[Vision2020] Wal-Mart, Efficiency & Fossil Fuel Crisis

[Ted Moffett]

Jeff et. al.

Sorry I did not follow up sooner.

My answer to your comments about Wal-Mart's efficiencies involves making a
case regarding the fossil fuel depletion/ climate change crisis that it
appears most do not want to hear, regardless of the facts.  Nonetheless,
I'll state my opinion, minus references.

I do not doubt that Wal-Mart's business model has elements that increase the
efficiency of moving goods to the consumer.  But in other respects their
model uses more energy in transportation of goods than a model based upon
local manufacturing of goods with more local raw materials and
resources used to produce the goods.

Their model lowers the cost of goods, in part because the cheap labor and
other lower business costs in China, more than compensates for the fact it
takes more energy for transportation of, for example, a TV built in China
and shipped to the USA, than if a TV factory in Boise shipped the TV to
Moscow.

Isolating the energy variable in Wal-Mart's business model thus reveals some
inefficiencies, despite the efficiencies you cited.

But apart from this point, I question the underlying assumption that we
should now be engaged in a glut of fossil fuel powered consumerism, even
with Wal-Mart's current efficiencies, or even with more locally based
manufacturing maintaining some aspects of Wal-Mart's efficiencies:

Once fossil fuels become very expensive (prices now are nothing!) and much
more scarce, which is only a matter of time, shipping goods from China's
cheap labor factories to the USA may become much more expensive.  I say
"may" only because energy technologies may be developed to mostly replace
the cheap, abundant and portable energy we now get from fossil fuels.  But
if not, we may then need to shift back to a model that focuses on more
locally based manufacturing requiring less energy for transport of goods and
accessing the resources to produce the goods, and perhaps reduce in absolute
amount the quantity of goods manufactured and consumed, again to reduce
energy consumption.

Global warming is also an economic issue: the future economic costs of
climate change from fossil fuel induced global warming are a variable that
should be considered in any long term economic model, costs that are now for
the most part being foisted upon future generations, by Wal-Mart, you, I,
progressive environmentalists in their SUVs, the Moscow Food Co-Op (I'm
trying to be non-partisan), and most everyone benefiting from the mostly
fossil fueled powered economic juggernaut that is the USA, liberal,
conservative, up, down, left, right, in between, nihilist...whatever.

Our current economic development model based on most everyone driving fossil
fuel powered cars/light trucks at will, and shipping goods 24/7 in a global
economy to maintain the USA as a consumer paradise via a mostly fossil fuel
powered transportation/manufacturing system, may in the very near future
result in a crisis so serious it might be regarded as a national security
threat...if it is not already?  Some think the Iraq War is a national
security crisis in large part about maintaining US access to fossil fuel.
The theme of this years Borah Symposium, "Resource Wars," was not an
exercise in idle academic speculation.

The Iraq War is a picnic compared to the potential conflicts between nations
fighting for access to fossil fuels when global demand begins to
dramatically exceed supply, in a world with 10 billion plus population, with
climate change resulting in flooding coastlines that may add to this tension
with millions of refuges forced from low lying coastal areas, or forced to
move via potential climate change related agricultural failures, ecosystem
disruption in oceans and fishing, etc.

While many think we can avoid this crisis by soon shifting to
other non-fossil fuel energy sources (or much more efficient fossil fuel
use) without facing a serious economic and/or climate change crisis, I don't
think the evidence is very compelling that this is practical.

I think the sane and politically impossible alternative at this point in
time is to downsize some aspects of economic activity to reduce fossil fuel
use in absolute amounts (not just slow the increases in fossil fuel
consumption), both to conserve limited fossil fuels for the future (they are
critical for many other important uses besides powering engines or
generating electricity, such as fertilizers), and to slow down the progress
of the climate change threat from fossil fuel sourced CO2.

The only way the continuing increases in fossil fuel use that maintain US
economic growth might be justified in the short term, is to regulate a large
sector of our economy to enforce development of the technologies needed to
transition away from fossil fuels, with as quick an implementation of those
technologies as possible, with current fossil fuel use made much
more efficient, like raising the CAFE standards to 40 mpg.

I am talking about government investment to the tune of 100s of billions of
dollars into fission, fusion, solar, wind, fuel cells, hydrogen, you name
it, an effort similar in focus and resource allocation to the Manhattan
project, or the all out commitment by President Kennedy to put someone on
the moon by the end of the decade in the 1960s.  The marketplace is not
moving quickly enough to solve the fossil fuel depletion/climate change
crisis: there is too much profit to be made now by maintaining the system
mostly as it is, and profit models are very short term driven.

Consider that due to human activity on this planet, we are now involved in
one of the great periods of species extinction in the history of the Earth's
biosphere, and this is apart from the coming climate change crisis (or is
this crisis here now?)  Add accelerating climate change to the equation, and
the environmental impacts could be devastating, with accelerating rates of
species extinction.

I, for one, do not think the human race, or the USA, has the right to
destroy so much life on this planet, both because life has inherent value
that I view as ethically absolute; and also for our self interest as a
species:  we do not know the full future impacts on ecosystems, that human
being are dependent upon, of eliminating so much diversity, nor what the
lifeforms becoming extinct that many view as "disposable" may have to offer
humanity in the future (medicines, access to genetic code, etc.).  Future
generations will look back at our conduct and be appalled, I am certain.

And now, I will be labeled an "anti-business environmentalist socialist tree
hugger extremist," or whatever other derogatory labels can be utilized to
de-legitimize and marginalize my point of view.  However, I don't view the
fossil fuel depletion/climate change crisis as a partisan ideological issue,
but a problem that everyone needs to address, regardless of ideology.

If only fossil fuels were cheap (25 cents a gallon, like in the '50s, though
a quick inflation adjusted cost estimate suggests this would be about $1.55
a gallon now), unlimited and there was no climate change threat... I'd drive
a flame red '57 Thunderbird 2 seater (the last year Ford made a 2 seater)
convertible hardtop, with the 340 horsepower supercharged engine, from Key
West to Seattle, Bangor Maine to San Diego... childhood journeys I took in a
roundabout route, but not in a '57 Thunderbird, though I saw them on the
road back then, thus the dream.  Maybe with biofuels...hmmmm.

Ted Moffett

On 5/14/06, Jeff Harkins <jeffh at moscow.com> wrote:

>   Ted:
> >
> > The premise to your argument needs revision:
> >
> > The advent of the modern shopping center was founded on the "one-stop
> > shopping" model.  That is, make it possible for a shopper to go to one site
> > to acquire goods and services - save time and money by not having the
> > shopper drive all over to acquire goods.  This model preceded WalMart by
> > some 40 years.
> >
> > The WalMart model was designed to capitalize on the shopping center
> > model.  By having one store provide a wide array of goods usually found in a
> > shopping center, shoppers would stop at one store to satiate most of their
> > purchase demands.  Walmart could offer lower prices because they eliminated
> > much of the overhead associated with a shopping center - one manager instead
> > of several (one for each store in the center); one accounting system instead
> > of several; one inventory acquisition system instead of several; one
> > promotion program instead of several etc.
> >
> > And several enterprises preceded WalMart in this model - Fred Meyer,
> > Sears, JC Penney, Montgomery Wards, K-Mart.
> >
> > Furthermore, WalMart's model has actually reduced the cost of moving
> > goods from the producer to the end-retailer.  Their centralized inventory
> > distribution model is the envy of most large scale mass merchandisers.
> >
> > One can make the argument that by having a WalMart in both Moscow and
> > Pullman, both communities benefit by reducing the cost of travel to a
> > central location.
> >
> > Now - as to biofuel, you bring some interesting issues to the forum.  I
> > agree with you that a lot of research needs to be done to validate the
> > economic merits of a bio-fuel program.  A bright side to the current
> > energy "crisis" is that energy alternatives will finally receive scrutiny.
> >
>
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