Talk about risky business. Over the last decade, oil went from being a necessary ingredient of global growth to being its primary constraint. New modeling is now blaming oil’s inability to keep up with demand as a primary driver for depressed American and global growth.
As a new Iraqi insurgency threatens the Persian Gulf oil basin, as China and Vietnam mix it up over drilling rights in the South China Sea, as Russia leverages its control of Eurasian hydrocarbons and as the planet approaches a climatic tipping point, it’s time to rethink our relationship to this vexing resource. Given the political stalemate in Washington, the prize for disruptive business ideas will grow as demand for mobility and demand for investment returns converge in the marketplace.
Here’s what happened. Since the end of World War II, mobility was the driver of growth and oil was a driver of mobility. In this country we know the story well. Since 1945, the U.S. population doubled and today, half of our population — essentially all of the population growth — lives in the car-dependent suburbs. This was not the product of the free market but of government intervention: the GI Bill, Fannie and Freddie, Truman’s 1951 executive order to disperse the population and industry out of our cities and the 1956 Interstate Highway and Defense Act tilted the housing market decisively from cities to suburbs. The federal support continues: Washington’s more than $450 billion of annual subsidies to real estate are predominantly supporting suburbs.
For America’s economy to grow, we had to add another ring of suburbs, which in the car-dependent suburbs mean more vehicle miles travelled, more time in the car and more gas guzzled.