Now that we’re about to enter into the long descent (oil is now officially declared to be in decline by 2012, with global demand shortfalls of 10 million barrels per day predicted by 2015), it’s probably a good idea to start developing some slightly more useful skills.

All you so-called ‘free market’ fans pay special attention, this is about dealing with real free markets, not those abominations of corporate oligarchies known as big box retailers, that receive the benefit of this term with virtually no critical thought at all.

Let it first and foremost be noted – I love free markets. I love local markets, I love the interaction, the process of getting to know the various proprietors, the products they have, the way they treat you, if you get ripped off, if you find a great deal, whatever. I love the whole thing. I also love farmer’s markets, for the same reasons, plus the added one that the food is simply better, and cheaper often, than supermarkets, but that’s a topic for another posting.

Obviously, not everywhere has a vibrant flea market locally, some only have the more antique type ones, which are useless if you’re actually looking for something useful or cheap, if that’s your case in your area, sorry, this posting won’t do you much good.

Shopping, Price, and Bartering

If you’re used to unfree markets, like for example Walmart, Target, Safeway, Lucky’s, Vons, and so on, entering into real free markets might come as something of a shock. First of all, the prices aren’t set in any predictable manner. They don’t have sales, although you can try to barter for items if you think the price is too high.
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Some things to think about, if you want to take a deeper look at the worse case scenarios (which I recommend, pretty much all climate science findings are pointing to results consistently worse than predicted as worst case scenarios only a few years ago), give this latest by Dmitry Orlov, Definancialisation, deglobalisation, relocalisation.

Back to what is actually happening right now. There seems to be a wide range of opinion on how to characterise it, from recession to depression to collapse. The press has recently been filled with stories about “green shoots” and the economists are discussing the exact timing of economic recovery. Mainstream opinion ranges from “later this year” to “sometime next year.” None of them dares to say that global economic growth might be finished for good, or that it will be over in “the not-too-distant future” — a vague term they seem to like a whole lot.

There does seem to be a consensus forming that last year’s financial crash was precipitated by the spike in oil prices last summer, when oil briefly touched $147/bbl. Why this should have happened seems rather obvious. Since most things in a fully developed, industrialised economy run on oil, it is not an optional purchase: for a given level of economic activity, a certain level of oil consumption is required, and so one simply pays the price for as long as access to credit is maintained, and after that suddenly it’s game over. François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world’s GDP would be required to pay for oil, leaving no money for putting it to any sort of interesting use. At that price level, we can’t even afford to take delivery of it. In fact, at that price level, we can’t even afford to pump it out of the ground, because the tool pushers, roughnecks and roustabouts that make oil rigs work don’t drink the oil, and there would no longer be room in the budget for beer.

And so, the actual limiting price, beyond which no economic activity is possible, is certainly a lot lower, and last summer we seem to have experimentally established that to be around $150/bbl. which is something like 25% of global GDP. We may never run out of oil, but we have already run out of money with which to buy it, at least once, and will most likely do so again and again, until we learn the lesson. We will run out of money to pump it out of the ground as well. There might still be a few gushers left in the world, and so there will be a little bit of oil left over for us to fashion into exotic plastic jewelry for rich people. But it won’t be enough to sustain an industrial base, and so the industrial age will effectively be over, except for some residual solar panels and wind generators and hydroelectric installations.

I think that the lesson from all this is that we have to prepare for a non-industrial future while we still have some resources with which to do it. If we marshal the resources, stockpile the materials that will be of most use, and harness the heirloom technologies that can be sustained without an industrial base, then we can stretch out the transition far into the future, giving us time to adapt.

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