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Aug 27, 2009 04:35 PM | 18
The American age of oil began 150 years ago today. Or, if you prefer the phrasing of President George W. Bush, the U.S. addiction to oil can be traced back to the original pusher "Colonel" Edwin Drake who began producing oil from the first commercial well near Titusville, Pa., (about 100 miles north of Pittsburgh).
The rest is history—the automobile, plastics, modern agriculture and, of course, climate change. But it all started with the Colonel's 69-foot wooden well that ultimately yielded roughly 40 barrels a day. To put that in perspective, the world currently produces some 85 million barrels per day, which provide us with a full 40 percent of our energy.
The Titusville find kicked off the first oil boom (to be followed by similar booms in Texas, Saudi Arabia and, most recently, Brazil) and left us with the enduring legacy of Pennzoil as well as the corporate children of the oil monopolies created by capitalist titans like John D. Rockefeller.
Today, oil companies like ExxonMobil and Chevron are known, among other things, for using their influence to oppose legislative efforts to control the carbon emissions linked to climate change (oil burning is high up in the list of human sources of excess carbon dioxide). And oil inspires geopolitical posturing (for example, embargoes and wars) that shapes modern history.
What's especially intriguing today is that Drake was inspired to drill his well by the high price of whale oil—the lighting fuel of choice back at the time. That high price was a result of dwindling supplies, as aggressive whaling had pushed many species to the brink of extinction.
And now we're doing the same thing with oil. Massive consumption by the U.S. and Europe, combined with growing consumption in China, India and the rest of the developing world, seems to be straining existing oil supplies. Oil price shocks are one result, and perhaps the end of cheap oil, or even what some call "peak oil" (when historic supplies crest and start to decline). In any case, the next question is: who will be the Edwin Drake of the 21st-century energy economy?
Image: © iStockphoto.com / Andrew Penner
Tags:
alternative energy,
pennsylvania,
oil,
age of ol,
whale,
edwin drake,
energy
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18 Comments
Add CommentExxon Mobil has spent untold millions trying to posture as an alternative energy company with ads on public television, and with large billboards on every jetway terminal at the Brussels Belgium network. The significance of the latter is that Brussels is the capital of the European Union, so the company tries to reach a worldwide audience in one stroke. Their public TV ads discuss the company's effort to get the contaminants like CO2 out of natural gas, implying to the public that they can burn natural gas with no CO2 emissions, which implies that they are working on ways of doing incomplete combustion so that carbon monoxide and particulate matter is emitted from the natural gas.
Reply | Report Abuse | Link to thisWhy why why does Exxon Mobil and the like spend their money to brainwash people instead of just deciding to spend their money doing something useful? I shudder to think that they use their government bailout funds (known as subsidies for exploration; funds they have been getting forever) to pay for their propaganda.
Speaking of propaganda, one usually doesn't consider deductions for the cost of producing a product a "subsidy". The government doesn't "give" Exxon anything. Quite the contrary as Exxon is one of the largest tax payers in the country. Simply because the government doesn't take every dime one receives from a consumer that buys one's product is no reason to consider what the government doesn't take a "subsidy". But hey, when Pat gets a job and earns income, let's all remember that any "take home" pay that Pat gets in his check after paying income and FICA taxes is just another government subsidy. What a free-loader!
Reply | Report Abuse | Link to thisAnd let's get the record straight. The Drake well was not the first oil well in the U.S. Historical geologic research data my father paid for circa 1979 pegged a well outside Oneida Tenn. as the first producing oil well in the U.S. It preceeded the Drake Well by a couple of decades or more (I believe the well was struck around 1819 but I am going from memory as I read the survey a long time ago). Unfortunately it was deep in mountainous terrain making it nearly impossible to commercialize. Plus there wasn't much of a use for oil yet. The well was accidental - they were actually after water. The survey mentioned the Drake well as being considered the first viable commerical well. But the Drake well definitely was not the first oil well in the U.S. Dad commissioned the survey because of a good oil producing lease on the mountain that over looks Huntsville Tenn. In fact, the land was leased from Bobby York - one of the grandsons of Alvin York. Yes, that Alvin York, a.k.a. "Seargent York" of WWI fame.
At some point in the very near future, there will occur a paradigm shift that will result in a new source of energy to replace oil, or a new technology that will result in a barrel of oil going many time farther than it does now (as was the result when automobile technology changed resulting in higher mileage). Black gold will follow the price curve of silver. Where is your money invested.....?
Reply | Report Abuse | Link to thisTax deductions for companies like Exxon are subsidies if they are not applied evenly to all taxpayers. The remaining tax payers pay a higher rate in order for Exxon to pay a lower rate. It is also anti competitive and the antithesis of free market ideology.
Reply | Report Abuse | Link to thisThe low level of economic literacy on these posts is astounding. Nearly all expenses incurred by every company are deductable for tax purposes. A company's tax is based on their income (or profit before tax), which is revenue less expenses. Nothing else makes any sense. Expenses must be deductable, or we would end up taxing companies that are losing money.
Reply | Report Abuse | Link to thisThese tax deductions are applied equally to all companies.
While a tax deduction reduces your amount of taxable income, a subsidy on the other hand can take the form of a tax credit or a direct transfer of funds from the government. This is common for money losing ventures such as solar and wind installations along with biofuels. Most of these ventures make no profit and thus owe no taxes. But they get free money courtesy of the taxpayers.
And, last I checked. Exxon Mobil's 2008 taxes paid was over $100 billion. So much for the governement subsizing Exxon Mobil. And further, they received no bailout funds.
There is actually little guesswork is projecting the future of global oil. The non-OPEC countries have less than 25% of the world's oil but produce over half of the world's annual usage. At this rate (including finding new oil at the rate of 4 billion barrels per year) their contribution can only continue for 20-25 years. After that , global production drops to equal OPEC's 12-13 billion barrels per year (a rate they can sustain for at least 80 years) instead of the current 30-32 billion barrels. To supply today's oil, OPEC would have to increase its output by 2 1/2 times and if I have read their own website correctly this is something they have no interest in doing. It simply means that we will all have get along on much less oil than we use now. Since our part of the pie will be more like 4 billion barrels instead of 7, the oil available for our personal vehicles will reduce from 5 to 2 or 3billion barrels annually. If we insist on using gasoline engines then hybrids with 50 mpg performance will be virtually mandatory. To completely revamp our rolling stock we will need about 20-25 years. Ergo, we start now. Don't count on saving money though, when all this happens gasoline prices will conveniently double to make sure our cost per mile stays about the same. If you don't believe all this, do your own investigating and check the data yourself.
Reply | Report Abuse | Link to thisYawn.... just more eco-romantic trash talk. If anybody on these boards actually ever pulled out there own checkbook and paid the bill to stick a bit in the ground to try to find oil I'm sure they'd have a completely different view of the risks inherent in the oil and gas industry.
Reply | Report Abuse | Link to thisBut as someone once said, "If you're not a liberal when you're young, you have no heart, and if you're not a conservative when you're old, you have no brain".
Reply | Report Abuse | Link to thisSoccerdad, Please show where Exxon paid $100B/yr in taxes?
Shoshin,
Reply | Report Abuse | Link to thisThat saying is of course not backed by evidence, and the definition of liberal and conservative is imprecise. Between my wife and I, three out of our four parents have gone liberal. The one that didn't has an eighth grade education.
Not to launch a pointless political hate fest, but oil companies are no more evil than any large company. Power and money corrupt, regardless of product. The biofuel industry is the oil industry's mini-me:
http://i-r-squared.blogspot.com/2009/07/cello-lesson-in-due-diligence.html
All these tax subidies for oil giants is pointless if you consider this data:
Reply | Report Abuse | Link to thisUsing proven oil reserves according to CIA and hypothetically oil consumption 1/3� of current usage we will run out in 133.6 years.
Total Reserves: 1,349,417,153,000 BBL
Consumption: 30,290,496,384 BBL/year
Under normal consumption: 44.5 Years
Hypothetical 1/3 consumption: 133.6 Years
With the top 7 sources being Saudi Arabia, Canada, Iran, Iraq, Kuwait, United Arab Emirates, Venezuela. Granted we get majority of our oil from Canada our consumption dictates price which is undeniable.
I'm 25 and by the time oil starts to run out I'll be hopefully retiring during hyper inflation in every sector. Every time oil prices spike so does electricity prices. They are intertwined and I might have to work till I'm dead and thats if I can even keep a job at that age factoring population by that time.
Some conservative's will argue Exxon is majority owned by 2 million different individuals. Why the hell should I care about ~0.068% of the population? I'd say remove subsidies and raise big oil's tax rate by 0.5% to prepare ourselves to have cost effective future so I can actually retire at a reasonable age.
If we switched to UK system of taxation of healthcare--which excludes social security--"Average Joe" earning 50K gross income would take home an extra 25% (12K / yr | 240K / 20 yrs) wages. The savings alone isn't just for individuals. Corporations would save 25% on healthcare costs and if they wanted to could pay them less factoring cost of living would be lower.
The other benefit would be a practical $720 billion savings spurring economic growth in sectors which need it.
A subsidy does not have to be direct payment, in can be a deduction that not everyone else gets. For example, the mortgage deduction is something that renters don't get. It can also be indirect in terms of providing services that are necessary for doing business. In these terms Exxon gets a lot of subsidies. For example, how much in the way of royalties does Exxon pay for the oil it gets from US land? How much did they pay for the wars in the Middle East which according to General Schwarzkopf would not have been waged if it were not for oil. Who pays for the roads that make a market for Exxon's gasoline. Why does Exxon get an oil depletion allowance when farmers don't when they lose top-soil. Who pays for the asthma treatment that is necessary when children who breath the products of the use of oil. Who pays for the costs of climate change caused in part by the use of the Exxon's products.
Reply | Report Abuse | Link to thisI think the price of oil never will go down significantly even when everybody is using plug-in electric vehicles in the near future, unlike what most people believe. Because oil is also used for electricity production in many countries and also for producing so many types of much needed chemicals.
Reply | Report Abuse | Link to thisWe are not near "peak oil" just yet because that concept changes mightily with every advance in drilling technique, which often open up not just marginal increases in available oil, but vastly greater new supplies.
Reply | Report Abuse | Link to thisI admittedly have some interests in leases that lie over heavy, thick oil deposits that are so thick in places the strata almost resemble tar sand.
But if gasoline stays at $5/gallon, this oil comes out: lots of it comes out. The amount of available American oil really becomes a function of the far left ruling out offshore deposits which are very rich and areas in Alaska and utah which are off limits because of polar bear anxiety and scenic values.
The USA has tens of millions of existing vehicles which will only run on liquid fossil fuels (some may be convertible to natural gas or propange at great expense.) You can't just junk a major part of this fleet and not cause a tremendous economic hit. These are not clunkers--they have billions of miles of useful life left in them.
Nor do we have to junk them at all, ever, because the USA is the Saudi Arabia of coal and for $5/gallon we can convert coal to liquid fuel and motor happily on for centuries. We can do this with a clear conscience because when the EPA or the Supreme Court declare that carbon is a pollutant and a "dangerous" one at that they are luridly exaggerating the facts.
CO2 is a trace gas in the atmosphere and its greenhouse effect on the big picture is vanishingly small. Almost anything else over-rides it, as the recent sunspot cycle demonstrated. The C02 percentage in the atmosphere can triple in the rest of this century due to China, India, and the rest of the developing world reaching for and attaining first world lifestyles, particularly in personal mobility, and the oceans will rise by no more than a few centimeters.
In fact, the real danger at this point is a new mini Ice Age. Pay attention to the next three winters. And forget this hokum about more "extreme weather events" lately or "species going extinct." There always were plenty of extreme weather events and plenty of species going extinct for reasons we can't even begin to understand--see the Neaderthals.
http://www.ibdeditorials.com/IBDArticles.aspx?id=336263836904604
Reply | Report Abuse | Link to thishttp://www.ibdeditorials.com/IBDArticles.aspx?id=336263836904604
Reply | Report Abuse | Link to thismike cook,
Reply | Report Abuse | Link to thisyou mention the Neanderthals. Any relation?
all glitters are not gold
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