Writing checks today that tomorrow can't cash

You're looking a little sleepy.

Oil prices hit a record high of $97 a barrel on Tuesday, but the next generation of consumers could look back on that price with envy. The dire predictions of a key report on international oil supplies released Wednesday suggest that oil prices could move irreversibly over the $100 a barrel threshold in the not too distant future, as the global economy faces a serious energy shortage.

SO REPORTS Time magazine. All awake now?

Good. Here's what else the piece says:

This gloomy assessment comes from the International Energy Agency, the Paris-based organization representing the 26 rich, gas-guzzling member nations of the Organization for Economic Cooperation and Development (OECD). The agency is not known for alarmist warnings, and its World Energy Outlook is typically viewed by policy wonks as a solid indicator of global energy supplies. In a marked change from its traditionally bland, measured tones, the IEA's 2007 report says governments need to make urgent, bold decisions on energy policy, or risk massive environmental and energy-supply crises within two decades — crises and shortages that could spark serious global conflicts.

"I am sorry to say this, but we are headed toward really bad days," IEA chief economist Fatih Birol told TIME this week. "Lots of targets have been set but very little has been done. There is a lot of talk and no action." .

The reason for the IEA's alarm is its expectation that economic development will raise global energy demands by about 50% in a generation, from today's 85 million barrels a day to about 116 million barrels a day in 2030. Nearly half that increase in demand will come from just two countries — China and India, which are electrifying hundreds of cities and putting millions of new cars on their roads, most driven by people who once walked, or rode bicycles and buses. By 2030, those two countries will be responsible for two-thirds of the world's carbon gas emissions, which are the primary human activity causing global warming .

India and China have argued against enforcing strict emission controls in their countries, on the grounds that these could hinder their economic growth and prompt a global economic slowdown. But the new IEA report says working with China and India on alternative energy sources and curbing emissions is a matter of global urgency.

The bad news is not only environmental. As the world scrambles to boost energy supplies over the next two decades, an ever-greater percentage of its supplies of oil and gas will come from a dwindling number of countries, largely arrayed around the Persian Gulf, as the massive North Sea and Gulf of Mexico deposits are finally exhausted. That will leave the industrialized countries far more dependent on the volatile Middle East in 2030 than they are today, and the likes of Saudi Arabia, Kuwait and Iran will dictate terms to companies like ExxonMobil and Chevron, which increasingly operate as contractors to state-run oil companies in many producer nations.

"Most of the oil companies are going to be in an identity crisis, and need to redefine their business strategies," Birol says. The soul-searching may have already begun, as oil executives begin sounding the alarm about the supply crunch that lies ahead. Last week, Christophe de Margerie, CEO of the French oil giant Total, told the Financial Times that even the target of 100 million barrels a day is an optimistic one for an industry that currently produces 85 million — far short of the 116 million barrels a day the IEA projects will be needed by 2030 to fuel the global economy.

And in a sharp departure from the usually reassuring comments offered by Big Oil executives, De Margerie said companies and governments now realize that they have overestimated the amount of oil that could be extracted from places difficult to reach and costly to explore. "It is not my view, it is the industry view," he said. In other words, the message is that the current sky-high oil prices may not be a temporary burden on the world economy.

IF YOU'RE not much worried, try reading what Georgetown professor Patrick Deneen has to say. And remember, it's his job to study this stuff:

Declining oil production does not solely imply more costly commutes; indeed, when considering the profound effects of higher energy costs (i.e., less net energy in the world), higher commuting costs seem to be of comparatively negligible importance. The effects of peak oil throughout the economic system (including in the most obvious form of higher transportation costs) have far-reaching and world-altering consequences.

First, declining amounts of energy raises serious questions about the viability of “globalization.” This phrase, taking the descriptive form of a process, implies an apparently inevitable and irreversible set of actions that no human activity can resist or prevent....

Globalization, simply put, describes a world in which ever-greater interpenetration of culture and peoples has occurred as a result, at base, of economic expansion and interconnections. These economic interconnections themselves have been the consequence of the spread of free market economic system worldwide, a system that has depended essentially upon thoroughgoing mobility and ease of transportation. The current form of global capital rests on a worldwide labor market in which low-cost markets produce goods for more wealthy high-cost labor markets, which in turn trade for developments in technology and what Robert Reich has called the “products” of “symbolic analysts.” We inhabit a world almost unthinkable, if nevertheless attributable at least in theory, to Adam Smith, in which extremely low cost markets, producing goods largely made of plastic and chemical derivatives (i.e., petroleum), supply high-labor markets with products produced more cheaply than if those same products were produced in the same town as the consumer. The low cost of the raw materials (forms of petroleum) and the overall low cost of bulk transport (shipping and air-freight, propelled by petroleum), result in the cheap production of a nearly unimaginable array of products, all of which rest significantly on a platform of cheap and ample fossil fuels. Peak oil implies higher costs. However, higher prices are themselves a signal of a more fundamental phenomenon, namely less overall energy and less overall material. To the extent that the material form of globalization rests upon this base, the arrival of peak oil means that this basis of globalization will begin to unwind.

“Symbolic analysts” and hence advanced modern economies will be also adversely affected. In the simplest form, declining energy (as was evidenced in 1971) will result in less overall economic activity. A contraction of the economy will occur, and with it, the basis of many of the jobs that now result from an economy based upon growth. Much of the financial services industry will unravel; indeed, banking itself will come under extreme stress as fiat currencies loose value worldwide, and inflation makes existing and future loans increasingly worthless and dries up sources of investment. Material and technological development itself will stall as there is less overall investment, and the basic platform of modern high-tech communication and computing – electricity – will become increasingly expensive. High electrical costs may be forestalled with the increased reliance upon nuclear energy, but that very increased reliance will quickly manifest itself in the form of higher prices due to limited worldwide supplies of uranium.

Movement of products and people will become more difficult and less frequent. There is significant question about the future viability of commercial aviation. Once exclusively the privilege of a wealthy elite, it is likely that commercial aviation will again become the province of the very well-off and a rare experience for a middle-class that has come to take it for granted – but only after significant contraction in the number of existing carriers and, accordingly, flight routes. Many parts of the country and the world that were once isolated will find themselves again less accessible, and less easily departed from. Inasmuch as globalization has particularly rested on the long-term expansion of aviation, with the imminent arrival of peak oil, its future is deeply in question.

Domestically, the national economic system depends extensively upon trucking. This industry will become increasingly strained with the arrival of peak oil, most immediately in the form of higher energy costs which will be passed on to consumers in the form of higher prices for goods and services. The interstate highway system will come under stress, inasmuch as the primary ingredient of pavement – petroleum – will make repairs on roads more costly and therefore rare. Higher prices will mean less ability to afford even what have come to be regarded as the necessities of civilization. These include not only “necessities” such as labor-saving devices, pharmaceutical products (many of which are themselves based on petroleum products), household items and the like, but perhaps most importantly of all, food. Indeed, the implications of peak oil upon food costs, and food production itself, border on the apocalyptic.

The imminence of peak oil directly and adversely impacts our ability to grow and transport sufficient quantities of food. The amount of fossil fuels used to grow basic agricultural commodities, and hence, to provide feedstock and ultimately fill our supermarkets, in the form of fertilizers, fuel for farm equipment, refrigeration and food transportation, is enormous. It is estimated by some that it takes approximately the fossil fuel equivalent of ten calories to put one calorie of food on our tables – significantly higher if one considers a meat diet. Another way of considering this equation: the equivalent of approximately 300 gallons of petroleum or its derivatives are necessary to produce our annual diet. Still another way to consider this fact: our daily diet would require the equivalent of 111 hours, or three weeks, of human labor. With the arrival of peak oil, our capacity to continue to produce adequate food supplies for a planet of 6 billion people will increasingly come into question. Already it has been noted that the demand for corn for the processing of ethanol has led to a steep increase in food costs, particularly given the extent to which corn lies at the root of much of the modern industrial world’s diet. Some of the gloomiest prognosticators of the peak oil phenomenon foretell the horrors of a global “die off.”

THE PARTY'S OVER, people, and we're going to wake up to one hell of a hangover.

We, particularly in the United States, have been living like there's no tomorrow, what with all our obnoxiously huge houses in obnoxiously far-flung "communities" from which we commute to our jobs in obnoxiously large SUVs.

In our land of the everlasting today, we no longer can distinguish between "want" and "need." We have a choice: We can stop the madness, or we can continue on like there's no tomorrow. But if our self-indulgent lifestyles keep writing checks today that our futures can't cash tomorrow, there's this one little problem.

Tomorrow.