Growth alone is not the answer

Oil money

If we know anything about what makes our economy tick we know this: Feed it cheap oil and it runs like a charm. But keep it rationed to expensive fuel, and growth stops dead.

Every major global recession in the past four decades has oil’s fingerprints all over it. For all of our efforts to wean ourselves off the fuel, oil remains the world economy’s most important source of energy (and, as a transit fuel, almost its only source of energy).

In the past, oil prices spiked to growth-killing levels when key producers shut off supply. Today we see these prices with the spigot wide open.

If you are wondering why, just look at where the fuel supply is coming from. Consider the Alberta oil sands, for example.

Costly goo

The oil sands’ real nemesis isn’t the so-called “eco-terrorists” that worry governments, but the shape of the cost curves that have plagued expanded production.

Why do you think Calgary-based Nexen Inc. is so eager to sell to China National Offshore Oil Corp.? While state-owned CNOOC thinks it is buying a strategic reserve, what it is really buying are huge cost overruns and production delays.

What’s true of Nexen’s bitumen resource is true for the Orinoco heavy oil belt in Venezuela, shale oil, or deepwater oil. The world will never run out of oil, but as we increasingly depend on these unconventional sources for our fuel supply, we are rapidly running out of the oil our economies can afford to burn.

The very prices that bring these fuels out of the ground stop our economy in its tracks. No amount of government pump priming or printing money is going to suddenly make that fuel more affordable and bring back growth.

By the metrics of my profession, oil’s collar on growth will leave us all poorer. Almost every measurement of economic welfare is tied to growth. But as every day brings new evidence of how our economic activity is distorting our environment and climate as never before, surely the measure of our well-being is more than simply the sum of what we consume.

As economies gear down, we may just find that a smaller human footprint, be it carbon or otherwise, may be just what our world really needs.

–Jeff Rubin, Transition Voice

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Comments

  1. says

    I think you mean “Growth is not the answer.” Economic growth has no place anymore in the tool kit of metrics for living a satisfying life. I’m sure you’ll reply that people in the slums of Mumbai need economic growth. My reply would be, “No, they need economic sufficiency.” We have got to get over our infatuation with growth, and that begins with the vocabulary and messaging we use (the Kool Aid we drink).

    Dave Gardner
    Director of the documentary
    GrowthBusters: Hooked on Growth

    • Alan Greenland says

      Dave, you make a good point. But I also think Jeff’s argument is correct, and useful. My experience talking with people is that some are open to the “growth is bad” argument, but that many — so ingrained in the conventional wisdom — are turned off by that line of reasoning. So the “growth is impossible” argument is more effective. Once people let go of the idea that growth will come to the rescue and set everything back to “normal”, they can open up to the concept that growth has actually done a lot of damage and isn’t necessarily a good thing anyway. I think your film (which I’ve shown at my UU church) does a good job of illustrating that truth, but often in conversation with the uninitiated I get more traction with the idea that growth is not going to be physically possible in the future, so we need a new plan.

      Thanks to both of you for the great work you’re doing!

      Alan Greenland
      Palatine, IL

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