Crude: The Story of Oil, Sonia Shah 2004

This 175 page book is a condensed look at oil, its history and future. It is packed with fact and detail and doesn’t miss much. Sonia Shah has now taken on the Pharmaceuticals in a new book See our previous post

Unholy Trinity (Big Oil Big Auto Big Tire), the Presidents, and the American Consumer

Oil, Auto, and Tire have for more than a century marketed ever larger, more expensive, gas guzzling, unsafe, products to a willing American public. In 1930 they banded together to take over and eliminate electric streetcars from American cities. Once in control, they removed the rails to be sure streetcars would never return. In 1947 GM, Standard, and Firestone were convicted of collusion to remove streetcars and fined $10,000 collectively.

NY Streetcar New York City Streetcar

Around 1969, OPEC raised oil prices fourfold and threatened to limit supplies to the friends of Israel. Nixon wanted to invade the oil producers but was bogged down in Vietnam. Gerald Ford started the program to hoard oil in the “Strategic Petroleum Reserve”. Many Americans followed his example, burying large gas tanks of hoarded gas in their backyards.

A second wave of fear was triggered by the overthrow of the Shah of Iran in 1979. Carter announced that the U.S. would use any means to secure Gulf oil. American consumers went into full panic, spending hours or even days in gas lines to top up their tanks.

American Presidents, dependent on the Unholy Trinity for campaign money and terrorized by public reaction to the threat of gas shortages, worked overtime to assure an adequate supply of the addictive stuff. Initially the moves were positive with Carter’s “gas guzzler tax” and increased mileage requirements. California led the way to tighter emissions requirements. By the late 1980’s the U.S. was well on its way toward energy self sufficiency.

Hummer Hummer

Then the Unholy Trinity struck again; this time with the SUV. Large vehicles requiring large tires are far more profitable than smaller more efficient vehicles. Somehow the public was convinced that these totally impractical, dangerous, unreliable monsters were “safer” because of their 4 wheel drive and massive size. Self sufficiency went out the window as profits soared for the Unholy Trinity. The SUV falls into a regulatory loophole which allows them to emit 5 times the pollutants of normal vehicles. To get around mileage requirements, big auto built over 1 million dual fuel vehicles which are able to burn ethanol. Since Americans are unable to buy ethanol this was curious. The manufactures were using ethanol fuel to pass EPA mileage standards tests, even though the vehicles using gas would get far lower mileage.

Suez, Valdez, and a Negligent Industry

Suez from Space Suez from Space Valdez Valdez Spill Valdez Bird Oily Bird

In 1956 Nasser seized the Suez canal in Egypt forcing oil to shipped around the horn of Africa. This started a boom in building ever larger single hulled tankers to haul the stuff. (Most ships are double hulled for safety) Then in 1989 the Exxon Valdez hit a reef and spilled 250,000 barrels of oil. The resulting lawsuits and bad publicity caused all big oil to conceal the ownership of their tankers and operate them through foreign flags like Panama, Bahamas, Liberia. The result is no government oversight or inspections, poor or no maintenance and inadequately trained and under-payed crews. The Valdez itself was repaired, renamed, and now operates in the Mediterranean. A few days ago, a court greatly reduced the damages owed by Exxon for the Valdez.

The same negligence is found throughout big oil. Offshore rigs are neglected and continue to collapse or otherwise kill their workers. Pipelines leak, refineries blow up, spills occur.

Piper Piper Disaster Refinery BP Refinery Disaster

Reserves in a Dying Industry

Oil production is in decline in virtually every country in the world. Where production is increasing, it will peak within a few years. Then why does the industry continue to tout its vast reserves to the public? For example, they project Greenland with a reserve of 47 billion barrels, the equivalent of the North Sea reserve, even though not one barrel has been found or is likely to be found in Greenland.
Big Oils internal reserves estimates are secret and available only to the CIA. They undoubtedly show the truth, that oil is fast running out.

The publicity surrounding Caspian Sea oil and Alberta tar sand oil make it sound like our problems are over. The Caspian Sea oil has yet to be found even though pipeline construction continues and the Alberta oil is nearly useless and is plagued by enormous production problems to say nothing of the environmental impact where Alberta stands to lose much of its water and all its trees.

The internal reality is reflected in the fact that no U.S. refinery has been built since 1975 and the entire infrastructure of off shore platforms, pipelines, tankers, etc. is in dismal repair.

Co opting the Universities, Lying about Global Warming

Big oil spends about 3% of revenues on research compared to 20% for typical technology companies. Some of this largess is given as strings attached grants to universities; primarily to the U of Texas, U of Tulsa, and Stanford. The seismic and other research supported by these grants is not shared with the public. Big oil treats the universities as if they were private labs. These grants are important to the universities, of course, and when big oil needed “scientists” to counter the research showing overwhelmingly the fact and implications of CO2 increases on global warming and climate changes, several professors were ready to sell their souls.

Public media has shockingly chosen to treat the conclusions of the entire scientific community against the opinions of a handful of hack academics in the pockets of big oil as equal sides in a serious debate about the reality of global warming. Hence the confusion of the general public mind on the whole question of global warming and its potential impact. See our recent climate change post

The military and Big Oil in the World

The British made the decision to convert all their ships to oil in 1912 even though Britain has no oil. As the worlds preeminent imperial power, Britain had no doubt that they could get all the oil they needed from the Middle East using military force where necessary. In WWII FDR and Churchill divided middle east oil between them with the U.S. taking Saudi Arabia’s oil.

The U.S. military today is the world’s largest consumer of oil. Fuel supply lines form the biggest and most expensive part of modern warfare. A fundamental tenant of warfare is to have permanent bases of operation near any theater of war.

Abrams Tank in Desert Abrams Tank in the Desert

It is no accident that George W’s VP is the former head of Haliburton, and that Condoleeza Rice is the only secretary of state to have an oil tanker named after her. When Saddam Hussein signed oil exploration and drilling contracts with Russia and China it was time for big oil and the U.S. military to move in. The Bush administration first coded their plan Operation Iraq Liberation (OIL) but soon thought better of the name. To this day journalists and media do not talk about permanent military bases and securing oil in the debate about the Iraq war.

Iraq War Scenes from Iraq War Bodies Iraq Pipeline

In the developing world, the discovery of oil has almost always resulted in worsening conditions for the people. The pattern is for big oil to do a deal with a small elite who enrich themselves in return for providing security for oil (killing anyone who gets in the way). When fighting and destruction occur, such as in Nigeria, western media (including the prestigious BBC, Financial Times, Reuters, New York Times, etc. mis portray the events as internal tribal warfare or insurgency, anything but protest against big oil which is destroying homes and livelihoods.

Alternate Energy Sources

A measure of efficiency for energy sources is to compare the ratio of amount of energy produced against the energy required to produce. In the early days, oil had an unbelievable ratio better than 100 to 1. With todays declining reserves, the ratio has fallen to 23 to 1. This still compares favorably to hydro power at 11 to 1; coal 9 to 1; and nuclear power at 4 to 1.

Solar Solar Plant Solar2 Solar Electricity Wind Wind Power

Solar energy has a ratio of 1.9 to 1 reflecting the high cost of producing solar panels. Wind power is about the same. Further research and building large scale production plants could improve the ratios for these renewable sources of energy.

Big Oil seems to look to natural gas for their future survival. Natural gas is cleaner burning but cannot be transported easily or for long distances. Overlooked by big oil in its promotion of natural gas is that any natural gas leaks pour methane gas which is far worse than CO2 into the atmosphere. At 3% leakage (the industry is near this level now), methane equals CO2 in its overall impact on global warming. As natural gas is developed and as existing pipelines and equipment age, we can expect methane to overtake CO2 as the major source of warming.

Natural Gas Natural Gas Pipeline Leaks Natural Gas2

Producing Ethanol from corn requires almost as much energy from oil as would be saved and wouldn’t significantly reduce CO2 emissions unless the ethanol plants somehow trapped the CO2. Then there is the question of how and where to store the trapped CO2. Ethanol also requires new pipelines and delivery technology because is mixes itself with water unlike gas. Big oil is clearly not interested in this investment yet they have a monopoly on retail outlets (gas stations).

Centralized hydrogen producing plants similarly require large consumption of energy and the delivery problems are even worse than for ethanol.

The current favored Bush plan, resulting in grants to the big three automakers is to produce vehicles that turn gas directly into hydrogen. These cars would be no more efficient or less polluting than existing hybrid vehicles but the government subsidies seem to assure that they will be built.

hydrogen Honda Gas Hydrogen Honda

Conclusion: Apocalypse?

So are we headed for the end of life as we know it? Certainly. Will we all kill ourselves in the process? Don’t know. At present, in spite of Al Gore’s best efforts, there is little will to change our consuming behavior. Massive changes in our attitudes and behavior is the only way changes will be affected. The power of the Unholy Trinity and the struggle for their very survival will continue to throw enormous forces into the political process and consumer marketing. Only individual consumers by modifying their behavior are in a position to withstand these forces.