[CAMWEST-discuss] Fw: The Future of the Southwest: A View from the Road

Danny Hannan danny_hannan at yahoo.com
Sat Jan 9 00:01:20 UTC 2010

G'day all,
I like this article by Chris Nelder.  It sounds like something I would have liked to have written.  Just to fill you in on the picture of the debt situation in the US as compared to Australia.
There are several ways to measure debt.  Two very useful ways are debt in terms of GDP and nett debt per head of population.
Australia fares better than the US on both counts.  Though Australian personal debt on a per head basis is marginally higher than in the US.  The total net debt is much lower.  Australian total nett debt per head of population is now over Au$30,000.00.  The US per head of population US federal debt is over US$40,000.00 as well, many impending costs that are as yet totally unfunded, and that does not count state debts, corporate debts and personal debts .  Many of the US states are in serious debt problems, borrowing just to supply services and pay employees.  So much for low taxes.

With this high level of debt I have little confidence that the US will be able to move to a post oil age.  And Australia is similarly headed in the wrong direction.

 danny_hannan at yahoo.com 

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Subject: The Future of the Southwest: A View from the Road

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The Future of the Southwest: A View from the Road
By Chris Nelder | Friday, January 8th, 2010
For the holidays this year, I stuck with my vow to never fly again at Christmas and opted to drive the roughly 1,600 mile round trip instead. 
It's only a couple of hours longer than flying, each way, a bit cheaper, and a whole lot more enjoyable. (And as for the carbon footprint, it's hard to say but probably smaller.) 
On the way, I had ample time to muse about the future and take in the on-the-ground reality of the Southwest. Foremost in my mind was the question: How will these communities fare in the transition to a localized, renewably-powered future? 
As I explained in my final columns of last year, I am pretty much done with talking about the problems of peak oil (really, "peak everything") and climate change. That message is tired, and the tipping points have arrived. The time for ringing the alarm bell and counting on federal or state solutions has passed. From now on, we all need to be eyes-front, focused on what we can do locally.
So I'd like to begin this year by sharing a few observations I made on my trip...

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A View from the Road
California's Central Valley — the source of 8% of the nation's food supply — was my first long stretch southward through endless fields producing garlic, lettuce, fruits and nuts, grapes and raisins, and other produce. Staggering under the combined pressures of rising agricultural input costs, a falling water table, reduced water flows from the Sacramento Delta, and immigrant labor issues, it offered a clear window into the economic malaise of California's farming communities. 
Just four days before Christmas, shopping mall parking lots looked only one-quarter full and the roads were mostly empty. Seemingly every industrial building along the highway through Modesto had a "For Lease" sign on it. The first hopping-busy shopping scene I saw was a flea market in the little farming town of Kingsburg. Highway marquees offered hotel rooms for $35 to $40 a night in Fresno. And in Bakersfield, the majority of billboards offered legal help to fight speeding tickets. 
From there I headed west into one of the few places on earth that you're likely to see an oil pumpjack in a vineyard: the Kern County oil fields, where "horse head" pumps still wheeze away, squeezing the last drops from giant fields that have been in production since the late 1800s.
kern county" src="http://images.angelpub.com/2010/01/3691/pump-jack-in-kern-county.jpg">
A few miles farther down the road I climbed into the Tehachapi Pass, the site of one of the nation's oldest (and one of the world's largest) wind farms, producing over 1.4 billion kWh per year of electricity. Originally built in the early 1980s and updated over the years, it offers a unique look at evolution of wind technology, with over 5,000 turbines running the gamut from small, old, broken ones to modern 1.5 MW monsters operating at over 40% capacity factors. The area is slated for additional development this year, including a new 30 MW project by Western Wind Energy (CVE: WND).
tehachapi pass" src="http://images.angelpub.com/2010/01/3692/wind-turbines-in-tehachapi-pass.jpg">
(Sorry for the less-than-professional quality cell phone pics from the road. I could have found better ones online, but I liked the foto vérité of these.) 
Continuing on through several hours of open desert strewn with plastic bags (if you still need a reason to carry your own reusable shopping bag, consider that one), I made my way into Mohave County, Arizona, along much of old Route 66. I soaked in the nostalgia of remnant, weathered hotels and restaurants from its glory days. A few isolated watering holes now sport their own wind turbines and solar PV arrays, but from what I overheard and saw on the local Craigslist, a job — any kind of job — was hard to find in these parts. Things have been tough ever since the real estate bubble popped.
This is mostly mining territory: a blue-collar, staunchly conservative county. Yet fully a quarter of a local rag I picked up — the Economic Development Journal of Mohave County out of Bullhead City, Arizona — featured stories on energy. There was fuss over the water requirements and transmission line siting for a proposed $2 billion, 340 MW parabolic trough concentrating solar thermal power (CSP) plant. New state rules requiring utilities to develop demand-side energy management and efficiency programs were discussed in detail, as was the award of Energy Star status to eight county buildings. There was even an account of a recent presentation by a university professor on peak oil. 
mongollon rim" align=right src="http://images.angelpub.com/2010/01/3693/mongollon-rim.jpg">I continued on to my family's cabin under the shadow of the Mogollon Rim, a roughly 200-mile-long escarpment at the edge of the Colorado Plateau that spans much of Arizona. It's an area well loved by the great Western novelist Zane Grey, who had a cabin near ours. We cozied up there for a week in wood-fired comfort in freezing temperatures, including a day spent fighting with old manually-oiled chain saws and laying up more wood, during which I momentarily wondered if it wasn't actually easier when I was a kid and we did it using a two-man cross-cut saw. He who cuts his own wood heats himself twice, as they say.
On the return trip, I detoured up to the Grand Canyon because I hadn't been there in many years. Unfortunately, it wasn't the best day to visit. A snowstorm had blown in to the Kaibab Plateau just as I arrived, making for very poor visibility (and some sketchy driving, even in 4WD). 
The Kaibab, of course, is the site of one of the sharpest lessons in carrying capacity in American history. Beginning in 1906 at the order of President Teddy Roosevelt, hunting was banned and livestock grazing was curtailed in order to encourage the population of some 4,000 deer who made their home there. The following year, the Forest Service embarked on a program to kill the natural predators of deer, including mountain lions, wolves, coyotes, and bobcats. The deer population exploded and reached around 100,000 before overbrowsing of the sparse habitat caused them to starve to death. From 1925-1926, an estimated 60,000 deer died of starvation and the rangelands were permanently damaged, leaving it with a far lower carrying capacity. American wildlands management practices were forever changed, as we learned the importance of keeping animal populations within the ability of natural environments to sustain them. 

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Mad Max Wasteland or Desert Oases?
The same lesson remains to be learned, however, with respect to human population. The problem of making our world sustainable is infinitely more complex. 
What is the true carrying capacity of America, if the San Joaquin Valley's water problems persist? About one-fifth of California's total electrical power demand is used to pump water; about four-fifths of the water pumped in California is used to irrigate agriculture. 
The ability of the state to build sustainable power supply — like those turbines in Tehachapi — has direct implications on the nation's food supply. Likewise, much of the population of Los Angeles could not exist without the massive pipeline system that brings the city water from the Colorado River. 
How will the little mining towns of northwestern Arizona fare as fossil fuels decline? They'll still be able to ship their minerals by rail along the freight tracks I paralleled on Route 66, but they'll need to have alternate sources of revenue if peak oil quenches economic growth. 
Supporting those proposed solar arrays and grid connections could mean the difference between thriving and shrinking, which explains why in a parched, windswept, and sun-baked land like Mohave County, the need for local water and energy supply is urgent enough to override the usual political bent and make strange bedfellows of Republicans and renewable energy advocates. Such alliances will become more common in a century of decline. Necessity wins over ideology every time.
In the Bay Area where I live, the last few years has seen an increasing incidence of water main breaks and exploding transformers, sewage spills, bridges becoming unsafe, and roads becoming more patch and pothole than pavement, as its aging infrastructure crumbles and fails. Governor Schwarzenegger went begging the federal government this week for financial aid, and proposed privatizing prisons in an effort to close a budget gap that now runs into the hundreds of billions. A downgrade of the state's debt rating seems inevitable for a state that is too big to not fail. Where will the revenue come from to fix all this, and keep the water flowing to the San Joaquin Valley, plus build out a new renewable energy and rail infrastructure? 
Arizona's in only slightly better shape. A week before Christmas, Arizona Governor Jan Brewer told her cabinet to slash spending sharply and push criminal alien prisoners back onto the Feds as quickly as possible, as she faces the prospect of borrowing $700 million a month to stay operational, and a looming 2011 fiscal year deficit of $3.4 billion. Solar power could be a massive financial boon to the state, but popular support has been sluggish and the leadership has been slow to understand the energy-water nexus. The solar potential of Arizona is far greater with photovoltaics and air-cooled CSP than water-cooled CSP.
The food production of the San Joaquin; the wind turbines in Tehachapi; the oil fields of Kern County; the solar resource of Arizona; the water resources of the Rockies that sustain its dense low desert populations... these all depend in one fashion or another on a complex, interconnected infrastructure of commerce powered by cheap fossil fuels. 
No one has even begun to seriously add up the costs of transitioning it to renewable power and rail transport. The tab will run into the double-digit trillions for the state of California alone. If the state fails — and I think it could — then where will the investment come from? Can we still imagine a debt-based federal infrastructure spending program that would utterly dwarf the New Deal? If not, then the transition will be financed and built from the bottom up... or not at all. 
I'm still betting that trillions of dollars will be spent over the coming decades to cut waste, build more wind turbines and solar plants, erect a long distance HVDC transmission grid, implement a smart grid with micro-islanding capabilities, stimulate a rail renaissance, and try to keep the American machine humming. 
That's why I call it "the greatest investment event of the century." The investment opportunity in the Southwest is absolutely staggering, if the capital can be found. 
But should those efforts prove too little, too late — and by my count, we're already 30 years too late — the long-term fate of individual communities will be largely decided by what they do in the next two decades. What they have at the end of that period may be what they'll have to live with for many decades afterward. The resources they depend on today may be stranded. 
My family may indeed fall back on the old cross-cut saw to cut our firewood. The Tehachapi locals may have power, but struggle to maintain food supply. The mining towns of Arizona may wish they'd done more to deploy solar, especially water-pumping solar systems, when the getting was good.
Communities that localize their supplies of food, water, and energy, with a sharp eye on local carrying capacity (which is to say, those who have the ability to disconnect from the complex systems around them and be self-sufficient), could have a reasonably good future. Those that don't may find themselves following the deer of the Kaibab Plateau. 
The question for investors is this: Fifty years from now, will Route 66 be a blasted wasteland of ghost towns, a Mad Max relic of the fossil fuel age... or a string of small, self-sufficient oases, each with their own solar arrays, wind turbines, backyard gardens, and railroad depots? 
I'll have more to say on that subject next week when I write for Green Chip Stocks. 
Until next time, 
All photos by Chris Nelder
P.S. It's amazing how some people still get cold feet when it comes to their investments. That should never be the case. Take my colleague, Ian Cooper, for example. He's had so much success trading in this market, his readers have made a small fortune. And things are about to get much better for them... 
Last week, Denmark gave up its control of a tiny chunk of Arctic tundra that has a $273 billion secret — and Ian's prepared a detailed report to enable his readers to get an early foothold. You can read the free report here. 
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