Our society is built on oil. Every tiny facet of it relies on oil energy. We literally eat the stuff. There is no known substitute for oil. It is a magnificent gift — something for nothing, which is why we take it for granted.
Trying to explain this to economists is frustrating, because money does not have to abide by the rules of nature. Economics is not science — it is the art of wishful thinking.
Put it this way. Money creates dreams, but only oil energy can fulfil those dreams. In an oil shortage, money becomes litter. Our politicians cannot face the reality of this, so they hope and pretend that life will go on as before — business as usual. No-one dares question the wisdom of the money-dream because it will disappear if the sleeper wakes.
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The “economics” of oil energy goes something like this:
1. It takes a considerable amount of oil energy to find and exploit an oil deposit.
2. Think of the quantity of oil energy that is required to create all the apparatus of the oil industry from the raw materials in the ground. Think of pipelines stretching hundreds and thousands of miles across inhospitable lands. Imagine the energy required to pump sticky crude across such great distances, as well as the energy consumed in the construction and powering of great tankers, port facilities and refineries.
3. Consider the many thousands of employees in the oil industry, all requiring food, transport and shelter. Consider the extent of the infrastructure required to build and launch geophysical satellites to help eke out the remaining oil deposits. Consider the energy cost of so much ground-based exploration, most of which yields nothing these days.
4. Imagine, if you can, the energy required to build and fuel all the apparatus of the United States armed forces, whose task is to secure access to, then guard, the flow of oil from the world’s major deposits.
5. All of this is poised very delicately upon the premise that the recovered oil must yield more energy than all we consume in the pursuit of oil.
6. Of course we plundered the best and easiest of oils first. The poorer stuff requires ever more of it’s contained energy to be traded back for extra processing and transport. Therefore the net energy yield is dwindling faster than the quantity of the remaining oil … do you see?
7. The Holy Grail of oil depletion is the point at which the energy profit (energy return on investment, or EROI) is too slender to make all that effort worthwhile.
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How will we know when oil energy has hit the wall? Is it already near at hand? Is the oil industry simply going through the motions, carried along by fear, hope and inertia?
Unfortunately, much of the internal working of the oil industry is obscured behind a fog of politics, ambition, greed and the pathological pursuit of little pieces of paper. The last one is the hardest to understand, because those pieces of paper are the chief cause of unhappiness in the “civilized” world.
Those who saw the documentary The Corporation will know something about “externalities.” Externalities are costs which corporations fob off onto someone else, usually Joe Public, to be paid for out of the public purse. Big Oil is probably the greatest recipient of this Corporate Welfare in America, because of it’s extraordinary reliance on the might of the US armed forces.
Take the Iraq adventure, for example. Forgetting for a moment the revolting sight of so much road-kill, did you ever consider the invasion in terms of energy IN versus energy OUT? Can the plundered Iraqi crude come close to replacing or exceeding that which is being squandered in such a cavalier fashion? Not if the Iraqi freedom fighters can help it, that’s for sure. This is oil production Bush-style … and we all know about that, don’t we?
Once used, the energy is gone forever … for good! So have we been burning fine whiskey in order to get beer? That wouldn’t surprise me.
Here’s where the externalities come in. Although gas is two bucks a gallon at the point of sale, the true dollar cost must include the cost of the war. Factoring in that cost, is there an economist in the house who can tell me the real price of gas? But wait … there’s more! Better throw in a large chunk of the US education system, health care … and let’s not forget the latest scam, the selling off of American retirees into the casino world of the stock-market. Boy, that’s one great externality, for sure.
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(Scene shifts to the oval office, a couple of years from now.)
(A man, looking suspiciously like Dorian Gray approaches. He speaks with an Australian accent.)
“Georgie Boy! Ol’ Monkey Man! Mate, you’re the prince of externalizers.”
“Rupe, flattery will get you everywhere. Pull up a chair and have a soy … er, soylent biscuit.”
“Geez, George! How do you do that trick with your nostrils?” Hmmmm…. sniff. “Why George, this bon-bon has the texture of a kangaroo turd and the bouquet of my Aunt Fanny. Not bad! Who’s the chef?”
“Oh, it’s just a little something cooked up by Dick and the boys down at The Project For the New American Cuisine. Do you think the mugs will fall for it?”
“Mate, once the punters get an eyeful of Krusty O’Reilly with his face full of this offal, they’ll be fighting at the drive-thru like vultures in a drought! By the way, what do you think of my bio-diesel project?”
“Rupe, the extraction of volatile esters from the corpses of dead A-rabs is a masterstroke. Given their prodigious abilities in the sack, we just might have the beginnings of a sustainable industry here …”
“Well, I did express a desire for oil at $20 per barrel and you know how it is when I set my mind to something……”
(Camera pans across to a window, where a drilling rig can be seen threshing uselessly on the White House lawn …)
© 2005, by the author.
