I had an interesting conversation with a colleague today. The topic was the escalation in the price of oil, and what that portends for the future.
It’s hard to argue that the continued parabolic rise in oil prices will have a chilling effect on any real economic growth, at least in the near term. While the wealthy among us aren’t affected by this exponential rise in price, at least initially, those of us in the middle class, and certainly, the working poor, already have had to start making some hard choices regarding household budgets.
The conversation I alluded to centered on transportation, logistics, and distribution (TDL)—basically that sector that ensures that everything we consume—food, gasoline, electricity, etc., gets delivered, intact, and on time. Medical services, entertainment, our technology, is all dependent on delivery, and oil affects everything we do. It is the literal lubricant that greases the gears of our civilization.
At some price indicator, we will reach a tipping point where our current way of doing things will no longer be sustainable. Then what?
Interestingly, since I started blogging here back in 2004, and prior to that on my first blog, a consistent theme of mine has been community, at least the kind that I remembered from my youth, growing up in Lisbon Falls. Even better, much of the past five months has found me writing about that time period, working on the topic of Moxie, for my upcoming book, but even beyond that, focusing on aspects of small town life that were meaningful to me that will be part of a full-length book, due late in the fall.
The person I spoke to happens to work in the TDL field. Her take on where we are headed is back to the 1940s, and 1950s. What? At that time, commerce, industry, and the focus of life, was on the local community, and then outward, to the region that you were part of. In the U.S., each region—the South, New England, the Midwest, the Southwest, etc.—all had unique characteristics; cuisine, dialect, heritage, and even politics.
If gas were to go to $10/gallon, then this might create a demand for a local grocery store, where people would drive five miles, rather than 25 miles to do their shopping. Local hardware stores, lumberyards, and other retailers might once again become central, rather than Wal-Mart, Home Depot, and others. Because everything we do revolves around transportation, particularly trucking, it may no longer make sense to truck food, manufactured goods, and other products thousands of miles. Rather, regional economies, such as northern New England, might forge partnerships to begin supplying the products being imported from overseas, or even, the west coast.
Many people that live in Maine don’t know that Aroostook County has the capacity to grow wheat, and in fact currently produces organic wheat for Borealis Breads. Facing a global shortage of wheat, Maine may once again find itself re-emerging as an agrarian center for particular crops, like wheat.
Here is an interesting article from 2006 that alludes to that potential.
The invisible hand always creates winners, as well as losers. That has always been the calling card of capitalism.