February 24, 2018

Oil and What it Means For Our Future


For better or worse our economy is tied to oil, so I want to connect a few dots and explain, in part, why that is and what it means for our future.


Why Are We So Dependent On Oil?

To fully understand this, we need to go back to oil tycoon John D. Rockefeller.  Mr. Rockefeller believed that oil was a gift from God and he was determined to find as many uses for it as he could.  Don’t get me wrong, he wasn’t completely altruistic.  This also meant higher profits, as he could make money from the parts of oil that many other people were dumping in rivers and lakes as waste.  Some of the uses they discovered were gasoline, tar for paving streets, lubricating oil, Vaseline and paraffin for making candles.  Today oil and oil byproducts are used in those things listed above as well as polyester and other clothing blends, many plastics, many medications, such as cortisone and aspirin, not to mention the gasoline, diesel and jet fuel, which is reported to make up 2/3 of the oil that is used.


Harvesting Oil

The theme song from the Beverly Hillbillies said that Jed Clampett was “shooting at some food, missed and up from the ground came bubbling crude”.  While this is an exaggeration as to how easy it used to be, it’s not a huge one.  It used to be very easy to find and drill for oil, and the very first attempts to refine it weren’t much more than boiling it.

The same cannot be said today.  All easy to harvest oil has long been harvested.  Crews have to drill many miles deep into the ocean, which is dangerous and expensive.  There are vast amounts of oil shale, but oil shale is mined in the form of rocks that have solid bituminous materials that are released as petroleum like liquid when the rock is heated in the chemical process known as pyrolysis.  So, while it is there, is it harder to get than traditional oil deposits.

Due to several federal regulations on oil exploration, drilling and refining, the United States will always be a net importer of its oil.


Peak Oil

There is some confusion when it comes to this term, so let me define my use of it.  Peak oil is simply the point at which we have reached the peak of oil production.  This could but doesn’t necessarily mean that an oil field that has hit peak oil is running out of oil, just that it has hit the limit in the amount it can produce.

The problem that peak oil causes is that, in the last decade, China, India and some other developing countries, have seen a massive increase in the amount of cars and drivers, which means a massive increase in the amount of gasoline and diesel needed to fuel them.

This is nothing to worry about as long as the largest oil fields and the world’s leading oil producing nations stay out of peak oil.  As you can see from this story, Mexico’s Cantarell oil field, which is the world’s largest oil field, has reached peak oil and is, in fact, declining in production.  This report from CNN says “WikiLeaks cable: Saudi oil estimates may have been exaggerated”

It reports that:

“Saudi Arabia’s oil reserves may have been grossly overestimated and its capacity to continue pumping at current capacity exaggerated, according to a U.S. diplomatic cable sent from the kingdom in 2007.”


Alternative Energies

I don’t know of any alternative energy that could replace oil.  Some might say “what about solar?”  Solar panels are very expensive to make, thus very expensive to purchase and install.  I have seen estimates of $20,000 on the front end, which could take 20 years to pay for themselves.  By that time you would need to start replacing panels and would have already been replacing batteries.  There were several solar companies who were given millions of tax payer dollars by our current administration.  We have all seen the reports of them going bankrupt.

Wind just doesn’t produce enough energy for it to be viable to replace oil.  Sure, it could be used in tandem to reduce some of the oil consumption, but I haven’t seen enough information to know if this would be cost effective or be like solar and pay for itself near the end of its life.

Don’t get me wrong, I think we should keep looking for ways to make alternative energy a viable option.  I have to be realistic and say that there is a very good chance that America will be tied to oil to meet our energy needs forever.


What Does All OF This Mean For Our Future?

Simply put; higher prices for everything.  Remember all of the items I listed that oil are used in its production?  That was just a fraction of the many items.  I have seen lists with over 6,000 items on them.  Even if you find an item that used zero oil in its production, there was still fuel used to bring the parts together or to ship it to its destination.

Remember that I said an estimated 2/3 of oil is used for fuel, including the fuel you use to drive your vehicle.  It is also used to power the ships, planes, trains and trucks that deliver goods all over the world.

There are places in the world right now where a gallon of gas costs $7.  I don’t know about you, but I don’t have that much in my gas budget.  That means if prices ever get that high here, the money will have to come from something else.


What Can We Do?

I think the best thing we can do is pay attention and be thinking about it.  Be conscious of the electronics that are left on 24/7 and how much power they soak up.  As gas prices rise it may be prudent to look for car pool opportunities to get to work.  I know MNDOT has initiatives to put car poolers together and your state may as well.

What other ideas do you have on things we can do to prepare for rising energy costs?


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