It’s summertime in Halifax. In Clayton Park, where my wife and I take evening walks, life seems much the same as it has every year around this time. Many lawns are being fertilized, some driveways are being resurfaced, and the occasional roof is being re-shingled. The two rarest sights are houses with more than a token stack of hardwood in the carport (maybe one in fifty has two cords) and houses with vegetable gardens (none).
Why, you might ask, would anyone living in a modern, twenty-first century city with transportation links to the rest of the world want to heat with wood and grow some of their own vegetables?
Before answering this question, it is necessary to consider how people living in any modern community heat and feed themselves. In Halifax, most homes rely on fuel oil for heating, while almost all fruits and vegetables are imported by truck and ship from literally around the world. Therein lies the answer to the question—Halifax, like many other modern cities, relies on a variety of oil products in order to survive. “Survive” might seem a bit over the top, but a growing number of politicians and government officials from a variety of countries are beginning to question the implications to their national security and well-being in the face of rising oil costs and potential shortages.
In early June, Prime Minister Gordon Brown of the U.K., when confronted by truckers demanding lower diesel prices, stated that the world was experiencing the “biggest of all three oil shocks.” During the first week of July, the South Korea government announced the first steps in reducing energy consumption by restricting government vehicle use; Prime Minister Han Seung-soo did not mince his words when justifying his government’s actions, “To take concrete measures to save energy is not a matter of choice but a matter of survival.” While in mid-July, 26 former U.S. government officials, including secretary of state Henry Kissinger, sent letters to both U.S. presidential candidates and every member of Congress, saying that the country faces “a long-term energy crisis” that threatens the future security and prosperity of America.
There is a growing body of evidence that supports these views. Perhaps the best known is the International Energy Agency’s Medium Term Oil-Market Report, an annual five-year projection of the world’s oil production and consumption. This year’s report, covering 2008-2013, makes for sobering reading since demand is expected to push production to its limits. The world has limited spare capacity, with new capacity being constrained by rising costs and project delays. New production capacity must match both new demand (increasing at over one percent per year) and offset the annual worldwide depletion rate of five percent in the capacity of mature fields (the depletion rate is closer to ten percent in OECD countries).
The IEA expects that that between now and 2013, production in non-OPEC countries will plateau (with biofuels making up 50 percent of the capacity growth in OECD countries), while OPEC production will be hard-pressed to make up any shortfall. If the IEA projections are correct, the world will need the equivalent production of another Saudi Arabia, the world’s largest producer of crude oil, by 2015.just to meet new demand.
But we don’t have to wait until 2013 or 2015 to experience what some politicians, former government officials, and the economists at the IEA are projecting—we are in the early stages of a worldwide energy crisis.
Anyone who heats their home with fuel oil is well aware that times are changing: over the past decade, there has been a four-fold increase the cost of fuel oil. The average cost has increased from $0.81 to $1.02 per litre from the 2006-07 to the 2007-08 heating seasons (September to May). This summer, fuel oil reached $1.30 per litre. There have been several factors pushing the price of fuel oil higher—the first is undoubtedly the rapidly increasing price in the cost of a barrel of oil. The second may seem unrelated to heating oil—diesel fuel.
Diesel, like home heating oil, is a distillate, one of the many products produced from a barrel of crude oil. There is an increasing demand worldwide for diesel: diesel-powered vehicles are growing in popularity because of their better mileage and, because of new engine technology, fewer emissions. Diesel fuel is also used for electrical generation—Chile, South Africa, and China are all turning to diesel to cover shortfalls in electrical production.
The demand for distillates is such that it is unlikely its price will fall significantly within the foreseeable future. It is worth remembering that when heating fuel cost a dollar-a-litre earlier this year, crude oil cost about $90 a barrel—few analysts believe it will ever drop to that level again.
Low-income homeowners or renters that rely on fuel oil may well be between a rock and a hard place this winter. Anyone heating with oil will find it costly—even well-insulated buildings that require less fuel to heat may not see any savings because of higher fuel costs. There are no easy solutions and the impact of a cold winter could be serious. For example, although significant fuel savings can be made by reducing a home’s average temperature, newborns and the elderly must be protected from the cold.
As fuel oil becomes more expensive, alternatives may become affordable; however, without infrastructure, the alternative will remain out of reach (as is the case with natural gas in Nova Scotia). A widespread switch to heating with electricity—which is currently less expensive than fuel oil in Nova Scotia—could lead to brownouts or even blackouts.
With long waiting times, government sponsored home-retrofit programs will make little impact. Even low-income assistance programs at best offset only part of the increase. Ultimately, governments must be prepared to open heating shelters to help those who are unable to heat their homes. Such shelters must be able to offer a place to sleep and eat, potentially for large numbers of people over lengthy periods of time.
What my wife and I see next summer as we walk around Clayton Park will be different from what we see today. Oil-fired furnaces will be sitting on driveways, waiting to be recycled, as homeowners remove their existing oil-fired furnaces and replace them with dual-fuel ones that operate on oil and wood. Carports will be covering several cords of seasoning firewood, in anticipation of the winter to come. And lawns will be turned into gardens as people grow vegetables to offset their food costs.
In the meantime, let’s hope for a mild winter.
Larry Hughes
Atlantic Construction and Transportation Journal—August 2008