Oil Post Part 3

Please note that the following post is riddled with sarcasm. Those whose delicate nature cannot handle such are strongly encouraged to not read this post.

At DSN we seem to have a track record for stirring the pot when it comes to Texas T. Early on, I did this post which generated some lovely comments.

Recently, Kevin kicked off the Black Gold trifecta with his post on the Republican plan, which seems like a very liberal use of the word plan, to cure all of our oil problems. Well researched and insightful, it didn’t really generate the heated debate Peter and I have come to expect from an oil post.

But then came Peter…who dare suggest that oil concerns may have been a factor in the Falklands War. How dare Peter make people think? Totally uncalled for. Peter’s post still seems to be generating comments of varying intelligence. Peter also received the “I Love Your Blog Award” from a dedicated fan who rather attack someone than think. All this seems to rest on the argument that oil was not discovered until 1998 and the war was in 1982. I suppose people expect something like this

“Hey Jeb why don’t we drill here and waste a bunch money?”
“Great idea Festus!”

In actuality, and unsurprisingly, oil companies invest millions into crack teams of modelers and geologists who spend years generating predictions to guide future exploration. This is all done before a big expensive ship is sent out to conduct a test drill at the site, say in 1998. To think that nobody in 1982 had any idea whatsoever that there was a better than average chance that oil may be off the Falklands is naive. Whether that actually was a minor factor in the war is worth debating. But again we don’t want to make anybody’s brain hurt.

Now it is time for my post on oil!


The first bit of absurdness is something that Kevin already touched upon but I have decided to show it in graphical format. The Republican Plan to tap into offshore reserves…

oilreserve.jpg

Thank God We Are Saved From the Oil Crisis!

oilreserveestimate.jpg

The most optimistic, sunny day scenario of how long we can last on oil reserves, calculated by the oil industry themselves, is just 40 years.

Why is gas so expensive?

bigoilprofit.jpg
Above is the stock price for Exxon Mobil verses the Dow Jones Industrial Average over the last decade. Notice the far greater growth in Exxon Mobil over the last few years compared to the DJIA. Surely gas prices have nothing to do with record profits?

Maybe hybrids are the answer?

Current hybrid cars are designed to use internal combustion engine, electric motor and battery technology to improve fuel efficiency and reduce greenhouse gas emissions. Which they do. Slightly. Certainly not enough to make any major impact within the time-frame(s) we’re in all likelihood operating under. The double whammy pressures of global warming and declining oil supplies. We have run out of time for tinkering with gas-electric technology that gets less than 150 to 200 MPG. These rudimentary hybrids are a step that is out of step because it is a step that should have been taken 20 to 30 years ago.

Keep in mind that if everyone in the U.S. drove a Prius, which on a good day gets about 45 mpg, our total U.S. oil reserves would still only last us 6.1 years. Hybrid usage may make us feel better at the end of the day but are we just plugging a hole with our finger to stop water from flowing fast?

Dr. M (1628 Posts)

Craig McClain is the Assistant Director of Science for the National Evolutionary Synthesis Center, created to facilitate research to address fundamental questions in evolutionary science. He has conducted deep-sea research for 11 years and published over 40 papers in the area. He has participated in dozens of expeditions taking him to the Antarctic and the most remote regions of the Pacific and Atlantic. Craig’s research focuses mainly on marine systems and particularly the biology of body size, biodiversity, and energy flow. He focuses often on deep-sea systems as a natural test of the consequences of energy limitation on biological systems. He is the author and chief editor of Deep-Sea News, a popular deep-sea themed blog, rated the number one ocean blog on the web and winner of numerous awards. Craig’s popular writing has been featured in Cosmos, Science Illustrated, American Scientist, Wired, Mental Floss, and the Open Lab: The Best Science Writing on the Web.





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11 comments on “Oil Post Part 3
  1. Craig, while I agree with the upper part of your post dealing with offshore resource assessments and politicization of it (I looked into the numbers myself here), I find the answer to the question ‘why is gas so expensive’ spectacularly oversimplified.

    Are you suggesting price gouging? Are you implying a single-factor explanation?
    What about the weak US dollar? What about long-term global supply worries? What about short-term production disruptions (e.g., currently in Nigeria)? What about growing global demand? What about speculators? … and so on.

    I’m not saying we shouldn’t address corporate greed, but singling that out implies a simply solution to a incredibly complex issue. Just my two cents.

  2. I simply suggesting that all while all the factors you mention may be important, the oil companies are using it as a time to justify price increases.

  3. Oil companies don’t set prices … sure, they are taking advantage of and benefiting from increased prices, but they don’t determine them. See here. Unless, of course, you are suggesting organized and coordinated collusion between commodities traders and oil companies.

    The misconception that oil companies sit around in rooms and set prices at will keeps getting repeated over and over again and I don’t know why … I think so people have a single “enemy” to unify against, someone to blame.

  4. Exxon’s share price is a reflection of the price of oil, not an indicator of causation. Then of course we have the public which only notices the local price of gasoline. A more interesting question is why have gasoline prices not gone up nearly as much as oil prices? Why is US refinery capacity utilization down? The answer to both is that gasoline is so cheap wrt the oil price that it is unprofitable to refine. The IOCs (Internation Oil Companies) such as Exxon only control about 15% of the oil, The national oil companies control the rest (and even more of the promising places to develop more). The Iraq war was partly about getting the IOCs access to promising oil fields -they are largely excluded. All the NOCs are doing is benefitting from the much higher price for their product. Of course they are also taking advantage of the crisis to push for more places to explore, and pump -thats where the calls to drill, drill, drill are coming from.

    The real answer, is the old economics bugaboo supply versus demand. Supply has more or less stagnated. Supply is usually measured by all-liquids, including lower BTU/barrel stuff like natural gas liquids. All liquids production is still on a slight increase, total BTUs of all produced oil is already on a downward trend. Then if we look at demand, the world’s middle class, has been rapidly expanding of late, we have very many more consumers competing for a more or less fixed commodity. Expect more of the same to happen -unless the world economy tanks so much that demand is seriously quenched. Essentially we are witnessing Malthusian economics coming into play, in a rather large way.

  5. Okay, I’ll bite.

    Firstly, I apologized at the time to Peter for my over-reaction (I have several ties with the Falklands both personally and professionally), and Peter accepted his mistake, so for you to bring it up again here to continue the nastiness is, frankly, a bit cheap. Besides, I think it’s fair for us lower forms of blogging

    Secondly, again, nobody gave a damn about Falklands Oil in 1982 (we were swimming in North Sea Reserves), and you and Pete have yet to produce a single piece of evidence to contradict that. I’d also like to ask you exactly what you think Britain is gaining from this oil, financially? To use innuendo and assumption to suggest a war was about oil makes you little better than the conspiracy theorists.

    Thirdly, on the domestic reserves point, completely agree, and if you’re going to pick out the worst post from my blog, it would have been nice if you’d looked around and given the folks here a link to the comprehensive post I did on the folly of going for domestic oil reserves a few days ago (http://layscience.net/?q=node/156).

    My final point concerns prices. While I agree that Exxon are a nasty piece of work, gas is not expensive because Exxon chose it to be. It is expensive due to a complex network of forces, not the least of which is, simply, scarcity.

    Anyway, it’s good to see someone else attacking this oil reserve myth, so keep up the good work.

    Martin

  6. Whoops, in the above the first paragraph should end “Besides, I think it’s fair for us lower forms of blogging to hold the SciBlings to account, given their position in the community”.

  7. Speculators have an awful lot of responsibility over the recent loony shifts in oil prices, more so really than any given oil company or even OPEC do. It’s the same with most dramatic shifts in prices, be they commodities or stocks etc. They usually have more to do with people’s perceptions than reality.

    Anyway, high oil prices are not the problem, they’re just a symptom. The problem is oil is a finite resource which we’re using up at an ever increasing rate and so are going to run out fairly soon. New sources of oil becoming economically viable doesn’t solve the problem, it only postpones the inevitable for a bit. If that time is used to develop effective alternative, preferably renewable, sources of energy, then that is great. If not, then the problem is effectively being ignored.

    (I say “preferably renewable” because none renewable if they’ll last for a while would do as another stopgap but thats still only postponing the inevitable, not resolving it.)

  8. We certainly touched a nerve with these oil posts. We MUST do more! In our defense, commenter John M. from the Falklands post confirms seismic work in the 70s showing encouraging signs of oil and gas around the Falklands. So, its not at all far fetched to think Britain and Argentina were aware of the potential reserves at the time of the war. Other factors were clearly at play in the conflict, though.

  9. The problem with the oil posts is that you’re veering towards the realm of conspiracy theories. There is, quite simply, as much evidence that this conflicted was motivated by oil as there is that Mossad knew about 9/11 in advance – i.e., none.

    McClain mocks me above, but I’d like to ask him why on Earth he thinks then that Britain in 1981 was planning on reducing her military presence in the region, why on Earth we’d even contemplate a war for oil when we were flooded in the stuff from the North Sea. Plus, I don’t think Britain is getting any benefit from this oil anyway – the money stays in the Falklands Administration.

    In terms of general oil stuff, this post is in the right direction, but I think you’re giving a far too simplistic picture, which is what people are complaining about here. The suggestion, for instance, that the U.S. has 21 gigabarrels of oil reserves is simply wrong, and your failure to address the true size and nature of the beast will simply mean that oil denialists will seize on this post and slate you for it.

    At any rate, I do enjoy this blog, and you are going in the right direction I think, so good like.

  10. I would echo Martin’s comments re general direction … I LOVE Deep Sea News … I don’t want to see the various oil-related theorists and cranks getting any stronger. Since I know at least something about petroleum geology, I’m making sure blogs I like and read get their facts straight. I consider DSN part of the reality-based community and hope it stays that way.

    As for the Falklands stuff … I haven’t done the research … I’ll let you guys figure that out :)

  11. I’ll speak for all of us when I say we appreciate and enjoy the spirited conversation and insights of our readers. We try and bring you new and interesting stuff on a near-daily basis, and by doing so we sometimes make mistakes. You guys help keep us straight about the facts and that’s very important. Thanks for the props and the support. Its really nice hearing from our co-bloggers.

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