My long-term bet on rising energy costs

by Simon St. Laurent

I've had a couple of conversations lately with people I like that led to strange places. One was about the seemingly crazy investment I'm making in ducks, chickens, and all the infrastructure they need, and the other was what I get for saying that I think we need to take a serious look at one-room schoolhouses as an alternative to busing kids everywhere.



I'm doing a lot of things that might strike people as strange or even inconsistent, but the driving force in most of it is an expectation that energy prices are going to keep climbing. I could, of course, be wrong, but unless we discover fusion technology, I feel pretty comfortable arguing that this is going to be the case for a long time. Demand keeps climbing, while supply isn't looking so great.



This doesn't mean I've disconnected my house from the grid, built a barbed-wire fence around my compound, and set up a world that's all about preserving me, whatever prices may do.



It does mean, however, that I'm looking at the world in a very different way. I'm trying to invest in things now that will serve us well later. The new roof, furnace, and insulation were key components of that, as is all the gardening, the apple trees, and terracing the yard. We've learned how to can and freeze food.



All of these are good things to do anyway, even if energy prices don't climb. Okay, I do worry that converting my yard into a garden may make the house harder to sell in this lawn-obsessed country. On the other hand, the return on investment for some of them will take a long time. The furnace and insulation have probably paid for themselves by now, and, well, you always need a solid roof.



The rest of the investments are pretty much a gamble. I can certainly drive a few miles and buy groceries more cheaply than I can grow them here today. Setting up the garden, and especially the fenced areas for the chickens and ducks, is an expensive adventure, if an interesting one. How many eggs does it take to pay for a $200 fence? Plus a coop, and all the feed the chickens ate in the meantime? And the time it takes to feed and attend them?



If I run these calculations based on current costs, I'm pretty clearly going to lose money. If, however, I calculate these investments as advantages in a world where energy and food rapidly become more precious, I may well come out ahead. (Looking at the rapid climb in wheat and rice prices, it's looking like a good bet sooner than I expected, though I expect they'll come down again before climbing over the long term.)



I'm already coming out ahead in knowledge, since I now know all kinds of things that I had no clue about before. (I still have much to learn.) Because I'm showing these ideas off both on Living in Dryden and on my gardening site, I hope to plant seeds in people's heads as well - the "I can do that" seed that develops into projects.



(I'm also taking a look at policy related to these issues through the lens of TCLocal.)



It's quite a change from my earlier work and my job, where I focus pretty exclusively on technology - what comes next, what great new invention will let us solve all these problems. I do think at this point that Web 2.0 is for real, reflecting a major shift in how we use technology - but I don't think that set of technologies is going to do all that much to address this major concern. Similarly, Rails is a lot of fun, and lets me do cool new things - but it's hard to eat it.



So if I come off as kind of strange, pushing ideas that don't all make sense at first glance, try to remember the context I'm working in. I live in the current world and do enjoy it, while planning ahead for a world that I expect will be pretty different. We'll see what Sungiva, our one-month-old daughter, thinks of all this when she's older.



[Cross-posted in slightly different form at Living in Dryden.]


9 Comments

Antoine
2008-04-30 01:14:24
I find it weird to talk about planting apple trees or having ducks and chickens in terms of ROI...
You could those things because it is nice to have fresh eggs, apples from your garden and so on. For the pleasure of having a nice home.
But for sure, those are good ideas, especially for furnace and insulation. Every home should have efficient insulation whatever is the price of energy...
Bob
2008-04-30 14:48:12
What are you feeding the birds? Laying pellets ain't cheap. And they're bound to go up with the price of grain.
Elliotte Rusty Harold
2008-04-30 15:38:16
You're not accounting for the value of your time. Even if energy prices went up by a factor of 4, it's hard to believe farming remotely makes economic sense for you. If it does, O'Reilly is severely underpaying you. :-)
Kurt Cagle
2008-04-30 16:08:26
I've always been somewhat of a pessimist about energy usage, but I also think that much of the problem is cultural inertia. Consider this: we've spent the last decade putting into place the infrastructure to handle the massive dissemination of information and the tools to make that information meaningful to kids all over the planet


Yet we still insist upon this daily ritual, five days a week, of putting kids onto aging, inefficient school buses that drive literal dozens (and in some cases hundreds) of miles a day to bring children to a big centralized building that's expensive to heat and/or cool, have them use perhaps the least efficient mechanism possible for learning new material (sitting facing a teacher droning on to a blackboard as he or she writes information in chalk that those kids neither understand nor particularly want to hear), feed them fairly marginal quality food and force them to repeat the experience again, fifty minutes at a time, until we bus them home, where they then sit down and regurgitate the answers they "learned" while at school.


I've been using the local distance-learning program here in Victoria for both my daughters part time. So long as they remain close to the curriculum, they can learn (and test) on history, science, math, English and French on the computer and do it at their own time and (more or less) their own pace. If they need three hours to understand a concept, then they can take three hours. If they get it in ten minutes, then they can go onto other things. My kids are happier (they're not being used as training fodder for student teachers or dealing with the jocks who would rather be nuisances to everyone else) and they seem to be learning the material far better.


The challenge of course is that it requires more supervision on the part of two fairly busy parents, but on the flip-side, given that we both telecommute ourselves, I'm not really sure that's as big an issue as it was in times past. It's not an ideal solution for everyone, of course, but I suspect that for millions of people, it makes more sense than driving a car into work and back every day in order to sit in a cubicle to use the same laptop that you could use from home, just so that a manager can check to make sure you're actually giving the company "fair value" by occupying a seat for eight hours.


Solving the stupidity of half a century of corporate inertia (educational and workwise) could make a huge difference in terms of both energy consumed and money spent chasing it.

Simon St.Laurent
2008-04-30 16:09:42
Yes, duck and chicken feed is expensive stuff, and will go up with the cost of grain. We're working on pasturing the ducks and chickens as much as we can, letting them forage for their own grain. Layers need calcium, of course, but oystershell supplements don't cost much.


While we're brooding ducklings and chicks, they're still mostly dependent on feed, and there will always be some feed (in winter), but a declining share. The eventual goal is to have the chickens and ducks as an integral part of the garden (and my wife's orchard) rather than as a side project. They can enjoy lots of tasty insects and slugs, making it easier for the plants.


And of course I'm not valuing my time at market value. Does anyone value their time at market value when they're not actually working? Reading a novel when I could be editing computer books - the opportunity cost of that is incredible! But life doesn't work that way.


Now if only O'Reilly had a gardening books division...

Kurt Cagle
2008-04-30 16:30:21
One more thought, in response to Rusty's comment - I live on an island (Vancouver Island), albeit one larger than some states. Still, it faces the problems that all islands face, in that nearly all goods have to come in by boat or by plane. A good windstorm (and we get a fair number of them) can leave the island isolated for a day or more, and costs of ferry runs off island have been climbing dramatically in the last year even as service has been curtailed due to the high cost of oil. Just a trip to Seattle and back, less than hour away as the crow flies, now can run US$300, and that's before hotels or other activities.


I'm not quite ready to raise my own chickens, though we do have a modest garden, but I also belong to a couple of farming coops in the area, and local independence and sustainability are hot topics around here. Victoria and Saanich has one of the largest number of blacksmiths in North America, bicycles are heavily used by all segments of the population and raising gardens for food is becoming something of a mania.


I don't think this has much to do with "West Coast flakiness". Rather, I think a lot of people here are very nervous about the world situation, about the cost of oil, and about their vulnerabilities in the face of what's perceived as increasing disruptions to their way of life. Perhaps its because we have higher gas prices here - $1.31 a liter, about $5.10 a gallon - Victorians are considerably more sensitive to price shocks than people in the US are on average. With estimates of gas now running as high as $2.50 a liter, just shy of $10 a gallon, within two years, having those chickens nearby could begin looking pretty good.


Danny
2008-05-01 10:36:43
We've got a vegetable garden, and half a dozen chickens even though local produce is inexpensive and usually good quality. Ok, trips to the (super/)market are a hassle. But we don't really think much about ROI on it - having good food from the garden seems reward in itself. We've got dogs & cats too, which don't exactly produce much of material value, in fact we just had to add a load more fencing around the chickens to keep one of the dogs out. So basically I agree with Antoine there.


But regarding future economy - I heard an interesting anecdote about Italy (where we now live) in the 1980's. While unemployment and general depression hit a lot of people hard across the rest of Europe, typical quality of life in Italy was hardly affected. Thing is everyone here either has a vegetable patch etc or a friend/relative nearby that has one. There's a generally benign black market in things like food & wood, employment even, and attitudes towards taxes are...well let's just say people don't exactly feel morally obliged. So there's a layer of insulation from "real" market trends. I don't know how far such a thing could be sanely taken as an individual (before slipping into camouflage gear and joining the gun club). But +1 to fruit, veg, eggs & insulation.



Simon Hibbs
2008-05-02 10:19:19
Premature optimization?
Simon St.Laurent
2008-05-02 10:27:54
"Premature optimization?"


Could be. I'm guessing more like just-in-time manufacturing, though. Energy costs are clearly climbing, which makes everything I'd like to do more expensive over time, so there's some benefit to sooner rather than later.


(And if the US Dollar continues its collapse against the Euro, some of that will be true even if energy prices stabilize.)


It's a bet, though - there's always the chance I could be wrong. That's okay.