I hate to be the bearer of bad news or futuristic predictions, but what if Oklahoma’s current economic crisis is structural and systemic and can’t be resolved with higher fossil fuel prices because of peak oil demand?
— Georgi Kantchev (@georgikantchev) May 1, 2016
Remember the days when everyone talked about peak oil, the concept that fossil fuels soon would reach their finite moment and then start to dwindle as the world weaned itself from carbon-based energy? Well, now the concept is that the world may have reached a peak in its demand for oil and natural gas as more and more countries turn to renewable energy sources, such as wind and solar power for electricity, and as car manufacturers sell more fuel-efficient and electric-powered vehicles.
Michael T. Klare, writing on TomDispatch.com, explores the world oil order and its current turmoil in an excellent, detailed article, but what should stand out for any Oklahoman in the piece is the concept that green energy is slowly but surely helping to drive down the price of fossil fuels. The fracking boom in Oklahoma may well be a short-lived phenomenon in historic terms. Klare writes:
As a result of advances in drilling technology . . . the supply of oil has continued to grow, while demand has unexpectedly begun to stall. This can be traced both to slowing economic growth globally and to an accelerating “green revolution” in which the planet will be transitioning to non-carbon fuel sources. With most nations now committed to measures aimed at reducing emissions of greenhouse gases under the just-signed Paris climate accord, the demand for oil is likely to experience significant declines in the years ahead. In other words, global oil demand will peak long before supplies begin to run low, creating a monumental challenge for the oil-producing countries.
Meanwhile, the American Wind Energy Association just reported that Oklahoma added more wind power than any other state in the nation during the first quarter this year.
— American Wind Energy (@AWEA) April 29, 2016
One question here becomes whether Oklahoma can diversify its economy as the demand for fossil fuels diminish. On the global level, it’s also difficult not to at least be concerned about a major world war or multiple wars as oil-producing countries try to stay relevant. War is good in a business sense for the fossil fuel industry. That’s not hyperbole.
So as The Oil Age slowly comes to a close, which is actually a good thing for the sustainability of our planet, what will be the ramifications for Oklahoma?
Oklahoma currently faces a $1.3 billion state budget shortfall next fiscal year, and has cut education funding the most of any state in the nation since 2008. The state also just announced the public education system will face a new $17 million cut this fiscal year. Other state agencies, such as the Department of Human Services, face dire cuts as well.
The revenue shortfall has been attributed to reckless income tax cuts that primarily benefited the state’s wealthiest people and tax breaks for oil and gas companies implemented by conservative legislators over the last decade or so and also the decline in the price of fossil fuels because of a supply glut or, in the new parlance, the beginning of peak oil demand.
So in a word, the future for Oklahoma with an ongoing worldwide dwindling demand for fossil fuels is bleak. The state has been unable to diversify its economy despite the obvious need to do so. It’s completely uncertain if wind power, which is renewable, can replace the tax revenue generated by the fossil fuel industry. Heavily taxing wind power is probably not a good idea either.
For decades, state leaders have called for the state to diversify its economy, but fossil fuel production still remains one of the leading industries in the state. It’s estimated that one-quarter of all jobs in Oklahoma are tied to the energy industry, which increasingly includes wind power. As the price of oil or natural gas decline so does the Oklahoma economy.
The obvious answer to the diversification question is that landlocked Oklahoma simply can’t expand its industrial capacity, with the exception of wind and maybe solar power, because of its anti-education bias, its precarious, dangerous weather patterns and its embarrassing conservative stigma. Who really wants to move a thriving business to Tornado Alley or try to hire educated workers here or have to witness the latest Sally Kern-like spectacle as it gets reported in the media?
A lot of people here are waiting for the price of fossil fuels to rebound back to above $100 a barrel. It’s currently in the $40 a barrel range, and has gone under $30 a barrel. Some experts predict the slight increase will not last, and will hover around $30 a barrel in the immediate future.
Maybe the price of oil will never rebound completely to the old highs because of peak oil demand. What happens to Oklahoma then?
The political answer to all this is obvious: Oklahoma needs desperately to adopt progressive economic policies and invest in education at all levels, but tragically that’s not going to happen anytime soon. Barring a world war or some other world catastrophe that creates an urgent demand for fossil fuels, which is obviously nothing to wish for, Oklahoma’s future remains grim.
A majority of millennials now reject capitalism, poll shows https://t.co/AudcEIhHVR
— TomDispatch (@TomDispatch) May 1, 2016