In the face of global change, there is little we can do to about the big picture. Fortunately, there is a lot we can do at the personal level to avoid pain on this issue. The best response is a re-assessment of your finances. Below is a suggested 5 point personal plan for dealing with Peak Oil (disclaimer: the following are suggestions only and do not constitute career or financial advice).
1.
Job security. The effects of Peak Oil will be mainly economic, resulting in low growth, even economic contraction, and high unemployment. How well you cope in a Peak Oil world will depend on your financial circumstances. Expect that either you or a member of your family may lose their job. If you can, organize your employment situation such that at least one member of your household has some level of job security. Just what that means will depend on how rapidly the economy changes. It might be best to avoid employment in industries more adversely affected by economic contraction such as construction and finance. Obviously, with increased fuel costs it is expected that transport and related industries would be most affected, particularly the airline industry. Public sector and essential services may be safer than other employment, but this will depend on government responses and their ability to source revenue.
2.Avoid (and reduce) debt. With high unemployment and rapid economic change you could find yourself unemployed for prolonged periods. If you are heavily in debt, prolonged unemployment could have serious consequences. Consider that even a mortgage, generally considered a safe form of debt prior to the sub-prime crisis, could be a liability if house values were to fall due to widespread mortgage defaults. The best way to avoid future Peak Oil related financial issues is to pay-off current liabilities and avoid future debt.
3.Save. Avoid the temptation to put it on the credit card and save instead for those purchases you really want. Put aside for a rainy day.
4.Maintain assets. The future investment environment will present challenges for everyone. Higher-risk investments such as equities, a mainstay of high-return long-term investing strategies, may never pay the returns of previous decades. Markets will be more volatile, putting the investor under pressure to buy and sell at the worst times. As with the sub-prime crisis, large corrections may rapidly erode much sharemarket value. House values may fall due to mortgage defaults. If mortgage defaults are too widespread, banks may fail taking their depositor’s savings with them. So, how do you maintain assets in such an environment? The only answer is to stay one step ahead of the game: have a cautious and conservative approach to investing. In the case of widespread mortgage defaulting, the safest investment might be, sadly, cash in a safety-deposit box or even a hole in the mattress. One positive aspect is that if you are able to maintain assets, your purchasing power may increase in the deflationary environment that economic contraction will create.
5.Be frugal. We certainly waste an enormous amount of money on unnecessary items and expenditures. A serious re-assessment of you budget will reveal how little you really need to spend to survive. Be prepared to make the changes when circumstances require. Consider any action that will reduce expenditures. For example, you may want to grow some of your own food, not because there will be insufficient fuel energy for modern farming, but simply to reduce expenses.
