POLICY: Peak Oil and Healthcare by Dan Bednarz, Ph.D

Dan Bednarz from Energy & Healthcare Consultants in Pittsburgh, PA is pretty concerned that you health care types don’t seem to be concerned about Peak Oil. What you say, you’ve never heard of Peak Oil? Better read this then!

America’s healthcare predicament will be resolved in the context of the worldwide energy emergency idiomatically known as “peak oil.” In short, the era of cheap, abundant fossil fuels is entering its twilight and medicine — virtually cut-off from this awareness—is exposed to the consequences. Like any other system healthcare requires energy and resources to function; fossil fuels, especially petroleum, provide both.

A brief explanation of the geology of peak oil is needed.

In the spring of 1956 petroleum geologist M. King Hubbert presented
his peak oil hypothesis to a convention of his peers. He told them that
production of light (low viscosity), sweet (low in sulfur compounds)
crude oil in the lower 48 states, at that time rising exponentially,
would peak and then enter into irreversible decline around 1971.
Although he was preeminent in his field, most of his colleagues
dismissed or ridiculed his forecast. In 1972 his prediction was
confirmed. Hubbert
also said: “it appears that the culmination [i.e., peak] of world
production [of petroleum and natural gas] should occur within about
half a century.” Fifty years later, with production ostensibly unable
to surpass 85 million barrels per day, we may be riding “Hubbert’s
Peak.” We will not know definitively about peak oil until we are past
it. Think of it this way: in Hank Aaron’s final years his home run
production was: 47 (his peak), 34, 40, 20, 12, and 10.

A majority of Americans consistently tells opinion pollsters that
healthcare is a right; yet this majority simultaneously cringes at the
countervailing ideas of rationing and being denied the right to choose
their doctors. Accordingly, the administrative, legal and fiscal
structure of American healthcare represents a pastiche of regulatory
and free-market incentives addressing: 1.) controlling costs, which are
driven by technological innovations, malpractice and liability
insurance, rising energy and petroleum-based equipment prices; and
inefficiencies, waste and fraud; 2.) coverage for 45 million uninsured
citizens and several million more who are underinsured; and 3.) needed
improvements in quality on an absolute basis as well as relative to
other industrial nations. Reviewers of healthcare reform
concede the failure of incrementalism and the imperviousness of the
system to genuine improvement and, therefore, call for fundamental
change, which the coming energy crisis –an unexpected and inescapable
exogenous event– will produce. Parallel to peak oil, our
nation’s ability and willingness to perpetuate current financing of
medicine is threatened by growing foreign trade and budget deficits, deteriorating national

infrastructure, and the costs of war.
The especial significance of peak oil, however, is that, in addition to
posing a fiscal risk, it threatens the structure of healthcare simply
because medical facilities consume large amounts of fossil fuel for
climate control, to operate equipment, and in their vast array of
medical and ancillary products –most disposable after one use,
manufactured overseas and shipped here with (formerly) cheap fossil
fuels. Therefore, as oil and natural gas become scarce, the
ramifications will be observed first in higher prices, then in
shortages of medical and health goods and products, and finally in the
ability to operate large medical infrastructure and to operate medical

Medical leaders face an inevitable choice between leading the reform
of healthcare and succumbing to the pandemonium that will be unleashed
by peak oil. The classic risk management dilemma is to know when the
cost-benefit ratio of inaction outweighs that of mitigation. To many in
healthcare peak oil will appear an absurd or fringe concern because
surely, they reason, government, science and the market will solve the
energy problem just in time with no impact on medicine. Unfortunately
this is not occurring.
This unaddressed danger presents healthcare with an opportunity to lead
society –and gain indispensable public support– in peak oil public
policy making. The alternatives, which revolve around “Letting George do it” strategies of the free-rider, postpone and worsen the eventual reckoning with the energy issue.

The Hirsch Report,
released by the Department of Energy in 2005, notes that if we are at
or near peak oil, we shall soon begin to face economic turmoil that
will require a decade or more to recover from –once suitable and
scalable energy replacements are developed. All things considered,
government pays for over 50% of all medical treatment. Would the state
continue to support the current inflationary medical system during an
extended economic crisis? This is the point at which the healthcare
system will come under intense scrutiny and extant political/economic
coalitions will begin to fall apart as Harold Lasswell’s classic question, “Who gets what, when, where and how?” is asked of the healthcare industry. What’s
more, unlike during the Great Depression, the jobless will not forgo
medical treatment, especially for children. And the employed, who also
will be economically distressed, also will assert their “right” to
healthcare and demand that the state “do something.” Presently,
Congress and the president have approval ratings
well below 50%. A federal government seeking to both preserve its
legitimacy and slim chance for solvency might respond by nationalizing
healthcare and also shifting funds from treatment to prevention. Public
health, not clinical medicine, is the foundation of a healthy
population; yet even in the wake of the infrastructure deficiencies
exposed post-September 11 the public health system remains over
burdened and under funded. This disparity between treatment and
prevention is another suppressed pressure to nationalize medicine.
Additionally, employers, especially the Big Three domestic
automakers, will welcome the relief nationalization provides from
spiraling health insurance outlays because this one action could save
them from or defer bankruptcy. Finally, the Baby Boomers, a
demographic cohort twice the size of the preceding generation, are
beginning to retire and will annually consume twice as many medical
resources as they do today. The duty of upper echelon leaders is to
creatively align their organizations with the obdurate realities of the
external environment;
otherwise their organizations decline or fail. Healthcare is
responsible for 16% or more of the nation’s GDP, giving it latent power
to become a “Good Citizen” and promote the inevitable transition to
non-fossil energy. This same share of GDP can easily become an
indictment of profligacy in tumultuous economic times. Healthcare
cannot stand pat; it is too important, too costly, consumes too many
resources, and is too big a target for populist anger and discontent.
Further, it has at best only ephemeral public good will. It will be
cast as part of the solution or part of the problem when the reality
and chaos of peak oil take hold of the nation’s collective
consciousness. Therefore, what can medical leaders do? In brief: 

Exhibit leadership by citing peak oil as a direct health threat to
the public; couple this to a call for an authentic national energy

  • Realize that healthcare will have to rethink energy and devise protocols for its conservation on a fundamental scale.
  • Establish collaborations with public health based on the themes of 1) “A Gospel of Energy”
    –that is, educate the public about energy; and 2) extend the scope of
    preventive medicine so as to reduce the expenditures of treatment
  • Suspend some traditional competitive rivalries among medical
    institutions to view the end of the fossil fuel era as a Herculean
    matrix of risks facing the entire ecology of the healthcare industry.

Despite the enormity of the threat, only a few leaders, the “conceptual blockbusters”,
will be able to both recognize and act on the implications of the
coming energy transition. Although they initially will face resistant
and robotic “institutional thinking”, they are the ones whom medical historians will discuss with approbation.

8 replies »

  1. Peak Oil and Health care in the United Kingdom.
    Highly informative and well done for doing it!
    I live in Bristol,England UK and would be grateful for any help on the issue of peak oil and health systems.
    I am looking to make direct contact with Dan Bednarz.
    Can anyone help?
    I fully understand the subject matter but currently isolated as no one will listen.
    I work in mental health services in Bristol and have serious concern on how to deliver healthcare to 350,000 people post peak oil.
    It would appear that there is a network in the USA on healtcare…so any advice would be gratefully received.

  2. I have written an extensive primer on Peak Oil and its impacts. My research indicates, in contrast to the Hirsch report, that alternatives cannot bridge the gap. The report is here and below is the abstract. You are welcome to post this report on this blog.
    This paper examines scientific and government studies in order to provide reliable conclusions about Peak Oil and its future impacts. Independent studies indicate that global oil production peaked in 2006 (or will peak within a few years) and will decline until all recoverable oil is depleted within several decades. Because global oil demand is increasing, declining production will soon generate high energy prices, inflation, unemployment, and irreversible economic depression. Regardless of the time available for mitigating Peak Oil impacts, alternative sources of energy will replace only a small fraction of the gap between declining production and increasing demand. Because oil under girds the world economy, oil depletion will result in global economic collapse and population decline. As oil exporting nations experience both declining oil production and increased domestic oil consumption, they will reduce oil exports to the U.S. Because the U.S. is highly dependent on imported oil for transportation, food production, industry, and residential heating, the nation will experience the impacts of declining oil supplies sooner and more severely than much of the world. North American natural gas production has peaked, importation of natural gas is limited, and the U.S. faces shortages of natural gas within a few years. These shortages threaten residential heating supplies, industrial production, electric power generation, and fertilizer production. Because U.S. coal production peaked in 2002 (in terms of energy provided by coal), the U.S. will experience significantly higher coal and electric prices in future years. The U.S. government is unprepared for the multiple consequences of Peak Oil, Peak Natural Gas, and Peak Coal. Multiple crises will cripple the nation in a gridlock of ever-worsening problems. Within a few decades, the U.S. will lack car, truck, air, and rail transportation, as well as mechanized farming, adequate food and water supplies, electric power, sanitation, home heating, hospital care, and government services.

  3. Surely healthcare professionals have other things to worry about besides declining oil reserves. The free market is doing a fine job bumping the price of oil up in the short term; in the long term this will make alternative sources of energy such as solar power more viable while also making additional sources of oil economically feasible. For example, a RAND study suggested that a trillion barrels of oil may be extractable from oil shale in the western United States, and that this might be worth doing even if the price of oil drops to $30 a barrel or so.

  4. Does anyone yet have the nerve to ask how much fresh insulin will be worth?
    This petroleum economy has created the modern-day scourge called diabetes,
    which now threatens up to 30% of American children. Insulin is a life-long
    addiction for such people. It needs to be freshly synthesized, transported, and
    refrigerated. The wars for energy will be to the DEATH.

  5. The effects of declining oil production on health will be massive as the process of decline continues. Modern agriculture has been described as using soil to turn oil into food. Nothing is more fundamental to health than adequate nutrition. We have a very serious challenge to maintain sufficient food production as the oil we use for running tractors and combines runs low. Natural gas is also in decline in North America. How will we replace the nitrogen that we currently get from natural gas based fertilizer?
    My thoughts – stop population growth, preserve all remaining farmland, relocalize agriculture and eat lower on the food chain.

  6. Good article — it’s nice to see further reasoned discussion on this issue reaching into the medical community. There has yet to be much study on what the alternatives are when plastics and industrialized medicines are scarce or non-existent.

  7. It’s about time somebody wrote about this. Dr. Bednarz’ excellent article should be required reading in the healthcare community!

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