Portland’s history is rooted in its location at the confluence of two major rivers and ready access to the ocean and a great agricultural valley. Because of its location, Portland also became the hub of significant rail service. This network allowed Portland to develop as a production and shipping center for heavy and bulk products that can be transported by boat or rail. Portland also enjoys a head start on many other urban areas in terms of energy efficiency, renewable energy, alternative fuels, sustainable design and green building, all of which promise to be growth industries post-peak oil. 

The economy serves to produce and distribute goods and services and to provide people with the income to afford these products and services. Portland’s economy faces two big questions with respect to peak oil:

1) How will businesses remain viable in the face of constricted oil supplies?

2) How can Portland citizens remain employed in high quality jobs?

It is important to emphasize that Portland will not experience peak oil in a vacuum, and local changes will be felt relative to those taking place regionally, nationally and globally. Portland differs in important ways from other cities and regions and holds certain competitive strengths and weaknesses. In examining vulnerabilities in the local economy, Portland’s economy must be considered together with the regional economy, which includes the greater Portland-Vancouver Metropolitan Statistical Area. Major export-oriented sectors of the economy include high technology, nursery stock, metals manufacturing and fabrication, transportation equipment and sports apparel. Other important sectors include construction and real estate, health care, retail and government. 

Peak oil will affect the economy both directly and indirectly. Direct impacts are experienced in the actual operations of a business or industry. This includes fossil fuels used in building energy use, the transportation of goods, and in manufacturing, such as for process heat or as a raw material for chemical or plastic products. Indirect impacts, by contrast, occur upstream with suppliers of raw materials or semi-processed goods, or downstream in consumer demand for products and services. These impacts are more difficult to measure and forecast. While transportation and energy represent only a small portion of many businesses’ costs, indirect impacts stemming from upstream supply problems or consumer demand may often be more significant.

The Task Force considered four key questions for various industry clusters:

1) How will peak oil affect production costs?

2) How will demand for the product or service be affected?

3) How will upstream suppliers of raw materials or semi-processed goods be affected?

4) What reasonable substitutes or alternatives are available to mitigate these effects?

The Task Force also considered the possibility that large shifts in international financial and currency markets could undermine the U.S. economy as a whole, including serious impacts in Portland.  The recent decline in the value of the dollar, the possible shift away from the dollar in international oil transactions, and the complex interrelationships among these and related macro-economic issues merit close attention and further study, which is beyond the scope of the current report. 

Below are potential major impacts the Portland economy may experience.