Peak Suburbia
by Jim Kunstler
www.kunstler.com (June 25 2007)
I get lots of letters from people in various corners of the nation who are hysterically disturbed by the continuing spectacle of suburban development. But instead of joining in their hand-wringing, I reply by stating my serene conviction that we are at the end of the cycle - and by that I mean the grand meta-cycle of the suburban project as a whole. It's over. Whatever you see out there now is pretty much what we're going to be stuck with. The remaining things under construction are the last twitchings of a dying organism.
It is not an accident that the housing bubble coincided with the phenomenon of Peak Oil. First of all, the housing bubble should more properly be called the suburban bubble, because most of the activity came in the form of "greenfield" housing subdivisions, and included all the additional crap-o-la accessories required by them - strip malls, power centers, Outback steak houses, car washes, et cetera. The suburban expansion has been based entirely on cheap-and-abundant supplies of oil. Similarly, it was not an accident that the suburban project faltered briefly in the 1970s, when America's oil production entered its long decline, OPEC seized the moment, and oil prices shot up. Notice that the final suburban blowout occurred after 1990, when the North Sea and Prudhoe Bay oil strikes came into full production, disabling OPEC, and a world oil glut finally drove prices as low as ten dollars a barrel in 1999. That ushered in the climactic phase of suburbia, as represented by things like the standard 4000-square-foot Toll Brother's McMansion and the heyday of the super-gigantic SUV to go with it.
The American public has no idea how over all that is. The bottom is falling out under not only the housing market (as in houses up for sale) but on the whole apparatus for delivering future houses, and the car-oriented crap associated with it. The production home-builders, such as Toll Brothers, Hovanian, Pulte, et cetera are going down and they will not be coming back. There will be a great deal of wishing that they might come back, but they won't. Likewise, the commercial builders of all the various forms of suburban retail will be waiting to "turn the corner" But they will discover that the wall they have hit has no corner. It's just a wall. For anyone who wonders how much we do not need anymore retail space in America, have a look at this chart showing the comparative amount of retail square-footage allotted for citizens of each nation:
http://jameshowardkunstler.typepad.com/.shared/image.html?/photos/uncategorized/2007/06/25/mags_diary21_retail_graph_2.jpg
Those of you considering the purchase of more WalMart stock, take note.
Some years back, when those watching the oil scene began to coalesce in their recognition that a worldwide production peak was imminent and hugely significant, the concept developed that this peak would take the form of a "bumpy plateau", meaning that supply-and-demand would teeter in an uncomfortable relationship for a period of time as markets and economies adjusted to the new reality by oscillating from higher prices to "demand destruction" to recession to recovery to higher prices, and so forth. This was expected to go on for quite a while before the world really headed into a slow permanent decline.
The latest statistical work by Dallas geologist Jeffrey Brown over at The Oil Drum.com {1}, suggests that something else is happening, something that was not anticipated: an imminent oil export crisis. This Export Land Theory states that exporting nations will have far less oil available for export than was previously assumed under older models. {2} The theory states that export rates will drop by a far greater percentage than net production decline rates in any given exporting country. For example, The UK's portion of the North Sea oil fields may be showing a nine percent annual decline for the past couple of years. But it's export capacity has declined sixty percent. Something similar is in store for Saudi Arabia, Russia, Mexico, Venezuela - in short, the whole cast of characters in the export world. They are all producing less and they are all using more of their own oil, and have less to send elsewhere.
Brown's math suggests that world oil exports will drop by fifty percent within the next five years, certainly enough to trigger a systemic breakdown in market allocation, meaning serious supply shortages among the importing nations. That's us. We import two-thirds of all the oil we use.
The implication in all this is that the activities that have become "normal" for us during the post World War Two era will very shortly become untenable. An economy based on suburban expansion and incessant motoring is on the top of the list of supposedly "normal" activities that will not be able to continue. I would maintain that even if we had twenty years, no combination of bio-fuels and other alternatives would enable us to keep suburbia running. But this latest work indicates that we have much less time to adjust.
This new information is consistent with my view that we had better prepare to make other arrangements for living in this country, by which I mean specifically re-localizing, de-globalizing, with an emphasis on local agriculture wherever possible, the emergency restoration of passenger railroad service and related modes of public transit, the rebuilding of local commercial infrastructures, and a radical rethinking of how we inhabit the landscape under New Urbanist lines.
Perhaps the most imminent danger is that the financial markets, which have been driving our insane, hollowed-out economy, will soon recognize what's in store and implode, creating a crisis of capital that will leave us with no ability to make any emergency investments, such as would be required to rebuild the railroad system. The equity markets sure blinked last week when two hedge funds based on phony-baloney collateralized debt obligations tanked. The collateral underlying this load of hallucinated "wealth" is comprised of contracts made by the insolvent for suburban houses worth far less than the value stated on the contracts - with every indication that the real value will keep dropping.
In any case, those who keep wringing their hands over the bulldozers leveling the plots of prairie, or cornfield, or desert - those distressed folks can direct their anxiety elsewhere. Worry less whether one final strip mall will tilt up out in gloaming, and think harder about how you are going to feed yourself and your family in a couple of years when the stupendous motorized moloch of American life begins to sputter, and the Cheez Doodle shipments can no longer make it to your supermarket shelves, and all that is "normal" melts into air.
Links:
{1} http://www.theoildrum.com/
{2} http://www.theoildrum.com/node/2689#more
http://jameshowardkunstler.typepad.com/clusterfuck_nation/
Bill Totten http://www.ashisuto.co.jp/english/index.html
www.kunstler.com (June 25 2007)
I get lots of letters from people in various corners of the nation who are hysterically disturbed by the continuing spectacle of suburban development. But instead of joining in their hand-wringing, I reply by stating my serene conviction that we are at the end of the cycle - and by that I mean the grand meta-cycle of the suburban project as a whole. It's over. Whatever you see out there now is pretty much what we're going to be stuck with. The remaining things under construction are the last twitchings of a dying organism.
It is not an accident that the housing bubble coincided with the phenomenon of Peak Oil. First of all, the housing bubble should more properly be called the suburban bubble, because most of the activity came in the form of "greenfield" housing subdivisions, and included all the additional crap-o-la accessories required by them - strip malls, power centers, Outback steak houses, car washes, et cetera. The suburban expansion has been based entirely on cheap-and-abundant supplies of oil. Similarly, it was not an accident that the suburban project faltered briefly in the 1970s, when America's oil production entered its long decline, OPEC seized the moment, and oil prices shot up. Notice that the final suburban blowout occurred after 1990, when the North Sea and Prudhoe Bay oil strikes came into full production, disabling OPEC, and a world oil glut finally drove prices as low as ten dollars a barrel in 1999. That ushered in the climactic phase of suburbia, as represented by things like the standard 4000-square-foot Toll Brother's McMansion and the heyday of the super-gigantic SUV to go with it.
The American public has no idea how over all that is. The bottom is falling out under not only the housing market (as in houses up for sale) but on the whole apparatus for delivering future houses, and the car-oriented crap associated with it. The production home-builders, such as Toll Brothers, Hovanian, Pulte, et cetera are going down and they will not be coming back. There will be a great deal of wishing that they might come back, but they won't. Likewise, the commercial builders of all the various forms of suburban retail will be waiting to "turn the corner" But they will discover that the wall they have hit has no corner. It's just a wall. For anyone who wonders how much we do not need anymore retail space in America, have a look at this chart showing the comparative amount of retail square-footage allotted for citizens of each nation:
http://jameshowardkunstler.typepad.com/.shared/image.html?/photos/uncategorized/2007/06/25/mags_diary21_retail_graph_2.jpg
Those of you considering the purchase of more WalMart stock, take note.
Some years back, when those watching the oil scene began to coalesce in their recognition that a worldwide production peak was imminent and hugely significant, the concept developed that this peak would take the form of a "bumpy plateau", meaning that supply-and-demand would teeter in an uncomfortable relationship for a period of time as markets and economies adjusted to the new reality by oscillating from higher prices to "demand destruction" to recession to recovery to higher prices, and so forth. This was expected to go on for quite a while before the world really headed into a slow permanent decline.
The latest statistical work by Dallas geologist Jeffrey Brown over at The Oil Drum.com {1}, suggests that something else is happening, something that was not anticipated: an imminent oil export crisis. This Export Land Theory states that exporting nations will have far less oil available for export than was previously assumed under older models. {2} The theory states that export rates will drop by a far greater percentage than net production decline rates in any given exporting country. For example, The UK's portion of the North Sea oil fields may be showing a nine percent annual decline for the past couple of years. But it's export capacity has declined sixty percent. Something similar is in store for Saudi Arabia, Russia, Mexico, Venezuela - in short, the whole cast of characters in the export world. They are all producing less and they are all using more of their own oil, and have less to send elsewhere.
Brown's math suggests that world oil exports will drop by fifty percent within the next five years, certainly enough to trigger a systemic breakdown in market allocation, meaning serious supply shortages among the importing nations. That's us. We import two-thirds of all the oil we use.
The implication in all this is that the activities that have become "normal" for us during the post World War Two era will very shortly become untenable. An economy based on suburban expansion and incessant motoring is on the top of the list of supposedly "normal" activities that will not be able to continue. I would maintain that even if we had twenty years, no combination of bio-fuels and other alternatives would enable us to keep suburbia running. But this latest work indicates that we have much less time to adjust.
This new information is consistent with my view that we had better prepare to make other arrangements for living in this country, by which I mean specifically re-localizing, de-globalizing, with an emphasis on local agriculture wherever possible, the emergency restoration of passenger railroad service and related modes of public transit, the rebuilding of local commercial infrastructures, and a radical rethinking of how we inhabit the landscape under New Urbanist lines.
Perhaps the most imminent danger is that the financial markets, which have been driving our insane, hollowed-out economy, will soon recognize what's in store and implode, creating a crisis of capital that will leave us with no ability to make any emergency investments, such as would be required to rebuild the railroad system. The equity markets sure blinked last week when two hedge funds based on phony-baloney collateralized debt obligations tanked. The collateral underlying this load of hallucinated "wealth" is comprised of contracts made by the insolvent for suburban houses worth far less than the value stated on the contracts - with every indication that the real value will keep dropping.
In any case, those who keep wringing their hands over the bulldozers leveling the plots of prairie, or cornfield, or desert - those distressed folks can direct their anxiety elsewhere. Worry less whether one final strip mall will tilt up out in gloaming, and think harder about how you are going to feed yourself and your family in a couple of years when the stupendous motorized moloch of American life begins to sputter, and the Cheez Doodle shipments can no longer make it to your supermarket shelves, and all that is "normal" melts into air.
Links:
{1} http://www.theoildrum.com/
{2} http://www.theoildrum.com/node/2689#more
http://jameshowardkunstler.typepad.com/clusterfuck_nation/
Bill Totten http://www.ashisuto.co.jp/english/index.html
posted by Bill Totten at
9:55 AM
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