The Economic Impact of Peak Oil. Where do we begin?

Throughout the last few months of my research into the implications of an energy crisis on Higher Education, one of my main weaknesses was knowing where to start when considering the impact that a Peak Oil energy crisis would have on our economy and therefore on the economic input and output of the HE sector. When considering an energy crisis scenario in the context of Higher Education, it seems to me that we can broadly divide the impacts into 1) Economic; and 2) Infrastructural. By this, I mean that we should be asking ourselves questions that relate to how we operate in an economy with significantly declining GDP and how we operate under circumstances where our energy infrastructure itself declines  (both transport and coal and gas dependent electricity are, in a sense, underwritten by oil production).1 Simply put, what happens to universities when there is a lot less money in the economy and energy in the form of electricity and petrol is rationed in one way or another? This was my original question and, I think, still remains valid.

I think that Educational Technologists should be thinking hard about the second part of the question, which implies that the provision of educational technology will be disrupted for decades. What is HE’s educational provision under a scenario of disrupted ICT?

The first part of the question should be of wider interest to people working in the HE sector (in fact, people in all parts of society, but this is where we work so let’s concentrate on HE). There has been some useful research done on the possible economic impact of Peak Oil. It cannot be conclusive, but it does provide us with the basis for our scenario planning. I would recommend these two recent papers which examine the likely short-term (i.e. 20 yrs) economic and social consequences of Peak Oil.

Hirsch, Robert L., 2008. “Mitigation of maximum world oil production: Shortage scenarios,” Energy Policy, Volume 36, Issue 2, Pages 881-889

Jörg Friedrichs, 2010. “Global energy crunch: How different parts of the world would react to a peak oil scenario,” Energy Policy, Volume 38, Issue 8, Pages 4562-4569

In summary, Hirsch’s paper shows that we can work on the assumption that global GDP will decline at about the same rate as global oil production, which is anticipated to be around %2-5/yr. The minority of oil exporting countries will fare better than the greater number of oil importing countries. Friedrichs’ paper, based on an analysis of historical examples, suggests that this will result in North America resorting to greater military coercion until a crippled economy forces the administration into ‘coercive diplomacy’. Western Europe, reluctant to engage in ‘predatory militarism’, “could hardly avoid a transition to a more community-based lifestyle. Despite the present affluence of Western European societies (or precisely because of it), this would be extremely painful and last for several generations.”

These papers, and their references, provide a good starting point for modelling the economic and social impacts on all aspects of society, including the UK Higher Education sector: Less money, more re-localisation.

On a related note, here are a few graphs which nicely illustrate the correlation between oil, money and debt. What they suggest is that oil production closely correlates with GDP and that since oil production plateaued in 2005, debt has been the driver of GDP where oil has been lacking.

The debt information is pretty suggestive of what is going on, and that is, the reason the world has been able to keep increasing GDP since 2005 is because it has been borrowing from the future to fund the addiction to economic growth. But this situation cannot continue without serious problems in terms of repayment. And we have imminent peak oil, with the consensus dawning that soon after 2011 oil supply is highly likely to start declining with decline rates anywhere between 2% and 8% per annum.2

Oil demand and GDP

Oil production in million barrels per day plotted against the square root of world GDP in constant (US$)

World debt from 1999 to 2010

  1. There is also the problem in the UK that many of our power stations need to be decommissioned around 2016. See this and this. []
  2. I am Perplexed: Comments on the World Financial Situation and Peak Oil []

Roundhouse Student-led Conference on Critical Theory and Education

Last Tuesday, I attended the Roundhouse Conference on Critical Theory and Education, organised by students at the University of Leeds, who run Roundhouse: A Journal of Critical Theory and Practice. It was a great, inspiring day that reminded me of what it was like to be a student1 and why students are well-placed to affect change in universities, whether it’s pressure from the outside or covertly from the inside.

Rather than simply moaning, there was some good negative critique about the role of universities with both staff and students shifting between anger, despair and inspired subversion of the neo-liberal agenda.

A few things in particular caught my attention on the day. The first followed Mike Neary’s talk during ‘The State of Pedagogy and the University’ session. He referred to the ‘student as producer‘ and this phrase kept returning throughout the day as staff and students seemed to like it. The conference itself was a good example of student/staff collaboration and there were no apparent hierarchies in the running of the day. Students were more than capable of organising, moderating and running a day-long session that critically discussed pedagogy, the role of the university and how it might be transformed.

Secondly, the current industrial dispute at Leeds over job cuts, was a recurring theme during the round table discussions over the course of the day. This helped ground the theoretical critique in a real crisis that staff and students at Leeds are actually part of.

Thirdly, there was a discussion about parallelism, with one of the speakers saying that there was no hope of meaningful reform and that the time has come to contemplate the end of the university as a site of critical thinking. He argued that by remaining within the university, we collude in our own oppression and suggested that new autonomous spaces needed to be created apart from the agenda of neo-liberal education. There was some sympathy with this view, although another speaker referred to the time when Charles Clarke questioned the state funding of Medieval History in favour of subjects that benefit the economy. The point being made was that parallelism would still serve the interests of the State by removing the responsibility of funding ‘uneconomic’ subjects. In effect, parallelism would act as a form of efficiency under the neo-liberal agenda.

Finally, I was really pleased to hear about a couple of student run initiatives at Leeds:

The Peanut Gallery, an autonomous student-run social centre.

I hope they can keep this running as it sounds like there’s pressure to close it down.

The most inspiring aspect of the day for me was learning about The Really Open University, which “sets out to change the expectations that people have of university life, and by extension the rest of our lives.”  The conference was leafleted with a recent copy of The Sausage Factory [PDF], describing their launch.

The public launch of ROU took place on March 2nd, when over fifty students, staff and members of the larger community came together to discuss, ‘What is a Really Open University?’ This group was brought together by a recognition of the need for alternatives to the current educational system which puts everything – teaching, learning, our daily lives – up for sale, and makes efficiency drives such as the current budget cuts seem inevitable. Through a collective and participatory process, this group developed several vision statements about what education without restraints would look like.

The Really Open University website has opened my eyes to how students are using the web for education-related activism. The Really Open Union site is a good example that brings together initiatives elsewhere. I agree with Leon’s comment on the Roundhouse blog that The Really Open University is a good example of putting theory into action and should be supported.

  1. It’s been ten years since Graduate School and I don’t have much contact with students in my current role []