Wal-Mart is expected to announce today a broad plan to reduce energy costs. The Times reports that the company intends “to reduce energy use in its stores, double its trucks’ fuel efficiency, minimize its use of packaging and pressure thousands of companies in its worldwide supply chain to follow its lead.”
These are short-term steps that do little to resolve the fact that Wal-Mart’s very existence is based on consumption of enormous amounts of energy. How? Let me count some ways. 1) The sprawling one-story stores leak huge amounts of heat or coolness through their roofs and walls. 2) Their stores, usually located far from any rail lines, must have their goods delivered by trucks, which guzzle far more gas than SUVs and are much less efficient than rail freight or barges at moving goods long distances. 3) Their huge free parking lots cater to drivers, thus putting the company at the mercy of a suburban customer base that itself will be struggling with higher energy costs in the form of higher heating, cooling and gasoline bills. 4) By importing their goods from China instead of making them here in the USA, the company is substituting transportation costs for labor costs, a model that works so long as oil — and the trip across the pacific — is cheap.
The marginal savings Wal-Mart’s executives can eke out by fine-tuning this or that operation are a drop in the bucket of energy waste that the company’s business model depends on. James Howard Kunstler, the author of the Long Emergency and the Geography of Nowhere, sees bleak prospects for suburbia in a high-energy future. But he says Wal-Mart is one of suburbia’s most vulnerable elements:
The whole system of continental-scale big box discount and chain store shopping is headed for extinction, and sooner than you might think. … Operations like WalMart have enjoyed economies of scale that were attained because of very special and anomalous historical circumstances: a half century of relative peace between great powers. And cheap oil – absolutely reliable supplies of it, since the OPEC disruptions of the 1970s.
WalMart and its imitators will not survive the oil market disruptions to come. Not even for a little while. WalMart will not survive when its merchandise supply chains to Asia are interrupted by military contests over oil or internal conflict in the nations that have been supplying us with ultra-cheap manufactured goods. WalMart’s “warehouse on wheels” will not be able to operate in a non-cheap oil economy.
It will only take mild-to-moderate disruptions in the supply and price of gas to put WalMart and all operations like it out of business. And it will happen. As that occurs, America will have to make other arrangements for the distribution and sale of ordinary products.
Phew! I’m not sure it will be as bad as all that, but if this is a first round of belt-tightening related to increasing energy costs, it vindicates his position. But really, Wal-Mart trying to conserve energy is like an elephant trying to conserve oxygen. It can’t happen without a radical restructuring.
[Update: Oct. 31, 2005; 9:26 a.m.] The Oil Drum has a lively discussion about this news.