Common wisdom holds that if oil is ever to become really scarce, fuel prices would reach astronomical levels and long lines would form in front of gas stations. Reaching peak net energy from oil, however, could turn this logic on its head: we might be running out of cars sooner than oil itself — and not because of the roaring success of electrification.
Long time readers need not to be introduced to the idea of our net energy predicament. After centuries of plundering the planet for resources, the extraction of raw materials and fossil fuels from easy to reach deposits slowly came to an end. As new (unconventional) wells and mines — aimed at replacing lost production from rich sources — keep demanding more and more energy, however, less and less will remain for other uses in the economy. As a result we will inevitably hit an inflection point — acting as an invisible ceiling to our global energy and resource production — beyond which growth turns into contraction.
With peak oil being finally admitted as true after decades of denial, and having a solid understanding of the role it plays in our economy, we can safely assert a thing or two. First, it really does not matter if we plan to replace oil and gas with nuclear or “renewables”. After decades of hand waving all of these “alternatives” remained hopelessly reliant on fossil fuels in every single step of their lifecycle. Mining, transportation, pouring concrete, building infrastructure — among many other things — are still heavily dependent on the availability of cheap and abundant diesel fuel, making all the heavy lifting and extraction of resources possible (1). Consequently, less oil will mean less solar panels, less wind turbines, less batteries, less uranium fuel rods, less niobium (needed to build fusion reactors), less thorium, and ultimately: less hopium.
This geology-induced (and rapidly growing) energy scarcity can be expected to provide an additional boost to the already ongoing economic contraction experienced throughout the most well-to-do regions of the world. Returning to the main topic of this article, the question poses itself: how will the car industry — an especially resource and energy intensive branch of the global manufacturing ecosystem — respond to this net energy crunch then? Ask any mainstream economist, and you would get the same instant reply. ‘The current (“cyclical”, “transitory”, “geopolitical” — make your pick) economic downturn will force auto makers to “temporarily” reduce investments (practically halting new car development projects), and to produce less vehicles in response to lower market demand.’ Sure, but what will these “experts’ say when the realization, that the fossil fuel bonanza is over, hits? Now, this is where things take a rather interesting turn.
Motor vehicles are not the same as twenty or thirty years ago. I’m not talking about those bells and whistles like sharing car keys with your smartphone or those ubiquitous backseat baby radars. I’m talking about more and more cheap plastic and low-end metal components under the hood… Not to mention the proliferation of those electronic control units, sensors and various emission and fuel consumption control devices — the failure of which could lead to an expensive visit to the nearest mechanic. Who, by the way, would be forced to replace entire mechanical units, as he could no longer ‘repair’ anything in the traditional sense of the word (i.e. to restore something damaged, faulty, or worn to a good condition).
Cramming ever smaller cc turbocharged (and overstretched) engines into ever heavier cars did not quite help to improve the situation either… So while it was not unusual to see vehicles running multiple hundreds of thousands of miles with just regular maintenance and cheap repairs, today’s cars will unlikely to see their two hundred thousandth mile. Not only will their components fail one after the other, but replacing those without a sophisticated supply chain of spare parts could also become nigh on impossible.
You see, car manufacturers — and in many cases their tier one suppliers, too — are nothing but assembly plants at the very end of a six continent supply chain involving tens of thousands of smaller suppliers. A shortage at a highly specialized component supplier (or set of suppliers) can choke the industry for weeks, months if not years: just think about the recent chip misery. With higher complexity comes even more choke-points and potential failure modes, making today’s vehicles a nightmare to maintain in the long run.
High complexity also means high cost, making new models unaffordable to most people. Is it any wonder then that the average age of vehicles on the road just keeps growing? Viewed from a net energy perspective, it’s not terribly hard to figure out what’s going on. Rising net energy scarcity puts a squeeze on energy intensive jobs, leading to lay-offs and plant closures. This is especially true in the automotive industry with German auto brands leading the charge, due to higher logistics, energy and labor costs. Well, energy is the economy, as the saying goes. No cheap and abundant energy, no economy (2).
Faced with this scarcity predicament (and a risk of losing the profitability of their investments) elites, quite predictably, doubled down on suppressing wages further and cutting benefits to workers, while governments struggle with ever growing deficits. At the same time food and household energy inflation (both courtesy of the increasing energy cost of fossil fuels) keeps eating away more and more of people’s hard earned wages and profits realized by small businesses, leaving less and less for non-essentials, such as buying a new car, van or truck.
What happens a few years down the line is not particularly hard to figure out. The rift between the well-to-do urbanite elite working in the banking, IT, market research, think tank, university (etc.) sector, and an ever growing precariat struggling to make ends meet will grow into a chasm. Most people will have no other choice than to cling onto their old (easier to repair and maintain) cars, and only the lucky few will be able to buy new ones. As a result, and as the old veterans give up the ghost one after the other, there will be much less second hand vehicles on the market, driving the price of even a ten-year-old car out of range for most folks. Now add in the increased maintenance and repair costs of automobiles made nowadays (becoming second hand in a few years time), and you start to see how all cars — new and old alike — will become totally unaffordable to large masses of people.
Cars once again will be a luxury item: owned and used by the rich, while regular folks will be forced to reinvent their lives.
Electric vehicles are no exception to this process: quite to the contrary. Replacing worn out batteries already costs a fortune, and will continue to do so in a fuel and resource scarce future where the mining and processing of battery metals is still expected to be done by ever dwindling supplies of coal oil and gas. It is thus not terribly risky to predict how the EV boom will eventually turn into a bust — with or without massive government subsidies. (And this is not to mention the myriad of other “problems” like a lack of charging points and grid capacity, both of which would require burning tons of fossil fuels to build and provide.)
Electrification — much less hydrogen — will prove to be no get out of jail free card.
Becoming unable to buy and maintain a car, many people will also become unable to maintain their commuter lifestyle. They will also face the risk of joining the ranks of the homeless, as not all of them will be able to land a cushy home office job in a tanking economy. Even though oil production can be expected to start dropping in accelerating fashion (starting around 2030), I do not expect exorbitant prices at the pump or five-mile-long queues… Yes, fuel will be relatively expensive (compered to stagnating wages) but those who could afford a car will most certainly will be able to fill it up for many years to come. A net energy squeeze will thus look much like peak demand induced by a massive economic downturn, and will make peak oil look like a joke. When in fact, the two will come hand-in-hand. And this is where our — so far rather gloomy — analysis takes an unexpected turn.
The scenario I outlined above deliberately missed the point by leaving out the role of adaption. While it’s true that large and heavy, individually owned vehicles (and their manufacturers) are slowly going the way of the Dodo, ultra-small, ultra-light vehicles are not. Just think about it: how efficient it is to move an 80kg (or 176 pound) person in a one and a half ton vehicle? The monsters most people drive today not only take a ton of resources and energy to make, but also burn untold gallons of fuel (or kWs of electricity) to move around.
Big cars happened because they could, and not because there was a huge demand for them.
I mean, there is demand for a lot of things, like traveling deep into space, but since neither the energy, nor the resources are available to do that, it simply does not happen. As soon as the penny drops that this energy crisis is here to stay, auto-makers will come out with smaller and cheaper to maintain automobiles (in both gasoline and electric versions). Many Chinese manufacturers are already well ahead of this curve producing tiny two-person cars or even miniature utility vehicles, taking up much less resources and utilizing a range of “primitive” but time-tested and dirt-cheap technologies. It’s a different question, of course, whether renown car makers can swallow their pride and come out with tiny boxes on wheels. (Or how about being spotted in one…?)
Another, even more low-cost / low-tech mode of transport to revert to in a world of much less fossil fuel energy is the plain old bicycle. Cheap, easy to maintain (at least the older models) and requires no fuel to run. And as for carrying stuff around just take a look at cargo-bikes — which is already a big thing in Europe, especially in the Netherlands. By fitting an electric motor and a small battery pack on them, these clever inventions can be cheaply upgraded into a veritable work-mule, able to carry a hundred sixty pounds of just about anything.
There is a caveat though. While reverting to low-tech, small, low-energy vehicles could solve the gasoline question, it can and will not be an answer to an increasing scarcity of diesel fuel (3). There is no way you can operate a copper mine on bikes or workhorses, the amount of rock needed to be hauled is just enormous. (The same goes to mining coal and iron ore, not to mention growing and harvesting crops.) So, while we could adapt to a lack of gas by giving up (a lot of) our conveniences and the distance traveled, we will nonetheless face shortages of all kinds of goods requiring long distance transport or a lot of fuel to make.
The average citizen will thus not only earn and travel less, but also spend less on goods and services, expending most of their salary on food, water and electricity. This trend will by necessity result in more local economies, where food is grown much closer to home, but also requiring more manual labor. There will be much less cars on the roads, smart watches on hands, and TVs at home. On the other hand, as infrastructure slowly breaks down due to a lack of maintenance, there will be more and more low-tech, low-energy solutions to everyday problems.
If you live in the global North and want to have a glimpse of the future, just take a look at how folks live a couple of hundred miles south from your country. It’s not only a lot warmer there, but people are already repurposing and reusing old items in more ways than anyone in the “developed world” could enumerate. They scavenge scrapyards for still operating water pumps and generators — making home made irrigation systems and turning bonnets into ploughs — giving these automobile parts a second life no car salesmen ever imagined. To quote American fiction author William Gibson:
“The future is already here, it’s just not evenly distributed.”
Until next time,
B
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Notes:
(1) This trend is made all the worse by a similar depletion process affecting rich metal ore deposits; translating into higher and higher fuel demand to keep copper, aluminum, and a range of other essential metal’s production up to a current level. Note how this is a classic double whammy: where not only we would need more energy to keep up the flow of essential liquid fuels like gasoline and diesel, but also to keep mining all those fast depleting other minerals needed to build “alternative” energy sources.
(2) A chronic shortage of diesel fuel — still prevalent in Europe — naturally results in higher logistics cost. A lack of cheap pipeline gas (ostensibly “replaced” with LNG) leads to higher electricity prices, despite all the handwaving how “renewables” saved the day. And finally, labor costs have increased in order to compensate workers for the sudden rise in living costs; all due to the same reasons stated above. Of course, this is all due to a miserable policy failure and an act of international sabotage, but serves nonetheless as a prime example to what happens when the energy cost of energy doubles overnight. Super-chilling and shipping natural gas across an ocean takes energy, just as shipping oil around the Eurasian landmass to refine it in India then burn it in Europe — instead of opting for a straightforward (and much shorter) pipeline delivery.
(3) You see our wee little problem with oil is that it contains a more or less fixed ratio of components (naphtha, gasoline, diesel fuel, heavy oil, lubricants etc.). Converting lighter products such as gasoline into heavier stuff, such as diesel fuel, takes an enormous amount of energy to do, offering no solution to our net energy predicament. This is why a car affordability crisis could all too easily prevent a gasoline price hike, while offering not a single day of reprieve to the growing diesel fuel crisis.
