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Oil Industry Still Coming Under Fire

By Gail Tverberg | Fri, 31 December 2010 16:44 | 1

Bashing the oil industry seems to be popular. The most recent example is the New York Times’ editorial They haven’t learned.

I don’t think any industry is perfect, but I also have a hard time seeing that any industry should be singled out for uniquely harsh treatment. Things are going to go wrong whenever human decisions are involved, so we need to figure out ways to make systems as idiot-proof as possible.

With respect to blow-outs, a Joint Industry Task Force was put together shortly after the Deepwater Horizon blow out to take steps very quickly that would reduce the likelihood of blowouts and improve the possibility of control if such blowouts do take place. I don’t think that it is possible to completely eliminate blowout risk, but steps such as this task force is taking would seem to go a long ways. Stopping work elsewhere doesn’t really help the situation.

One of the big issues with oil is our tremendous need for it, just to keep current systems operating. It is fashionable to think that wind, or solar PV, or biofuels can somehow substitute for oil. Wind and solar PV don’t substitute for oil. What they do is create intermittent electricity, which is not at all the same. Biofuels don’t scale well, and unless they are “chemically equivalent” tend to cause problems in the machinery that use them, if they are added as more than a small percentage of the fuel mix.

Another big issue with oil is its cost, especially when it is imported from around the world. There is a huge advantage in producing oil in this country if we can–in terms of local jobs, and in terms of keeping the funds in our own economy.

Oil from abroad may not always be as available as everyone expects, either. The New York Times editorial talks about the US controlling only 3% of the world’s known reserves. In fact, OPEC reserves used in calculating the 3% ratio seem to be greatly overstated, so the US likely does control far more than 3% of the world’s productive capacity. But a lot of folks have stuck their heads in the sand, thinking that OPEC has a great deal more productive capacity than it likely really has. Overstated OPEC oil reserves are an issue the New York Times should be bringing to its readers, but it has not.

Oil production in the US is not something that one can just turn on and off at will. People who work in the industry depend on stable job situations. If trained workers in the oil industry can’t find jobs in the oil industry, they will move on to other industries, where they can find jobs. If one stops and restarts drilling, the danger is that there will be fewer workers with experience later, making the risk of accidents higher.

Government oversight of the oil industry (and probably a lot of other industries) has not been very good. It is hard to see how this is going to change in the near future, because it takes a lot of training to understand appropriate procedures, and this really can only be learned by working in the industry. It may be that the oil industry itself will need to be involved with more aspects of regulation, and the government will need to play a more limited role. But halting drilling while all of this is sorted out doesn’t really help the result.

It seems to me that business can and should go on as usual, while all of the details of regulation and preventing future blowouts is sorted out. The industry had a good safety record prior to the Deepwater Horizon blowout, and it is taking steps now to prevent future blowouts. After seeing the high price that BP is having to pay for its spill, companies clearly have a financial incentive to make certain that they are operating safely. So it seems to me that the harsh position of the New York Times is unnecessary.

By. Gail Tverberg

Gail Tverberg is a writer and speaker about energy issues. She is especially known for her work with financial issues associated with peak oil. Prior to getting involved with energy issues, Ms. Tverberg worked as an actuarial consultant. This work involved performing insurance-related analyses and forecasts. Her personal blog is ourfiniteworld.com. She is also an editor of The Oil Drum.

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  • Anonymous on January 01 2011 said:
    In my humble opinion the oil industry has taken an unjustified bashing. I have no love for that industry, because I seem to remember applying for a job with one of the majors, and being turned down, but I believe that they have done a good job for the citizebs if the Big PX over the years. The problem is that they are going to have to take the bitter with the sweet, and the bitter is that oil is scarce. And for reasons that I will not go into here, it will remain that way.

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