As oil and with it products we use to fuel our cars and trucks gets more expensive, there is growing anguish about the effects on the cost of living. China alone is adding millions of cars a year to the total, and peak oil theory says we should be hitting limits soon on production growth.
In reality, as prices go up, there will be options of exploiting kinds of oil previously too expensive: under the deep sea, in the arctic (conveniently being freed of ice; what's doing that, I wonder, if there's no climate change?), tar sands, shale oil… so production may not drop off as fast as predicted by peak oil theory. But should we want to squeeze every last drop of oil (and coal and gas) out of the ground?
Not only do we have climate change to worry about, but the economics of fossil fuel has a lot to do with the gap between rich and poor nations.
The Poverty Gap
In the twentieth century, the cost of communication increasingly split rich from poor. By communication, I mean movement of people, goods and information. Part of this was energy; another part telecommunications. The common thing was the distinction between countries with a comprehensive network of roads, rail, electricity and telephone connections, and those without.
Addressing this gap became increasingly hard, as the cost of new infrastructure has to compete with infrastructure created in an era of lower costs (e.g., coal was cheaper because demand was lower). It is this gap which for example makes fruit in a third world country absurdly cheap in tradable currency terms, while making a local phone call is ridiculously expensive. There's a kind of arbitrage, but one where the places where the price differences occur are too hard to connect, to correct the pricing anomaly (as would happen for example if the US$ to euro exchange rate was out of synch with the US$ to pound sterling exchange rate).
Somehow, despite all this, we have arguments from climate change inactivists that addressing poverty is an alternative to addressing climate change. Yet if you accept that poverty is largely structured into communication infrastructure (or lack thereof in poorer countries), new technologies that reduce the need for infrastructure can go a long way to closing the poverty gap.
An example is the cell phone. In many poor countries, cell phone roll-out has been many times faster than predicted, because of communication starvation. People in Nigeria didn't have phones not because they were poor, but because there was no infrastructure. Cell infrastructure is relatively cheap to put in: as long as you have electrical power, you can virtually parachute base stations in. By contrast, a nation-wide wired phone network needs wiring to the home, with extensive local wiring, even if trunk lines are wireless.
This example generalizes to other cases like electricity. If you can generate power locally without a grid, you can make energy accessible a lot faster in countries without infrastructure. Eliminate the cost of consumables, and you also eliminate another huge problem: rapid price increases as supply fails to keep up with demand. If you think this is bad for wealthier countries, what will doubling the fuel price to to someone who can barely afford a car?
The nice thing about renewables is that technology changes reduce prices. It doesn't matter if coal supply runs low, oil runs out or gas slows to a trickle. The wind will still blow, the sun will still shine. Just as Moore's Law has pulled computer prices down dramatically over decades, photovoltaics and wind are getting cheaper. Eliminate the consumables and you have a real revolution in energy economics, far bigger than Henry Ford's revolution in personal transport.
This is an exciting time once we forget doom and gloom and think of what could actually be done.
Instead of living in terror at consequences of change, how about accepting that we are looking at a change as big as the move from horse and buggy to cars?
Think of it this way: the cost of renewable energy sources only depends on the technology, not consumables. Once we get this right, we can make energy cheaper with every new development. As long as we are stuck with fossil fuels, prices can only go up as demand overtakes supply.
Why are we so scared of this great new concept? Once we solve the energy storage problem (there are already good ideas like compressed air) poorer countries will benefit too. What's the downside? Unless you own a coal mine ... the horse industry lost big time when the Model-T appeared, but think of the advantages to society as a whole: personal mobility on a level never experienced before.
Now we have the next level: energy with radically lower constraints on supply and infrastructure. If you can do local microgeneration with efficient storage, you no longer need a grid. In rural Africa, for example, you could almost parachute in (where have we heard that before?) a solar or wind microgenerator.
Back in the nineteenth century, it's alleged that someone predicted that London would be metres deep in horse manure in a few decades. It's a nice story, even if it's improbable that it's true (I have yet to find a direct source for it, and there are several variants – the hallmarks of a myth or urban legend). It is certainly true that getting rid of horse manure in the streets of major cities was a growing headache – just as cutting carbon emissions is today.
So why, today, are we staring down the problem of curbing carbon emissions when there are far superior alternatives – alternatives that only need a little development to be viable?
The only alternative is to consume fossil fuels like there's no tomorrow, then it's back to the stone age. Why are we even debating this?