Wednesday, June 09, 2010

OIL: It's a Blessing, Not An Addiction and It's The Single Most Flexible Substance Ever Discovered

"Of course there are problems created by oil, as the Deepwater Horizon calamity so heartbreakingly demonstrates. But most things of great value come with downsides. There are 40,000 traffic fatalities in the United States each year, but no rational person suggests doing away with cars, trucks, and highways. Airplanes sometimes crash and boats sometimes sink, but air and sea travel are not derided as “addictions’’ we need to break. Deaths due to hospital infections, medication errors, or unnecessary surgery number in the scores of thousands annually, but who would recommend an end to medical care?

There is no denying the drawbacks associated with oil, but its advantages are equally undeniable. American wealth, progress, and autonomy — the most dynamic and productive economy in history — would be impossible without it. What we have isn’t an addiction, but a blessing."

~Jeff Jacoby, "Oil Fuels Better Lives"

16 Comments:

At 6/09/2010 2:51 PM, Anonymous Anonymous said...

We've built our society around cheap oil. Now the oil is not cheap so we suffer.

It all made perfect sense when oil was seeping to the surface in West Texas. It makes no sense when you have to go out into hurricane alley and drill 5 miles below the ocean floor to find economical reserves... alas we have no choice because we're addicted!

But hey, spin it any way you want.

 
At 6/09/2010 3:06 PM, Anonymous Novee said...

Oh, shut up Anonymous. This is one of the few things he has not spun.

You talk about us being built on "cheap oil" but I'll bet you never once looked at inflation adjusted oil prices.

The only reason we HAVE to go out five miles and drill in mile deep waters is because people with your mindset won't let us drill on land and in shallower waters. With OPEC, gasoline taxes, and regulation we have an artificial shortage and HIGHER oil and gasoline prices than we would otherwise have.

Great article Dr. P. I'm glad there are people who think rationally and write well. This author is on my must read list.

 
At 6/09/2010 3:47 PM, Blogger Junkyard_hawg1985 said...

Anon: I recently made two trips. The first was to Jamestown Settlement (1607) in Virginia. The second was the 1850's living farm at Land Between the Lakes in Tennessee. What I found interesting was how little technology had changed between 1607 and 1850 for common people (243 years). There were some small changes, but nothing compared to the changes we have seen in the past 50 years.

Why the difference? Oil has played a huge role. If you no longer want to be addicted to oil - go back to no air conditioning, no indoor running water, travel by wagon, major scarcity in materials like steel, and wiping with corn cobs - that is your business. I for one am VERY grateful for the blessings provided by oil and plan to continue to reap its rewards.

 
At 6/09/2010 4:14 PM, Anonymous Anonymous said...

I have a problem with Jeff Jacoby's use of the word "autonomy" to describe a result of oil. The US is not autonomous (for those who aren't English teachers, autonomous means "self-sufficient/free." We're pretty dependent upon other countries for our oil supply. And ironically, the Department of Defense uses more oil per day than the entire country of Greece! I guess you need to use oil to get oil, eh? http://www.energybulletin.net/node/13199

 
At 6/09/2010 4:25 PM, Blogger rufus said...

Betcha don't. The EIA, in its "Short Term Energy Outlook," states that Global consumption will go up by 3.1 Million Barrels/Day in the 2010 - 2011 time frame.

Then it states that "Production" will Increase by 0.81 mbpd.

Since we're using a little more than we're producing today (as we draw down the floating inventory,) this sounds like a pretty good trick.

China, India, the Opec countries, and the other Non-OECD Countries are ramping up "Consumption" to the moon, chilluns, and Global "Production" has, essentially, Peaked.

Crunch-time, Buckaroos.

 
At 6/09/2010 6:05 PM, Anonymous Anonymous said...

I'm actually an O&G investor from Texas. I'm definitely not spinning?!? Seriously, it used to be to find oil you just looked for seepage. Oil bubbled to the surface. Why don't you google seepage. Heck, they even made sitcom about a guy named Jed who discovered oil while shooting at a rabbit.

Nowadays, there is no oil within a mile of the surface on land... at least not in economical quantities. You can find some gas, but not oil.

Oil is AMAZING stuff but you're kidding yourself if you think we have plenty of cheap oil that's just not being exploited because of NIMBYs. We need to "restructure" our society and it will be painful. You can put your head in the sand and pretend otherwise, or you can watch the transfer of wealth to those who buy a Prius, work close to home, insulate a little bit and throw a few solar panels on the house!

 
At 6/09/2010 7:15 PM, Anonymous Novee said...

We are not "dependent" on foreign oil just because we trade for it. The US actually EXPORTS oil to Asia. Most of our oil comes from US. The largest foreign supplier is Canada which I don't consider "foreign".

We'd have plenty of domestic oil if we chose to drill for it.

 
At 6/09/2010 7:38 PM, Blogger pakurilecz said...

"all made perfect sense when oil was seeping to the surface in West Texas."

been a real long time since oil seeped to the surface in Texas and not in West Texas for sure.

in the 1850s when Col Drake drilled his well, we were hunting down whales to supply us with lamp oil. if not for Drake we wouldn't have whales.

we continue to drill deeper and deeper. we also drill horizontally so as to minimize the footprint needed by wells.
I don't think anyone has ever said that oil pulled from land wells is cheap, but it is infinitely cheaper and easier to drill a well on land than to drill a well in 5,000 foot ocean depths.

 
At 6/09/2010 10:41 PM, Anonymous Daniel said...

"The only reason we HAVE to go out five miles and drill in mile deep waters is because people with your mindset won't let us drill on land and in shallower waters. With OPEC, gasoline taxes, and regulation we have an artificial shortage and HIGHER oil and gasoline prices than we would otherwise have."

'Fraid not. Non-OPEC production peaked six years ago, we've had stagnate production despite higher prices, the N Sea is producing less than half the oil it was 10 years ago and discoveries haven't kept pace. Last year we had roughly 15 billion barrels of discoveries thanks to some high profile fields - that was considered a good year compared to previous one in which we nabbed roughly 10 billion barrels, yet it didn't keep pace with demand (30 billion barrels). Discoveries have fallen since the '60s and we've been consuming more than using since the '80s.

 
At 6/09/2010 10:48 PM, Anonymous Daniel said...

"We are not "dependent" on foreign oil just because we trade for it. The US actually EXPORTS oil to Asia. Most of our oil comes from US. The largest foreign supplier is Canada which I don't consider "foreign".

We'd have plenty of domestic oil if we chose to drill for it."

America produces roughly 8 mbpd (crude+condensate) and consumes about 18 mbpd - we thus import over half the oil we use. The reason some corporations sell to Asia is based on negotiated contracts with foreign companies, not because we have spare capacity. US production peaked 40 years ago. Texas produced over 2.5 mbpd in the '80s, but today yields less than 1 mbpd.

 
At 6/09/2010 10:58 PM, Blogger Michael said...

If you take civil or mechanical engineering, you learn that much of the needed knowledge used today was known thousands of years ago. The Differential is often claimed to be less than 200 years old, yet there is one in a Greek museum that is over 2 thousand years old. The same goes for things like chrome steel and the flying buttress.

A car or skyscraper would be a curious thing to a well education ancient Greek, but not beyond his understanding.

We are where we are because on inexpensive energy inputs.

If oil was so rare in the US, then why is 95% of it's land and water off limits to drilling? Why do states and the federal government ban something that doesn't exists?

 
At 6/09/2010 11:11 PM, Anonymous Daniel said...

"I'm actually an O&G investor from Texas. I'm definitely not spinning?!? Seriously, it used to be to find oil you just looked for seepage. Oil bubbled to the surface. Why don't you google seepage. Heck, they even made sitcom about a guy named Jed who discovered oil while shooting at a rabbit."

I remembered when Texas was still producing 2.5 mbpd in the '80s - and that was down from its '72 peak of 3.4 mbpd. Today it yields less than a 1 mbpd. It's hard to believe, but this oil glutton was producing half the world's crude in the '50s.

 
At 6/10/2010 1:06 AM, Anonymous Anonymous said...

Why do people say oil isn't cheap? I can move 1 ton of steel, plastic, and other junk, including myself, about 25 miles for about $3. My neighbor drives a Prius and can do it for less. If I stop at Starbucks on the way, I'll more than double the cost of the trip. Yet more of the price of the gallon of gas is due to taxes than the Frapaccino.

What other fuel is as cost effective? Moreover, what other source is available in enough quantity to stay that cheap?

Alternative sources can fuel at the margins now, but can't displace oil yet. There's not enough land to move a majority of vehicles to ethanol, and not enough raw material for batteries to go electrical.

Even when oil goes back above $100, it is still going to be tough finding a more economical source to get those container ships over from China, or fly to NY.

 
At 6/10/2010 9:42 AM, Anonymous Troy said...

The wide range of comments is fascinating. It seems that people either think oil is great and will be around forever, or they think oil is evil and should be banned immediately. I, for one, think that oil is not as prevalent as it once was. However, I also don't think that we should ban its use completely.

I think of alternative energy sources as a savings account, if you will. It won't sustain us for very long, but you're a fool if you don't anticipate a (temporary) shortage of fossil fuels at some point in the near future. Alternative fuels can help us in a crunch, but I don't see them as a replacement to fossil fuels. I guess that's why they're called "alternative" energy and not "replacement" energy (although many libs would like us to think that way).

 
At 6/10/2010 10:31 AM, Blogger rjs said...

yep: http://www.hubbertpeak.com/Duncan/Olduvai.htm

 
At 6/10/2010 11:08 AM, Blogger juandos said...

anon @ 6/09/2010 6:05 PM says: "I'm actually an O&G investor from Texas"...

Yeah and I'm both a brain surgeon and an astronaut presently circling the planet in the International Space Station...

"Why don't you google seepage"...

Why didn't you?

Natural Oil and Gas Seeps in California

 

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