The Deepwater Horizon disaster in the Gulf of Mexico is providing barrels of new ammunition to pundits on both the Right and the Left who contend we have to end our “addiction” to oil.
Repeating this meme – which we’ve been hearing non-stop since George W. Bush used it in his 2006 State of the Union speech -- allows pundits to sound professorial and rational. The term “addiction” is a loaded term that appeals directly to the self-help/self-improvement genre that Americans are predisposed to accept. Upon hearing that word, the supposed cures are easy to foretell: we must give up the addiction, go cold turkey, jump on the treadmill, eat fewer desserts, and in the process we will be transformed. And just as the recovered addict becomes a new man/woman, this mythical “new” America that frees itself from the petroleum junkies in the Middle East will be made stronger, more employable, and of course, thinner and better looking. Quitting oil will be as easy, something akin to appearing on “America’s Biggest Loser” except this energy revolution will not be televised.
If only it were so easy.
The blowout in the Gulf is a heartbreaking mess. I say that as someone who swims, fishes, and birdwatches on the Gulf Coast. But as awful as the blowout is -- as dreadful as the environmental damage is and will likely be for years to come -- the simple unavoidable truth is that we humans cannot, will not, quit using oil. If oil didn’t exist, we’d have to invent it. No other substance can compare to oil in terms of energy density, flexibility, cost, and convenience.
For all of the myriad problems that oil creates, it also provides us with unprecedented mobility, comfort, and convenience. While we think of oil primarily as a transportation fuel, it’s also a nearly perfect fuel for heating. It can be used to generate electricity. When refined, it can be turned into an array of products ranging from cosmetics to shoelaces and bowling balls to milk jugs.
The addiction meme inflames the masses and makes for convenient talking points for ambitious politicians, but the reality is that oil remains an absolutely critical commodity in the global economy. And that’s why BP and Transocean were out there in the Gulf of Mexico drilling in 5,000 feet of water. A decade ago, a colorful railroad lawyer named Don Cheatham told me “without transportation there is no commerce.” Cheatham’s point is clearly true. But the corollary to Cheathman’s point is also obvious: without oil there is no transportation. About 95 percent of the world’s transportation fuel comes from oil. Thus, without oil, there is no commerce. And in today’s world, the people who are the most mobile are also the most affluent.
While American voters are being inundated with talk about addiction, the reality is that the U.S. oil market has quit growing. Since the Exxon Valdez spill in 1989, global oil demand has increased by nearly 20 million barrels per day. But the U.S. accounted for just 1.6 million barrels per day of that new demand.
The peaking of US oil demand is being driven by a number of factors including the aging of the population and improvements in efficiency. In June 2009, Cambridge Energy Research Associates issued a report which projected that U.S. demand for automotive fuel will peak in 2014. Meanwhile, Exxon Mobil expects U.S. demand for transportation fuel to plateau by 2015 and then fall by about 10 percent by 2030.
Nearly all of the new growth in oil demand is coming from the developing world. Between 1990 and 2008, oil use soared in places like China (up by 244 percent), India (138 percent), South Korea (121 percent), and Saudi Arabia (120 percent).
So are the Chinese, Indias, Koreans and others around the world “addicted” to oil, too? No. They are addicted to prosperity. And so are we.
By Robert Bryce