The International Energy Agency (IEA) is the intergovernmental body responsible for monitoring advising and reporting to governments on issues of oil supply and demand pricing and related policy. Sort of like the “world bank” of oil their opinions are generally held as gospel by governments around the world. Also like the World Bank their opinions are often skewed by protection of vested interests and the momentum of tradition.
In practical terms this means that if the IEA and it’s “clients” will benefit from telling you that all is “well and good” on the energy front then that’s what they will tell you. Or if new data is emerging that the IEA has not had to deal with in the past they will deny its reality until it becomes impossible to ignore through force of events.
That’s why Monday’s headlines about the IEA had me looking for the joker behind the curtain. The stunner in the Financial Post read “IEA sees peak oil looming.”
While a small but dedicated group of economics geeks like yours truly were sounding the alarm over the past seven years or so about the impending consequences of peak oil the IEA and other economic “exspurts” were pumping big dollars into the the PR machines to discredit the “peak oil nuts” and ensure everyone that everything was just fine thank-you-very-much.
That is until this past Monday.
On Monday not only did the gods at IEA admit peak oil “exists” but they stated that the peak of “conventional crude” extraction was in 2006 (it was actually 2005 but how would I know being merely human). They then went on to make a number of sensational predictions (mostly inaccurate in my extremely humble opinion) about future oil prices and their impending consequences.
What we are facing is a full-scale global shift in the way we do economics. Resource limits particularly energy and more specifically oil is the new law.
Watch for the price of oil to continue to bounce up and down for a while as the developed world keeps whacking its head on the “economic growth” ceiling. Economic stagnation will keep the price of oil in check for a bit longer until the rapidly developing Asian nations strain demand beyond the breaking point. Then we will see the price of oil separate from the trend in the stock market as oil rises while western markets flounder under the weight of inflation.
The Canadian dollar will track the price of oil as it increasingly becomes a petrocurrency which will spell more trouble for Canadian exports. This will all transpire within the next 5-7 years and then all bets are off.
Predictions just produce hot air and anxiety without some practical advice and mine is this: Stop looking to distant governments and abstract economics for your wellbeing. The opportunities are right outside your door in the form of localized mutual provision. In English that means develop your skills and trade them within your community. Buy local source local employ local train local craft local eat local. Walk more drive less.
Re-discover the soul enriching value of creative manual labour because this is where our opportunity lies.
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