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Obama Negotiates with Himself on Oil. Again. May 16, 2011

Posted by Jamie Friedland in Media, Offshore Drilling, Politics.
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President Obama’s position on oil has been one of the most disappointing and incoherent facets of his administration to date.   On Saturday, this trend continued as the President announced a series of shifts to increase domestic oil production.

Pundits say he had to respond to high gas prices (which presidents do not control).  This maneuver is political capitulation in the face of a mismanaged narrative in the public discourse.  For years, this “debate” about gas prices has been dominated by flat out lies and misinformation in one of the more disgraceful displays of unaccountability in contemporary American politics. 

I have attempted to clear the air (pun intended) on this topic a number of times.  For a fuller explanation, please see this previous post.

Here’s the short version: conservatives claim that high gasoline prices are caused by liberal overregulation stifling domestic oil production.  That just isn’t the slightest bit true.  Oil is a global commodity, so its price is determined on the global market.  We, the United States, represent 25% of world oil demand and about 3% of world supply.  The point here is that we simply don’t have enough oil to affect global supply and thus prices.  And the kicker is that even if we could, OPEC is a cartel; they could/would effortlessly decrease their production to offset any impact we could have. 

Here’s another inconvenient truth: domestic oil production is already up 11% under Obama and was down 15% under Bush.  That reality doesn’t match this GOP argument.  Increased domestic drilling cannot lower gas prices.  Period.  Don’t take my word for it, read for yourself – even the mainstream media have finally caught on recently. 

Domestic oil production does not drive gas prices.

So back to Obama.  After failing to enact a single piece of oil-spill legislation, the President was finally starting to sound like a progressive on energy again.  In an earlier address he even pointed out the supply/demand reality I described above, although he inexplicably refused to take it to its logical conclusion that drilling cannot be a solution.  To now increase drilling as a response to gas prices validates the baldly fabricated GOP narrative.  Much like the current deficit focus, we’re conceding not only the point but adopting their frame as well.  No good can come of that.  It just doesn’t make any sense.

Recall that last year, right before the Congressional energy debate, the administration unveiled a plan to dramatically increase offshore drilling.  For which it asked nothing in return.  Rational negotiators might reward unilateral compromise.  A GOP party that miraculously resurrected itself by vociferously opposing any- and everything Obama does would of course do no such thing.  So we gave away a bargaining chip for free [that most progressives would have rather kept] and no energy bill was passed.  Also, this episode occurred just one month before the BP oil spill, which prevented the administration from using that catastrophe as a catalyst for needed change.

In both cases, the only rationale I can see is political maneuvering.  We know the Obama campaign prizes the supposedly undecided independents and what moderate Republicans still exist “in the middle.”  They think that carving out GOP territory for Obama will undercut Republican attacks.  But even if they pick up some independents, if they sell out progressives to do it that is not a net gain.  Additionally, the GOP won’t care that oil production is up – more than they want these policy objectives, they want to keep their base angry.  Have Obama’s oil moves blunted their attacks on this president as anti-oil or trickled into the Fox Newsiverse?  No. 

Obama’s tactics seem to operate from a flawed premise on bipartisanship about which I have previously written, and I am concerned about this plan.

Drill, baby, drill is political welfare for Big Oil, plain and simple.  It does not help America, it helps oil executives.  If we’re going to cave on offshore drilling, leverage it for a coherent energy policy.  If we’re going to increase domestic oil production, call it the compromise that it is and justify it as job creation (with a side of pollution and risk); don’t validate their lies.  I can stomach a certain amount of political compromise, but I can’t start defending the Fox News reality as truth.  

Peak Oil: The Cause of Ultra-Deepwater Drilling June 11, 2010

Posted by Jamie Friedland in Climate Change, Offshore Drilling, Politics.
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As Americans now know, it is difficult, risky, and expensive to obtain oil from deepwater reserves.  So why are we drilling there?  The answer to that question is a simple, two-word phrase you will hear more and more: “peak oil.

Oil is a finite resource (hence the distinction with “renewable” energy sources) that takes millions of years to form.  While more oil will eventually form on this planet again, the current global supply is, for all intents and purposes, all we’ve got.

In 1949, American geophysicist Dr. M. King Hubbert made an alarming prediction: the U.S. will start to run out of oil in 1970.  His theory was not taken very seriously at the time, but his analysis proved to be quite accurate.  As a result, peak oil is also called “Hubbert’s peak.”

On a graph, oil production forms what are essentially bell curves.  For example, in an oil field, production starts off slowly as only the first rigs come online and begin to pump oil.  Production increases quickly as more rigs are added and more oil is pumped.  Production begins to decline as rig construction tapers off or most of the oil is pumped, and then production falls quickly towards zero as the reservoir empties.  Past a certain point, no amount of extra drilling can increase the extraction rate because there is no more oil.

Oil production for a given region forms a bell curve.

This general bell curve holds at any scale: if you add up the production curves of all the individual oil wells in an oil field, you get a bell curve for that field.  If you add up the production curves of all the oil fields in a country, you get another bell curve for that country.  And if you add up all the production curves for all the countries in the world, you get our global oil production curve – also roughly a bell curve.

Hubbert analyzed data from U.S. oil fields and projected that domestic production would peak in 1970.  He was correct.  There have been many oil discoveries since then, and new technology and drilling techniques have given us access to resources previously unaccessible (including many in the Gulf of Mexico), but Hubbert’s peak accounts for this.

The U.S. passed its production peak in about 1970 - just as Hubbert predicted.

Make no mistake, any politician who tells you we need to increase domestic drilling to wean America off foreign oil is misinformed or lying to you. As of 2008, the Energy Information Administration (EIA) reported that the U.S. imports 57% of its oil.  With our country well past its production peak, that import percentage can go nowhere but up.  The only way we can get off of foreign oil is to stop using oil altogether.  Which, as it turns out, we will have to do anyways, regardless of politics.

The longer we use oil, the more of it we will import. We simply do not have enough oil left to drill our way to energy independence.

Our planet, like our country, has an oil production peak.  While peaks are only visible in retrospect, there is concern that we are nearing or potentially even past global peak oil.  It is widely believed that OPEC has long been overstating its reserves and production capabilities.  But even if they aren’t, and we haven’t passed our global production peak yet, we will at some point in the not too distant future.

Oil consumption is steadily rising as a result of inexorable population growth and a constantly industrializing world.  Unless oil production can also continue to rise, it is only a matter of time before oil production cannot satisfy demand.  That has not happened.  And the ramifications for our oil-centric economy in a world in which oil demand vastly outstrips supply are disturbing – they are essentially doomsday scenarios for life as we know it (not because our standard of living cannot necessarily occur without oil, but because we would not be able to recover from an abrupt cessation of cheap oil if we have not already been working on suitable alternatives).

This deserves an entire post of its own, but I have to mention that oil as an energy source is used almost entirely for transportation fuel.  This is why mass transit and hybrid/electric vehicles are so important.  If we can power transportation with our electricity grid, we can eventually power transportation from renewable energy sources like wind, solar, and geothermal. But that transition will take time, and peak oil will not likely give us much.  Especially not if oil companies refuse to accept this reality and politicians refuse to acknowledge and act to prevent this threat.

Critics of peak oil point out that there is still a lot of oil underground, and they are correct.  However, the oil that is left is the most expensive and difficult to obtain.  Energy Return On Investment (EROI) is the ratio of how much energy is obtained from resource extraction compared to how much energy it took to get it, and EROI is a critical measure in this discussion.

There remain vast quantities of oil underground, but most of them are in places that are difficult to access or even beyond the reach of current technology.  A given oil field will provide a finite amount of energy and, at market prices, a certain amount of revenue to an oil company.  If it costs more money and energy to get that oil out of the ground, transported, and refined, than that oil will provide, then it is not worth drilling; such oil will never be extracted (unless prices rise drastically).

Think about the old gusher oil fields back at the turn of the last century, such as Spindletop in Texas.  All you had to do was pierce the reservoir and the oil flowed out under its own pressure.  The EROI from fields like this was well over 100 (and very profitable).

This kind of thing doesn't happen much anymore. Except underwater...

That doesn’t happen anymore.  Today, oil EROIs have fallen by an order of magnitude. Oil companies have long extracted the easiest-to-reach and most profitable oil reserves.  Those are gone.  What remains is the less lucrative oil.  Oil you have to actively pump out of the ground in harsh environmental conditions.  There is a gradient of extraction ease, which is largely correlated with profit potential:

Image Source: The Oil Drum

Once you move offshore, the investment (both financial and energy) is greater.  The deeper you go, the more money and energy that drilling costs.  As oil fields become depleted they lose pressure, so carbon dioxide must be injected into the ground to keep the oil flowing, and that takes more money and energy.  Aside from being terribly polluting, extracting oil from oily sand is very energy intensive; the EROI for projects like the Alberta Tar Sands is about 5.

Oil companies are drilling in ultra-deep water offshore because we are literally running out of oil. The one “bright side” of this is that as oil supply lags further and further behind demand, prices will rise (possibly into the realm of $500/barrel).  When prices go up, really hard to reach oil that was previously prohibitively expensive becomes economically feasible to recover.  But our modern world relies not just on oil, but cheap oil.  For everyday people (and small businesses), oil that expensive might as well not exist.

We may have passed global peak oil. But even if we haven't, moving off of oil should be a no-brainer.

Even if climate change didn’t present a compelling argument to move off of oil, and I cannot overemphasize how much it does, this is a transition that we will need to make anyways.  If we switch to a new fuel source before we run out of oil, we may able to make the transition without too much disruption.  But if we ignore this looming threat and try to make the transition off of oil at the last minute, a global crisis of unprecedented magnitude is a distinct possibility.  We are doing virtually nothing to avert this coming crisis.

Our ignorance is not so vast as our failure to use what we know.” -M. King Hubbert (1903-1989)

Have a nice day!

If you are interested in Peak Oil, I encourage you to look up author James Kunstler, energy expert Matthew Simmons, or check out the discussion and resources on TheOilDrum.

Full list of oil spill questions/answers here.