Peak Oil is the primary cause of the home foreclosure crisis.

Unlike the 1973 Oil Embargo where shortages hit everyone, with Peak Oil we are proverbial frogs in a pot of cool water placed on a fire. More and more people cannot afford escalating price of their commute, food and mortgage.

What is Peak Oil? Peak Oil is the maximum rate at which we can pump oil out of rocks. World Peak Discovery was 1964. Peak in US production was 1970, North Sea 1999, Mexico 2004, Saudi Arabia 2005.

Peak Oil was May 2005 when crude oil production stopped consistently growing; it peaked at 74.4 million barrels per day. There may be subsequent larger peaks, but steady growth of oil for a steadily growing economy is gone forever. Our economy will either decay or increase efficiencies.

Foreclosures, gas prices and food are visible risks. Foreclosures are expected to hit 2 million families in 2008. Gas prices are at $3.50 and will likely hit $4-5 gas this summer. Food prices are rising but fundamental food supply is at risk. In March Potash’s CEO warned of famine unless there are record harvests.

Food supply is fragile and brittle. A typical bag of groceries travels 1,500 miles, 97% powered by oil. Any disruption, a trucker strike, terrorist attack on a refinery, pipeline accident,, earthquake, hurricane, etc…, could shatter deliveries for longer than local food supplies will last. We can have a Bear Stearns in food.

Food risk was driven home to me when I was asked, “Of the 10 worst famines of the 20th Century, how many happened in Africa?” My answer was 8. The correct answer is zero. Despite the hardships in Africa, truly spectacular famines require an advance economy to create population over-shoot and government policy that erodes institutions and technology that sustain that economy. We have over-shoot, erosion and fundamental ecological changes with Peak Oil and Global Warming.

We face civilization killers. Through immediate local action we can become self-reliance, defeating these killers.

Time is limited but here are the steps I think might work:

1. Face brutal facts. Oil if finite. New oil discovery peaked in 1964. US oil production peaked in 1970. We will never have oil supplies that exceed demand. We are responsible to create sustainable infrastructure. Like most organisms on earth, we can live within a solar budget.
2. Plan Victory Gardens. Self-reliance can start with food. Communities can be durable if everyone strives to grow 1/3rd of their food. It will take 3-5 years to build experience and infrastructure. Such gardens provided about 40% of food needs during World War II.
3. Increase efficiency. Economic Growth is equal to Energy Growth times Efficiency Growth. Oil, as the lifeblood of our economy has stopped growing and is declining. We can increase efficiency and become self-reliant. Cars are less than 4% efficient.
4. Stop Planning and Start Innovating. Current infrastructure was planned, built and caused Peak Oil and Global Warming. Government regulatory monopolies bar innovation and protect from competition power generation infrastructure’s 69% inefficient and transportation infrastructure’s 80% inefficient. We know we can achieve far better. CSX (railroad) current TV ad states they “move a ton 423 miles on a gallon of fuel.” Yet regulators protect using a gallon of fuel to move a person 18 miles in a city from competition. Personal Rapid Transit (PRT) is ultra-light automated railroads, a physical-internet. People and cargo move at about 200 miles per gallon. Minnesota and city governments have a documented history of blocking PRT deployment. Yet, Morgantown’s PRT, built to combat the 1973 Oil Embargo, has delivered 110 million injury-free, oil-free, passenger miles. PRT and other innovation present risks from trial and error. To avoid innovation’s messy process, planners block competition and reinforce the current path to Peak Oil and Global Warming.
5. End Transportation Subsidies. Sustainable infrastructure must add more value than the cost to compete; make a profit. Initiatives should be privately funded. Government should use incentives not subsidies.
6. Allow Free Markets. Invention and job creation are characteristics of small businesses carving niche profits from inefficiencies. Communications infrastructure was de-monopolized 1984 and resulted in explosive innovation, job creation, cost reductions, the Internet and cell phones. Germany de-monopolized power generation in 2002 and has created 250,000 renewable energy jobs. Exports in 2007 were $12 billion. Germans installed 4,000 megawatts of renewable power generation in the last year. California has installed 242 megawatts in the last 5 years.
7. Address population growth. The world resources are finite; we should not become the locus of our own demise.

The solution to Peak Oil is as simple as the consequences are grim; be self-reliant. We have an opportunity, we can change the lifeblood of our economy from oil to ingenuity.