Be warned: the end of cheap oil will kill suburban dreams

Every Saturday throughout the early 1960s, a dull drone could be heard over the Colorado plains. The light aircraft flew low, at around 2,000ft. Inside, the pilot plotted future roads, suburban housing schemes and new business parks. Ray Kroc was looking for cheap land and was planning a revolution for suburban America even before the suburbs existed. Kroc, the mastermind behind McDonald’s, soon graduated to helicopters and by the 1980s, the company was one of the largest purchasers of commercial satellite photography, using it to predict suburban sprawl from outer space

The story of the spread of American suburbs makes instructive reading, particularly in light of last week’s forecast by NCB stockbrokers that the population of Ireland – largely concentrated in greater Dublin – will grow to over 5.3 million 2020. Any resulting anxiety is made yet more acute by the fact that the vast majority of new building is going up in commuter towns and all roads are leading to Dublin.

The prospect of a rural Ireland characterised by concrete housing estates — with makey-uppy names such as Parkwood Way, Cedarview Downs and Mountain Pines or the Irish equivalent of Carraig Greenane, An Coille Mor or Ard na Greinne — is now a reality. For example, take population patterns in a county like Clare – for many the epitome of west of Ireland rural idyll with the Burren, Lisdoonvarna and the Cliffs of Mohir. Since 1996, 66% of the increase in the population has come from non-Clare people moving into new estates, reflection the suburban spread of Limerick to the south and Galway to the north.

As this process continues, these estates will not be serviced by a local town or village, but by clusters of shopping malls, all-night Spars and fast food joints which will be located on proposed motorway intersections. Many retailers are already ahead of the posse. In the same way as Ray Kroc surveyed the Colorado plains from the sky, Tesco Ireland employs five full time planners whose job is to buy up sites in new suburbs that are about to be re-zoned so that the Tesco footprint will lead rather than follow development.

Our development model is pure West Coast American and despite all our government’s rhetoric about spatial plans, transport 2021 and the like, the ‘facts on the ground’ suggest that Denver rather than Denmark is the blueprint for suburban development in Ireland.

Apart from the obvious implication for traffic, the suburbanisation of Ireland is likely to presage a fast food revolution. In the US in the 1960s, McDonald’s Inc realised that, as the amount of time spent in the car rose, people would eventually have to eat as they crawled through the daily commute. Fast food — instant, hot and very (or varyingly) edible — is made for the wheel of a car. The answer to the hungry commuter problem was simple: on the spot, disposable meals without any need for cutlery. Suburban sprawl, traffic and fast food soon went together. Today, an estimated 17% of all American food is eaten at the dashboard. This figure is likely to be replicated in Ireland in the nor too distant future – particularly with forecasts suggesting – not unreasonably – of 200,000 new cars on our roads for the next ten years.

This will lead to a serious weight problem. According to the national taskforce on obesity, 27% of eleven year old Irish boys and 29% of Irish girls are overweight and little Irish girls from five to eight are ballooning much quicker than boys. One in three is overweight. We go from toddlers to waddlers in a shockingly short period. And, more worryingly 11% of Irish seven year old girls are obsese.

But will it all turn out like this? The chief assumption in all economic forecasts is cheap energy. Affordable energy is lynchpin of our economic model. It underpins cheap money which finances investment which in turn raises our productivity and attracts in cheap immigrant labour which pushes demand and the economy further and farther. But what if this central assumption is false? What if the era of oil is over? What if we are moving rapidly into an era where oil production is about to peak? Imagine that we are facing the end of suburbia?

Geologists have been warning about the peak of oil production for many years. Many of them believe that the world’s oil production will peak in the next three years. 52 of the 99 countries that produce oil have passed their peak production. US oil production – the world’s main devourer of cheap energy – peaked in 1971. Equally, geologists worry that the stated oil reserves of the likes of Saudi Arabia might be overstated. In the same way as the CIA had a vested interested in over-stating the power and threat of the Soviet Union in the 1970s in order to boost its own budgets, many argue that the Gulf Sates overstate their reserves to inflate their importance in world affairs. Whatever the reason, the implications of “peak-oil” are enormous. They are epoch changing. Put simply, every assumption goes out the window. Even Dick Cheney believes that we are running down reserves by 3% a year and given the emergence of China and India – both huge consumers – the US Vice President estimates that world demand is rising at 3% per year. This implies that the price of oil is on an upward trajectory and the sky’s the limit. (Some of the world’s finest thinkers on peak oil will assemble in the Mansion House in Dublin for an important conference next Wed 5th April for information see www.energyfutures.ie)

When you take out transport costs and taxes, the world has being getting its energy for almost free for years. Cheap energy has been the basis of our civilization. Yes, there have been great strives in telecoms, the internet and communications of late, but the true facilitator of western prosperity world as we know it, is cheap oil and natural gas. In the next ten years, therefore, pessimistic geologists conclude that we could see the end of the great experiment that was suburbia, cheap food and passive consumerist societies.

Did you know that Ireland is the third most oil dependent economy in the EU and the seventh most dependent in the world? This means that we are severely exposed. Where would our new suburbs be without cheap petrol and what about our out-of-town housing boom with our large kitchens, under-floor heating and super-sized fridges? Where would we all be without the car? If oil prices sky-rocketed, not only would SUVs resemble the dinosaurs on the morning of extinction, but fast, cheap food might also be a thing of the past. The abundance of world food production is based on the success and cheapness of petrol-based fertilisers and pesticides. If the price of these increased dramatically, crop yields would plummet. What are the implications for consumer spending? If the geologists are right, a large rise in the price of energy would be the economic equivalent of a massive tax hike, reducing our disposable income and depressing spending.

Economists have in the main ignored the geologists which appears irresponsible. Maybe the reason for this is economists’ sometimes over-blown confidence in technology and its ability to use energy more sparingly. But if the world realises that the resource is running out, panic will set in, rendering those counties that have oil such as Iraq, Iran, Saudi Arabia and Venezuela much more volatile.

The prospect of oil production peaking in 2010 should focus all our minds on the fact that we have had a pampered time in the past few years and that the great, affluent suburban era may now be faced with it first real challenge for which there are no easy fixes.