewable energy, has grown six fold in the past 50 years. In developed countries, about 85 per cent of the energy consumed comes from non-renewable fossil fuel — oil, natural gas, and coal — and it is about 60 per cent for developing countries.

Oil has become the lifeblood of modern industrial civilisation. At present, the world consumes 82 million barrels of oil a day, the US alone accounting for 25 per cent of this. China has emerged the second largest consumer at 6.6 million barrels a day, accounting for 8 per cent of the world's total.

Though the unprecedented scaling up of energy-dependent human enterprises have increased our material affluence and added to our comfort, our vulnerability to myriads of environmental risks has increased tremendously as well. "Nothing less is at stake than the fate of human civilisation," says Prof Paul R. Ehrlich of Stanford University.

According to the recent Oil Market Report of the International Energy Agency (IEA), output has started falling in 33 of the 48 major producing countries, including six of the 11 members of the Organisation of the Petroleum Exporting Countries. An increasing insatiable global demand for oil, in the world of finite oil endowment, the end of abundant, cheap oil is already insight. This stark reality should enter into development policy equations. Comprehending the cascading effects of an anticipated global oil peak in extraction and the resulting price shock on our modern lifestyle, which we have taken for granted, is difficult.

Humanity has been on a collision course with the resource constraints of the planet Earth. Three decades ago, Dennis Meadows' report for the Club of Rome, , made us aware of the limited resources that Earth's ecosystem can provide to the development of the global economy. The predictions of this landmark report did not materialise exactly as calculated.

Nevertheless, the pivotal concept of limits to growth in a closed Earth' system, with finite natural capital and complex life supporting services, remains unchallenged in the scientific community. Our failure to fathom the reality of limits to economic growth has created myriads of elusive problems of global warming, soil erosion, deforestation, depletion of fossil fuels and loss of bio-diversity, among other things, under the illusion of technological and economic progress.

Astrophysicist Brian Swimme says that "we are making macrophase changes to the life system of the planet with microphase wisdom." We can no longer ignore the indisputable fact that in the name of efficiency, technical superiority and the so-called Pareto-optimum, we have been increasingly exhausting the finite natural resources. Bluntly put, the tunnel-vision concept of economic progress has been achieved at the cost of the planet Earth's ecosystem. We have been moving along a slippery and unsustainable development path.

"We are fast approaching many of the Earth's limits. Current economic practices that damage the environment cannot continue. Our massive tampering could trigger unpredictable collapse of critical biological systems that are only partly understood. A great change in our stewardship of the Earth and the life on it is required if vast human misery is to be avoided and our global home on this planet is not to be irretrievably mutilated," warned some 1,600 renowned scientists in 1992. The recent catastrophic Hurricane Katrina that struck Southern US is another wake-up call for decision makers in the corridors of power around the globe.

It is high time we start considering the planet Earth as scared and take care of its life supporting systems. After all, our survivability on this planet ultimately hinges on its life supporting systems. Humanity can survive without cars. We can survive without computers. We can survive without myriads of modern gadgets. But we cannot survive without the basic life-supporting services of the planet Earth's ecosystems.

"If the world continues on its current course — massively altering the natural world and further increasing fossil fuel consumption — future generations may face a chain of disasters that make Katrina-scale catastrophes a common feature of life in the 21st century," says the World watch President, Mr Christopher Flavin.

The early results of global warming — 90 degree Fahrenheit water temperatures in the Gulf and rising sea levels — may have exacerbated the destructive power of the Hurricane Katrina, according to many scientists.

Now the Katrina crisis has added fuel to the oil crisis associated with the peaking of world oil production. We are witnessing oil prices going through the roof. Perhaps, we are up against the biggest `oil shock' since the 1970s. Since oil is directly or indirectly a part of everything, rising prices in this sector will contribute to higher prices for everything else as well.

Surprisingly, a recent study titled Peaking of World Oil Production: Impacts, Mitigation, and Risk Management (February 2005), commissioned by the US Department of Energy has received little attention. The authors of this report, Robert Hirsch and his colleagues, after a thorough analysis of the global oil situation, have reached some alarming conclusions about the threat that the Peak Oil poses not only to the US but also to industrial civilisation itself.

"The peaking of world oil production presents the US and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation option exists on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking," according to Hirsch's report.

The study forecasts "protracted economic hardship" for the US and the rest of the world. It is a global problem of unprecedented proportions that deserves immediate, serious attention. In view of the impending peak oil crisis, energy policy should be on the top of the policy agendas of all the countries.

The increasing demand for oil must be curtailed. Top priority must be given for achieving self-sufficiency in energy. We must develop ecologically sustainable economies. The time has arrived to give serious consideration to the philosophy of `sufficiency economy'. The so-called invisible hand of the market economy, by overshadowing every other reality, has created myriads of invisible damages. Are economists ready to rediscover the Gandhian Economics to address the impending interconnected economic, social, and ecological crisis of our time?

(The author is Emeritus Professor of Economics University of Prince Edward Island Charlottetown, P.E.I. Canada.)

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