Boom and Bust

Like crocus pushing out of the ground and Daylight Savings Time, increases in fuel costs are a harbinger of spring. The cost of a gallon of gas has risen by around thirty cents in March but is still relatively cheap. Fuel has has been at record lows for more months than I guessed it would, because of a worldwide glut of oil production. For the consumer this is great news. A boom in cheaper fuel means more disposable income. The plummet of per-barrel value has stimulated a boom in auto manufacturing.  Car dealers have experienced a boom in sales of super-sized SUVs and pickups. The rationale is that it’s cheaper to fill the tank of one of these behemoths than it was to fill he tank of a mid-sized SUV.

I frequently wake in the early morning—two or three a.m.--and lie awake for an hour or two. During an episode of insomnia, random thoughts swirl in my head like stoned bats. Sometime in early February, during one of these episodes, I felt an overwhelming desire--because gas prices were at an all time low--to buy a new car. The urge to upgrade sparked a twinge of conscience. According to some Utahans, I’m an environmentalist. I’ve worked for years as an ecologist/environmental mediator and, therefore, guilty by association.

My self-righteous justification for upgrading my car was that I use mass transit on occasion and often ride my bike to meetings and to do chores around the valley. And, I thought smugly, I would replace my beater Subaru with another Subaru, not a super-sized SUV. The drone of sanctimoniousness rocked me to sleep.

Cycles are fundamental and intrinsic ecologic functions. A cycle is defined as: “An interval of time during which a characteristic often regularly repeated event or sequence of events occurs. A single complete execution of a periodically repeated phenomenon. A periodically repeated sequence of events. (1)" Cycles surround us. They influence our lives significantly. The most obvious is the change of seasons and maybe the most talked about is the weather. While cycles are recurring events, the timing is generally unpredictable and impacted by random events. Cycles are more then just ecological. They manifest themselves in commodities, stock market, housing, transportation, social issues, our personal lives, and are a significant role in boom/bust cycles of all types.

The lure of potentially rich mineral and oil/gas resources in the federally owned subsurface mineral domain attracts serious developers, who are in the business of exploiting these resources. Around the fringes are speculators who want to get rich quick. Mineral and oil/gas extraction, over time, have left thousands of public lands un-reclaimed or poorly rehabilitated. Tailings piles from the mining of gold and associated minerals; abandoned uranium mines; open pit copper mines; exploration for other minerals have left hundreds or thousand tons of hazardous waste.

In the “oil patches” a vast network of roads and abandoned drill pads dot vast acres of public lands. Slumping tailings piles have occasionally failed and released tons of toxic waste into riverine systems, killing vegetation, aquatic and animal species, and polluting drinking water sources. Wildlife habitats are fragmented and rainstorms and the incessant wind move soils off-site. From the air these areas look like varicose veins.  

 The extraction industry is the most visible example of boom/bust cycles, at least in some western states. When oil production in North Dakota(2) was at its peak, rough necks (even the seasoned veterans) acted and spent like they thought this was the golden boom that would never go bust. And for a while they were right. The latest boom in the Williston Basin lasted for over a decade. North Dakota had the lowest unemployment in the country. Men and women, some with families in tow, migrated to the windy plains of North Dakota.

The bust was inevitable, given the record of boom/bust sequences in energy and mineral production. Energy and mineral production companies and pro-development politicians hype the increase in jobs, the benefit to local economies from resource extraction, although they know that the dreams of hopeful people flocking to these riches will someday crash.

Oil producers worldwide are over-producing oil and therefore gas prices have remained low. Pundits and politicians have gone on at length explaining how low gas prices are giving our economy a nice boost due to higher than ever sales of larger then ever SUV’s and pickups. The logic is that even though the larger cars are gas-guzzlers it is cheaper to fill the large volume tanks, therefore the consumer is saving money to invest back into the economy. The downside of cheap fuel—massive layoffs in energy production employment--was mentioned but hardly discussed. A boom, at least for consumers, grew out of the oil glut. The extraction industry was hit by yet another bust.

Consumers are reaping benefits of cheap fuel costs at the pump from the boom part of an energy cycle. Car dealers, the auto industry, and associated businesses are flush. States complain that tax revenues are down. And in the Williston Basin many people who migrated there to reap benefits were run over by the bust part of the cycle.

In a strange and probably perverted way the public has benefited in two ways from the gas boom: the drilling companies are not out causing more environmental damage to the land and we have cheap fuel.

 As I ruminated about the possibility of buying a new car, I ran the numbers. A new vehicle would get poorer gas mileage than my 2004 Subaru but, even though I would have to fill the tank more often, because of the boom, it would be cheap! However, I know health issues and costs in the valley have risen because of bad air. Cheaper fuel and larger cars result in increased road congestion and contribute more to the declining air quality in the Salt Lake Valley than pre-boom autos. While this may be hard to measure, more is more no matter the amount.

I know that the cheap fuel boom will most certainly go bust. It is inevitable. Fuel costs grow after a decline much like losing and gaining weight. When I trapped myself in a boom/bust cycle with my weight, I would almost always gain just a bit more than I had lost, therefore, the cumulative effect was that over time I was getting heavier. I had read the story of the grasshopper and ants to some of my grand children a few days before my midnight sojourn. The oldest one had said:

“Why didn’t the grasshopper save food like the ants? The grasshopper might have lived another year instead of dying in the winter.”

We should be saving fuel now that it is cheaper to stockpile, like the ants hoarding food. Instead, like the grasshopper we fiddle on in the short term not wanting to face the reality that using more gas now will mean that much less when the world petroleum producers struggle to find more resources.

(1.) http://www.globalchange.umich.edu/globalchange1/current/lectures/kling/ecosystem/ecosystem.html

(2) http://www.theatlantic.com/business/archive/2015/06/north-dakota-oil-boom-bust/396620/