Growing job sector
The debate over oil prices took a turn for the useless the moment our Dear Leader and his heir apparent began blaming $4-a-gallon gas on people who oppose drilling in the neighborhood of Florida’s beaches or in Alaska’s wildlife refuge. According to those two, the people in Jakarta and Sydney and London are paying more for gas because the people in Burlington and San Francisco and Daytona Beach were opposed to sucking up a few drips of oil from the Atlantic and the Arctic.
It’s never wise to trust an addict, but George Bush and John McCain are also pushers with a considerable clientele for cracked-up ideas, like consumers who think nothing about railing against social programs that help the poor but somehow feel their $40,000, 12-mpg SUV entitled to cheap energy. Now they’re telling us that opening up more seas and federal lands to drilling will bring down the price of oil. That’s about as logical as suggesting that curing cancer will save Social Security — if by curing cancer more people will live longer and contribute more taxes to the Social Security trust fund. Even if it wasn’t mathematically outlandish, generating more tax dollars shouldn’t figure in the top 1,000 reasons to cure cancer. Just the same, there may be some reasons to drill for oil. Lowering the price of oil isn’t among them.
And there are a few places worth drilling: The world isn’t about to switch away from its oil-based economy overnight. Canada’s gigantic oil sands reserves come to mind, as does that other off-shore prize more than 4,000 American soldiers and a few hundred thousand others have died for, so far — Iraq’s 100 billion barrel oil reserve that Exxon Mobil, Shell, Total and BP are ready to tap again after being thrown out by Saddam Hussein in 1972. (This time, the consortium secured 58 permanent American military bases for its protection.) The war-for-oil aside, the price of that oil should reflect its decline as a resource and its polluting effects as a fuel. The higher prices should spur innovations. As far as fossil-energy costs are concerned, there’s nothing more overdue than higher prices, especially if it blunts consumption.
Still, current prices won’t stay this high. The market is most likely in an unsustainable price bubble. But drilling more to generate even an extra 1 million barrels a day six to eight years down the line (because not a drop of oil will be produced until then) will make a difference in 2015 gas prices only in the minds of people who like their promises served up in crack pipes. Not that there’s that much oil to be had here. America as an oil power is history. It can only remain so at the expense of others (hence, again, Iraq). But that’s getting the drill too close to the mother lode of open secrets.
Peak oil is the theory that sometime this decade, more oil will have been extracted from world oil reserves than remains in the ground. Some think that point may have been reached. Canada’s oil sands, which may hold upwards of 150 billion barrels (half of Saudi Arabia’s reserves) suggests peak oil is still a few years away. But it’s coming soon, because worldwide consumption keeps increasing fast (it was 68 million barrels a day in 2000. It’s around 80 million barrels a day today. Americans account for a quarter of that). Debate peak-oil theory all you like. In the United States, oil production peaked in 1970, at 9.6 million barrels a day, and has been falling quickly since. Prudhoe Bay in Alaska, by the way, didn’t begin production until 1977. That didn’t stop decline. Production was barely above 5 million barrels a day in 2006, and almost 1 million barrels a day less than when Bush took office. Drilling in the Arctic refuge and offshore is oil companies’ attempt to milk every inch of land and seafloor for extra dividends. It has nothing to do with alleviating consumer costs.
Three realities to keep in mind when guzzling oil addicts’ distortions and wishful drilling. First the Atlantic and the Arctic contain a few billion barrels of oil at most. Second, projected increased production in Saudi Arabia, Canada and Iraq will overwhelm anything produced in the United States. Third, energy independence is a pipe dream — especially when the country insists on increasing its dependence on oil, whatever its provenance, rather than innovating its way out of it.
This Third Oil Shock will pass. But it’s neither the last nor the most painful. Absent a national shift away from consumption toward conservation and alternatives, greater shocks are ahead—deservedly so, considering what little we’re doing to avoid them.
This is an uneven essay. You need to become a bit more familiar with peak oil to grasp its scale; that this is not going away; there is no bubble and innovation does not create energy – if that’s what you’re suggesting.
For instance, this is incorrect:
Canada’s oil sands, which may hold upwards of 150 billion barrels (half of Saudi Arabia’s reserves) suggests peak oil is still a few years away. Comment: Peak oil has nothing to do with the tar sands. It’s about the volumetric flow of light, sweet crude, that is, conventional oil. Reserves are a red herring; it’s about how much can you get out of the ground per day. We may be at peak now. Plus you need to consider Energy Returned on Energy Invested. Conventional oil has no peer in this dimension, particularly tar sands, which may have as low as 2 or 3 to 1 energy return. For comparison EROEI from Texas oil in 1930 was 100 to 1, today about 20 to 1; we probably need at least 7 to 1 to run an industrial society.
First the Atlantic and the Arctic contain a few billion barrels of oil at most. Correct.
Second, projected increased production in Saudi Arabia, Canada and Iraq will overwhelm anything produced in the United States. Comment: Saudi Arabia looks likes it’s peaked; Canada will not be a big player –in fact, they may in a few years halt or reduce exports to us. NAFTA be damned. The tar sands are failing in several dimensions and they will only –at best- yield a few million barrels a day. Iraq’s “reserves” are probably overstated, but nonetheless they may be the largest in the world. Plus, look into the Export land Model to see why exporters are selling less on the international market and consuming more at home.
Third, energy independence is a pipe dream — especially when the country insists on increasing its dependence on oil, whatever its provenance, rather than innovating its way out of it. Correct, but we’re not innovating out of this if you think we’ll just get ourselves together and throw a toggle switch and keep on producing more and more energy. Peak oil is a symptom of the limits to growth and all that implies for American mythology.
In sum, hard times are descending on us and we will fight and fight against recognizing that the physical environment is a constraint on human intelligence.