In a fascinating TED talk, designer Thomas Thwaites explains how he tried to build a toaster from scratch, using only preindustrial tools and methods. Even though a toaster is one of the simplest industrial products available, of course such a project is doomed to fail, because it takes an entire civilization to make a toaster. Thwaites even cheated quite a lot, using a leaf blower and microwave oven and many other tools that he couldn't possibly have made himself, and electricity was just assumed, yet he could only produce a crude imitation of a toaster. Amazingly, his homemade toaster actually worked for five seconds, but that was it.
When you consider how many things we take for granted and depend on that would go away without the operational fabric of industrial civilization, it becomes clear that it is supremely important to preserve this system if we would like to go on living comfortably or at all. We can't even make a pencil without industrial civilization. Unfortunately, peak oil is the elephant in the room which threatens the very fabric of our civilization along with our ability to make toasters and pencils and just about everything else, yet public awareness treats peak oil as a complete non-issue, or at most like just another factor in the economy which might slow down growth a little bit. Even the most pessimistic economists in the mainstream talk about temporarily slower growth and never anything worse. It is downright surreal.
Everyone understands that if you want civilization, then elementary schools and hospitals need to exist even if they can't make a profit. Energy is even more basic to our civilization, and crude oil is our most critically important energy source, yet strangely everyone (in Norway, at least) expects oil companies to be profitable or go out of business. So why is the oil industry simply allowed to collapse? I find it very strange that the market is assumed to sort things out and meet our needs in the face of rising costs and declining wages. Somehow, the law of supply and demand is supposed to solve all energy and commodity problems, and we don't need to take any action whatsoever to produce these goods ourselves if we can't make a profit on them. Demand is always assumed to materialize at any price needed to produce the things we need, even though the opposite is happening before our eyes. This model is outdated and it clearly doesn't work anymore, because the oil industry is no longer profitable. I believe mankind is losing its ability to afford the necessities of life, at least not by means of the market economy, which is in the grips of deflationary forces.
So here is what I would do in response to the current oil price crash. The Norwegian government should guarantee the price of oil from the Norwegian continental shelf at, say, $80 per barrel and back it up with our Petroleum Fund. This way we have over 800 billion dollars to throw at it, and I can't imagine a better way to use this wealth because it will be obliterated by peak oil in any event. The price guarantee would encourage petroleum companies to keep investing in the North Sea, and the sustained activity would also benefit the entire Norwegian economy as we have been accustomed to. If the price of oil goes back up above $80, nothing happens, and if it stays below, the government will pay the difference or buy the oil for $80 and put it in strategic storage or whatever. Instead of expecting profits, projects should be evaluated based on EROEI, and all projects with a sensible EROEI (at least 5, perhaps?) should be approved for this price guarantee.
The time has come to stop expecting profits from the oil industry, but rather subsidize it to the hilt. I realize Norway is one of very few countries in the world able to do this, and we only represent 2.8% of global oil production. I suppose OPEC is in a sense already doing it, since they insist on selling all they can at any price. Most oil exporters would collapse without the profits and they are in no position to subsidize oil exports for long. But we should do what we can. This remedy will not solve the problem of peak oil, but it might buy us a little more time, in which we can try to come up with more sustainable strategies. If our politicians understood the gravity of the situation, they would do it.