In 2009, the Obama administration granted BP a special exemption from a legal requirement that the oil company perform an environmental impact study (EIS) exploring the results of drilling in the Gulf of Mexico with its platform called Deepwater Horizon. According to the Washington Post, the Department of the Interior’s Minerals Management Service (MMS) gave BP a “categorical exclusion” so that it might promptly commence drilling with Deepwater Horizon, even though MMS knew that an EIS had not been completed. The MMS report claims that the ecological consequences of an oil spill could be ignored because such an event was “unlikely,” and besides, “no additional mitigation measures” would be needed in the event of a spill.* We now know that this was a horrendous mistake. Here, as in many other cases, the questions people ask are instrumental in creating the future they manifest.
This cause and effect relationship — between the questions they ask, and future they create — applies to contingency planning in all domains, and on all levels of potential damage. Said differently, successful contingency planning is critically dependent on creating realistic scenarios about what the future might look like. The relationship that many businesses, non-profits, and government agencies have today with Peak Oil is much like the relationship that the MMS had last year with the possibility of a massive oil spill in the Gulf of Mexico. Many organizations are unquestionably aware of very serious oil related problems looming on the horizon, but they have not yet integrated realistic scenarios into their internal contingency planning efforts. As a result, they remain dangerously exposed to very serious losses — including going out of business.
These organizations are, by default, waiting to see what type of losses will ensue, waiting to see how painful and expensive these losses will become. Perhaps then they will be compelled to take action to do something about Peak Oil? As the massive oil spill in the Gulf of Mexico so clearly shows, this is a very dangerous and ill-advised strategy. Instead of waiting to see what will happen next, we should all be asking ourselves: “How horrendous, how destructive, and how ultimately-suicidal does the evidence have to be before we all agree that the age of cheap oil is over?”
It’s one thing to be preparing contingency plans for a future scenario that has a very remote possibility of happening, perhaps an airplane crashing into the headquarters building of an organization in question. It’s another thing entirely to plan for something big that we know definitively will happen, and will happen within the next five to ten years. Peak Oil is a certainty — the only open question from a probabilistic standpoint is: “When, over the next few years, will serious adverse impacts will be experienced?” Many organizations are driving completely blind because they haven’t seriously analyzed these things, so management at these organizations now has no idea how serious the adverse impacts will be. These organizations are in effect guaranteeing that the problems will be a whole lot worse than they need to be, because they haven’t yet gotten their act together to transition to other energy sources, to prepare contingency plans, and to take similar steps enabling them to weather the metaphorical storms ahead.
Likewise, it’s generally acceptable (from a standard of due care standpoint) if an organization doesn’t do contingency planning for relatively-low-negative-impact scenarios, such as an isolated incident of violence in the workplace. It’s an entirely different matter if an organization fails to do planning for a high-negative-impact scenario, such as a massive oil spill that threatens to decimate the economy in a major portion of the country, and that threatens to make thousands of animal species extinct. Similar to the massive oil spill in the Gulf of Mexico, Peak Oil involves many a high-negative-impact scenarios that absolutely must be anticipated and planned for. These high-negative-impact scenarios include massive unemployment because the petroleum-dependent system on which we depend can no longer be maintained in the wake of petroleum wars, embargos, shortages, rationing, terrorism, and high prices. Other Peak Oil related scenarios include bankruptcy of critical suppliers and major customers, because they can no longer profitably participate in an energy infrastructure based on low-cost petroleum fuels. Airlines and long-distance trucking firms are now acting as canaries in the mine — their recent mergers and bankruptcies have been caused by the prominent position that petroleum-based fuels play in their cost structures.
In an age where so many decisions are dictated by the numbers, it is surprising that so many organizations still fail to do Peak Oil related contingency planning. In fact, it is illogical NOT to do this type of planning, and the numbers prove this position. Many organizations do contingency planning for low-negative-impact events like an isolated case of workplace violence. And many organizations do contingency planning for very-low-probability events like an airplane crashing into a building. But these same organizations are often at the same time failing to plan for the high-negative-impact, and virtually certain, impacts of Peak Oil. For the detailed mathematical calculations substantiating this analysis, see my blog post on this topic (http://kickingthegasoline.com/contingency-planning/the-irrationality-of-…).
The construction of future scenarios is dependent on asking the right questions. The questions we ask will inform the scenarios we construct, and the extent to which they are realistic or not. Many of us have been asking old-fashioned and ill-informed questions, and as a result, the contingency planning scenarios that we have created are most unlikely to come to pass. For example, asking the same questions about deep water oil drilling that one asks about shallow water drilling, that approach has been shown to be ill-advised, dangerous, and obsolete.
Among the old-fashioned and ill-informed questions that we have been asking is this favorite of politicians: “How can we sustain economic growth and expansion?” Efforts to sustain economic growth and expansion with fossil fuels will only create more hardship, more damage to the environment, and more straining to keep things going when we can no longer do that. Fossil fuel production, in fact production of the vast majority of non-renewable natural resources, is peaking if it is not already on the down-slope (its status depends on the resource you are talking about). This means that fossil fuels and non-renewable natural resources will be much more expensive in the future, that is if they are available at all. Efforts to keep our current petroleum-dependent economy going with these non-renewable resources will only cause more damage and pain. The horrendous spill of oil in the Gulf of Mexico is just one of many examples showing that we cannot keep going with this same approach. A much more empowering question is instead: “How can we meet basic human needs, and how can we continue our basic business activities, and how can we reduce our adverse impact on the environment (climate change for example), when there is much less energy available, and when the energy that is available will be commanding a much higher price?”
Another ill-informed and old-fashioned question that many people are still asking is: “In the wake of energy shortages and high prices, how can we maintain the globalized transportation and distribution system that we currently employ?” Continuing to ask this question will likewise only make life painful, exceedingly difficult, and ultimately impossible to sustain. The upcoming high energy prices, and intermittent shortages of energy, mean that the production, transportation and consumption of goods will be done, in the near future, on a much more localized basis. It will soon be neither economically viable, nor ecologically sustainable, to continue our current globalized transportation and distribution system. A much more empowering question to instead be asking is: “How can we produce essential goods and services locally so we don’t need to rely on the fossil-fuel-dependent globalized transportation and distribution systems?”
Yet another ill-informed and old-fashioned question many of us have been asking is: “How are we going to replace all the fossil fuel energy we currently use with renewable energy systems?” The fact is that fossil fuels, particularly petroleum, are incredibly dense and packed full of energy, and there is no good renewable energy system that we know of which can fully replace them. In other words, we can’t help but have our standard of living adversely impacted in a big way by declining energy availability and escalating energy prices. We must instead be talking about energy descent, or using much less energy than we have been using. A much more empowering and realistic question to be asking therefore is: “Given that we will have much less energy to consume in the years ahead, and given that what energy we do consume will probably be much more expensive, how can we retool local businesses so that they are ecologically sustainable, and resilient in the wake of the many changes that they will be going through?”
As it turns out, there are a significant number of old-fashioned and ill-advised questions that we have been asking, questions that are dangerously distorting our anticipated future scenarios. It is only through realistic questions that that we can create credible scenarios, and through these realistic scenarios, then go on to create truly responsive contingency plans. Businesses, non-profits, and government agencies need to seriously scrutinize the questions they have been asking, need to seriously question the validity of the assumptions they have been making, and need to deeply understand that the future will not be just more “business as usual.” With appreciation to Rob Hopkins, the founder of the Transition Towns movement, this author signs off with a request to all businesses, non-profits, and government agencies: please start asking the right questions.
—-
Charles Cresson Wood is a technology risk management consultant with Post-Petroleum Transportation, in Mendocino, California. He is also the author of the book entitled Kicking The Gasoline & Petro-Diesel Habit: A Business Manager’s Blueprint For Action (see www.kickingthegasoline.com).
* For purposes of this discussion, let’s ignore reports that government regulators falsified safety inspection reports, were awarded bonuses for rushing oil-drilling permits, and approved the final permit for BP’s catastrophic drilling operation in fewer than 10 minutes.
