Peak Oil is the “Sustainability Spear”


By Max Dunn

Ray Anderson was 60 and retired from the weight of making next quarter’s numbers when he was able to breathe, look around, and ask: “What’s next? What legacy to do I want to leave for my daughters?” That is when he got the sustainability “spear in the chest”. However, Ray’s case was pretty unique. While some other businesses like Wal-Mart, Ford and Xerox are making some moves towards sustainability, we are not likely to see a wave of businesses spontaneously adopt sustainability until something momentous happens. And what form will that momentous sustainability spear take? Climate change? Probably not.

The effects of climate change are likely to be subtle and long term. For instance the IPCC AR4 estimates that sea levels will rise between 7 and 23 inches – over the next 90 years. They also predict that over the same time period, extreme heat waves, heavy precipitations and intensity of hurricanes are very likely to increase. But heat waves and hurricanes will always be sporadic and when they occur, it will not be obvious whether they are the result of climate change or natural weather variation.
But there is something that is much more likely to be the “spear in the chest” of every business, and that is Peak Oil. This is not a long way off – Peak Oil will likely start having major effects by 2012!
In 2005, the Department of Energy commissioned a report on the risks we face due to Peak Oil. Commonly referred to as “The Hirsch Report“, it warns of the seriousness of Peak Oil:

The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented.

Let me repeat that, “The economic, social and political costs will be unprecedented.” Furthermore, the report warns:

“The problems associated with world oil production peaking will not be temporary.”

Think about it: how many businesses are profitable because of cheap oil? Manufacturing, retail and agriculture all rely on the fact that it is cheap to transport goods many miles – often back and forth. Even Patagonia admits that it’s organic cotton men’s polo shirt travels over 14,000 miles from origin of thread to distribution center! What is going to happen to their business model when transportation expenses skyrocket?

Once the effects of Peak Oil start to be felt, businesses will be forced to completely rethink how they operate. Many will not survive. But the ones that do will be those that take sustainability to heart. In addition to restructuring their business around the reality of radically decreased oil availability, they will also start preparing to use all natural resources more sustainably.

So keep the faith. While it may seem that currently there are only a few examples of businesses that are truly adopting sustainability, Peak Oil will be a spear thrown at the heart of all businesses forcing them be sustainable, or killing them. And that is when we will be in great demand to show businesses the sustainable way.

MaxDunn.jpgMax Dunn is a serial entrepreneur who founded, ran and sold 4 high-tech companies. He is now working on a Sustainable MBA at the Presidio School of Management and also enjoys being a stay-at-home Dad, surfing, Ruby on Rails and blogging about peak oil and electric vehicles.

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