How will the Energy Crisis Affect Ottawa New Home Buyers?

In an intelligent and erudite book published only last year, entitled The Long Descent, author John Michael Greer writes,

For those of us who grew up during the energy crises of the 1970s, recent headlines have taken on an eerie degree of familiarity. Now as then, soaring energy costs make the news almost daily, part of a wider economic shift that's sending the prices of many raw materials through the roof. The countries that export the oil we in North America waste so casually (OPEC then; Iran, Venezuela, and Russia now) are showing an uncomfortable eagerness to cash in their economic chips for the headier coin of international power. Meanwhile the US balance of trade sinks further into a sea of red ink as imported consumer goods from our largest Asian trading partner (Japan then, China now) overwhelm what's left of American exports, sending the dollar skidding against most foreign currencies. In Yogi Berra's famous words, it's deja vu all over again.

Of course it is not quite as straight-forward as that, because, as we know, speculators in oil shares are an even more dominant factor in increasing monthly fuel costs. (It has been said that as much as 70% of the rising costs of fuel results from speculation and not from shrinking supplies). Now it is no longer simply a case of comparing the relative costs or merits of each alternative energy source - the consideration that occupies us now is how long any of those resources will last, and what will happen to us during our five months of winter, when fuel prices rise as supplies shrink. And overriding those concerns, what alternative energy source is most likely to fuel our vehicles?

The Hubbert Curve is a logistic distribution curve that predicts the rate of oil production over the future. It is the main factor in the Hubbert Peak Theory. M. King Hubbert was a geophysicist who initiated this form of forecasting while working for Shell Oil in the 1950s. It has since become a prominent feature in any discussion of the "peak oil" theory. He predicted that oil production in the US would peak around 1970. Applied to the entire world, he predicted that oil production for the entire planet would crest around 2000 and decline thereafter.

It is not just a question of resources undergoing a depletion cycle (ie, non-renewable resources). This model assumes that the rate of oil production is determined by the rate of discovery of new oil wells. And the steep drop in its production curve implies that oil will decline too rapidly for us to have time to develop new energy sources to replace the present ones.

As the author remarked, "The peak of US oil production came as a surprise only to those who weren't paying attention". And a recent Canadian TV series on our burgeoning outer suburbs predicts that - as populations move closer to downtown areas - some of them, at least, will become the partially abandoned and completely neglected slums of the future.

So that, instead of facing a global financial crisis caused by the over-production of inefficient autos, over-priced housing and real estate speculation - as we are at present - our next major crisis may be a move from outer suburbs to the cities even greater than the moves that took place as a result of the OPEC Oil Crisis in 1973.

This of course raises the question: "What are governments, industry and consumers doing about it".

Are consumers demanding (through their purchasing choices) that builders install alternative energy technologies? Evidently, not enough. The only condominium in the city with alternative energy technologies, for example, was seized by creditors a short while ago, due to cash flow problems. Not enough sales, for not enough money, in other words.

And why isn't Solar a part of every new home? Surely, if they could do it in the 1970's, it can be done now. The equipment is readily available, and quite inexpensive, to heat your water with solar. How about geo-thermal technologies, to harvest the heat from the earth's surface? These technologies are largely a matter of small pumps, tubes, and controls - much less complex than your gas furnace.

Without consumer demand, however, there is little likelihood of property developers initiating anything even as basic as this.

And without even these basic technologies to save on heating costs, how are suburbanites going to be able to afford to commute to their jobs, when gas is $4 per litre... or worse, when gas is $8 per litre, or perhaps rationed?

As with all crisis of this magnitude, surely it's the place of governments to lead the way out? But government does not appear to be doing so.

They invested enormous amounts in bio fuels, despite the evidence showing that the process consumes more energy than it provides. They committed to closing coal-fired generators, rather than invest in carbon-capture technology to offset the pollution, because they were going to invest in nuclear power generation, which they then stalled, despite the fact that it takes in excess of 10 years to bring new plants online.

They provide little or no incentive to home builders that encourage the deployment of alternative energy technologies, although they have had no problem legislating energy efficiency for automobiles for many years.

Locally, our government cancelled the deployment of a fast, light-rail system, that would have enabled tens of thousands of people to commute daily without cars. In fact, that system would actually be in place, and working today, whereas instead, we will not see the project, that government has inexplicably now decided to move-forward with, for another 10 years. And what we will also see then, is the vast majority of light-rail costs being spent on a tunnel to move the vast minority of commuters a single kilometer under the downtown core, as well as massive investment in legacy technology diesel busses and road systems.

Understanding the energy crisis is a matter of simple arithmetic. A rapidly growing population and demand for energy, just at the point where energy resource production begins to decline, and the resulting shortage of finite energy resources increases their cost.

Given the inevitable outcome of this scenario, the choices for home buyers are clear : smaller, high efficiency homes that use alternative technologies to augment conventional heating technologies, located as close as possible to their workplaces, their children's schools, and their families.

Reducing energy costs is really the only solution for individuals, because its unlikely that government will be able to offset the increased cost, and its certain that the marketplace, through salary increases, will be able to help either.

In other words, its all up to you!