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The Cost of Oil The two recent spectacular disasters—the tsunami in Asia and hurricane Katrina on the U.S. gulf coast—have seemed extraordinarily harsh “acts of God” to be inflicted on humanity so close together. Many environmentalists tend not to be surprised, seeing them as most probably consequences of global warming. Global warming, of course, is due primarily to increased release of carbon dioxide through combustion of fossil fuels, primarily oil. Other consequences of our extravagant burning of oil include damage to health and property by atmospheric pollution and massive expenditures of resources, including human lives, in various military adventures to defend sources of oil. It seems clear that the social costs of our addiction to oil are high, even though they are not recognized in the marketplace. Particularly in the face of increased global warming, it is imperative for our society to kick our oil addiction habit. How we will do it is another question. Technically, there are a number of options in various forms of solar and other renewable energy sources, and these will need to be brought into place gradually over time. Ultimately, the renewable sources are our only possibility for the future. For many applications, such as generating electricity or space heating, a switch to renewable fuels awaits only the economic incentives and the will to do it. In transportation, on the other hand, the switch will not be so easily accomplished, since the replacement fuels will have to fit into the existing infrastructure of roads and service stations. Substituting alcohol for gasoline would be relatively easy, but shifting to fuel cells running on hydrogen would not. Many commentators, therefore, conclude that in the short term (a decade or two) we will need to continue to rely on gasoline; hence our only hope is to focus on fuel efficiency and conservation. Probably the most effective and palatable mechanism for encouraging conservation is to allow the price of fuel to increase as a response to scarcity or through some form of taxation. U.S.
extraction of oil peaked in the late 1970s. In other words, the rate of
pumping oil out of the ground, always increasing previously, is now
declining. World-wide the extraction of oil seems to
be peaking now. The future, therefore, will meet ever-increasing demand with
a diminished supply. According to classic economics, then, the price of oil
will continue to rise steadily. The easiest shift beyond the conventional, already used by many oil companies, is to use “secondary extraction.” Oil in place is under great pressure from the burden of overlying rock. As oil is removed, its volume decreases and the pressure falls, finally to the point where it is insufficient to force the oil to the surface. In the past, what was left in place, usually around thirty percent, was simply abandoned for newer fields. Secondary extraction consists in restoring the pressure by injecting water or other fluid back into the deposit, allowing for extraction of most of the remaining oil. This additional effort brings added cost and results in higher prices. Other forms of non-traditional oil also await their turn at feasibility. There are massive deposits of shale oil which at present are too expensive to extract, but which would become attractive at higher prices. Shale oil consists of oil droplets embedded within non-porous shale rock. Extraction involves bringing the rock to the surface (in a process similar to strip mining of coal), crushing the rock, and extracting the oil with water. In addition to the direct costs of exploitation, there are social costs. The mining operation scars the surface and leaves mountains of waste shale, a relatively small volume of oil requiring massive quantities of rock. The process requires large quantities of water, whereas the deposits tend to be found in regions where water is scarce. In spite of these difficulties, shale oil will be exploited when the price is right. There are also significant deposits of tar sands oil. These deposits consist of viscous tar-like hydrocarbons mixed with sand. Unlike shale oil, these deposits tend to be deep, so that they cannot be scooped up at the surface. Their extraction would be similar to the pumping of conventional oil, except that the material needs to be heated to make it flow. Once it is at the surface, it can flow through pipelines only if they are heated. Once at its destination, the oil can be processed without significant modification in the existing refineries. Another possibility is conversion of coal, which is much more abundant than oil, to oil-like liquid or gas. This process could use a lower grade of coal than is required by power plants, for instance, and would remove the sulfur content, a significant drawback of conventional coal. This approach, of course, will bring with it the disadvantages of coal mining. In addition, it requires large quantities of water. One after another, these sources of oil will increase the price, hopefully thereby encouraging conservation Without doubt, voluntary conservation as a result of raised consciousness, enforcement of higher fuel efficiency standards, encouraging bicycling and walking, and numerous other measures would be easy, cheap, environmentally beneficial and effective means to conserving oil. Insofar as oil is used in the manufacture of most consumer products, efforts to curb purchases and encourage recycling would also help. Another approach is to use market economics to encourage conservation. One example would be the “congestion tax” presently in place in London and found to be both effective and popular. In effect, private automobiles would be charged a fee, approximately the equivalent of a taxi fare, each time they entered a designated urban area. Revenue from the fees would be used to subsidize public transit and for other social programs. Another proposal is to require motorists to pay an annual fee equivalent to the estimated social costs (pollution, congestion, etc.) of their driving, something of the order of a few thousand dollars a year. Here also, the revenues would be dedicated to social programs. Kicking the oil habit will need to be done. We can do it creatively and experience a more fulfilled life. A population used to walking and bicycling will be healthier and will have the satisfaction of meeting neighbors. A respite from traffic and parking places will bring us serenity. Eating locally produced food will foster a sense of being close to the earth. We may see the result as a lower standard of living, but it will be a higher quality of life. Dom Roberti http://www.ecospirit.cpfphila.org/ |