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June 9, 2010 4:08pm
Posted in: Posts

A very wise man once told me to “never write angry.” It’s for that reason, and that one alone, that this blog has been silent on the subject of the BP/Transocean oil disaster in the Gulf of Mexico for the past several weeks. And silent, generally. Talking about a topic as seemingly soft as empathy at a time when millions of American fishers are unable to work because their targets are swimming in oil can seem flip (although BP CEO Tony Heyward’s “I’d like my life back” comment comes close to setting a record for low empathy by a leader.).

Tens of thousands of barrels of oil per day have spilled and now begun to reach the shores of Louisiana, with Mississippi, Alabama, and Florida next in the path of destruction. Multiple high-drama tactics have been attempted to stanch the flow, even though experts say the only possible solution will be when relief wells near the site of the former Deepwater Horizon platform are completed. This will take months more, and likely millions more barrels of oil along the third-longest coast of the United States.

And most of us can only sit back and ask why and how such a tragedy could occur.

A debate has raged for decades among geologists about when, if ever, we would reach Peak Oil for the world — when would the production of petroleum reach its maximum level before falling back as wells dry up and the price rockets up. Statistically, at least, we haven’t reached that point. But Michael Klare, a professor at Hampshire College, has potentially framed the issue in a new light: we have reached the era of tough oil. Though we might be centuries away from extracting every possible drop of oil contained beneath the earth’s surface, we have, without question, reached a point under which previously unthinkable tactics by oil companies (like, for example, drilling a well more than 5,000 feet underwater or processing oil sands into crude). Peak Oil is irrelevant. The costs of tough oil are more than adequate to make the need for new energy technologies a crisis.

It says a great deal about the current economics of the oil industry that in the time since the 1979 Ixtoc I oil platform explosion (a case that is eerily similar to Deepwater Horizon in every regard except that it was 1/25th as deep), R&D dollars have been focused on one thing — new ways to get oil out of the ground. Not on new ways to prevent disaster, not on new kinds of energy sources, but on new wells far beyond the brink of sanity.

This disaster is manmade and ultimately caused by a simple misapprehension about the purpose of corporations. They do not exist merely to reduce transactional costs and maximize shareholder value. Companies like BP exist to serve their customers. With an industry as massive as oil, those customers are pretty much everyone on earth. And still again, as it was in the wake of the financial industry’s late 2008 implosion,the executives of an industry that has wrought grievous harm on society, its employees, and its customers, seem confused as to why anyone is even angry at them.

For the last 35 years, it has been increasingly evident that oil would soon lose its status as the most economical source of energy. And yet the wealthiest companies in the history of the world have made only token gestures toward finding a safer replacement. We’re all paying for that now. We can only hope that this moment might mark a turning point, and that the energy industry will soon be able to see the world beyond its walls. It’s time to rewire the corporation.


One Response to “What the Era of Tough Oil Means”


  1.   Prime Time Says:

    Well said, so to speak.

    Some politicians from the Gulf Coast states seem as uncomprehending as BP’s CEO.

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