Oil

Oil: Anatomy of an Industry

By Matthew Yeomans

The New Press, 2004

246 pages, $39.95 (hb)

Crude: The Story of Oil

By Sonia Shah

Seven Stories Press, 2004

232 pages, $48 (hb)

REVIEW BY PHIL SHANNON

http://www.greenleft.org.au/node/31905

Oil was in trouble until the German inventor, Karl Benz, attached a motor to a tricycle in 1886, inspiring the invention of the petrol-powered automobile in the US seven years later. Initially used to produce kerosene for lighting, oil had come under threat from the electric light bulb and a new market had to be found. The car saved the day for oil and the wealthy millionaires who owned it. The cost to the rest of the planet, however, has been steep.

Matthew Yeomans and Sonia Shah have each chronicled the history of oil, the biggest business in the world, from its 100-million-year bio-geological gestation, to its lavish, no-care-for-tomorrow lifestyle of excess consumption and early demise.

Oil has fattened the fortunes of billionaires and whetted the imperialist appetite. US and European powers have not thought twice about taking the stuff from other nations, through divvying up imperial rule of oil-producing countries in colonial times and through sweetheart deals with their state-run oil companies in post-colonial times. Western foreign policy has been tightly wedded to the business needs of Western oil companies. Since the OPEC cartel nations flexed their pricing power in 1973, Western governments have become obsessed with maintaining a stable and profitable oil supply.

The most obsessive has been the US, which uses one-quarter of all the world's oil. Most of this is used to propel the 200 million cars that dominate US roads following the conspiracy by auto, oil and tyre companies to take over and dismantle the nation's electric trams during the 1930s and force the nine in 10 people in the US who did not own a car to sit behind the wheel of big gas-guzzlers.

With imported barrels of oil outnumbering domestic barrels by three to two in the US, exploration for new fields has become imperative. The consequences have been tragic for those with the misfortune to be in a country labelled "oil-rich". As Shah sums it up, oil is struck in some remote underdeveloped country, oil companies with budgets larger than the countries they prey on rush in driving unfair bargains with hopeful or corrupt bureaucrats, public money is pumped into oil infrastructure, tightening the debt-trap, and wealth is siphoned off into the Miami bank accounts of the foreign politicians, generals and businesspeople.

Land is stolen from the indigenous peoples, and critics are silenced in their hundreds by beatings and executions. Rainforest is denuded, rivers are poisoned and ocean pollution is ever-ready from single-hulled super-tankers — most of them flag-of-convenience ships registered in countries with low wages and lax shipping laws whose governments, for convenient cash, are conveniently happy to look the other way on expensive safety and maintenance standards.

Oil and water don't mix, but oil and war are in a tight embrace. Although the US has sought to spread its oil imports across many countries to lessen its dependence on Middle Eastern oil, the Middle East still has the majority of world reserves and thus a decisive say in price setting and production levels. "The real reasons for invading Iraq", says Yeomans, "were as simple as the stated reasons were obtuse". Saddam Hussein's real sin was to threaten price stability, and the installation of a US-friendly regime in Iraq would enable the US to "command its own destiny in the one region that will dictate the fortunes of all the world's oil for decades to come". Gun-barrel privatisation of Iraq's oil was important (nearly all oil is state-owned in the Middle East), but so was the aim of controlling the long-term political future of the Middle East.

Iraq was so vital to Washington because new oil discoveries are not keeping pace with demand. The new finds made since 1970 supply less than one-third of total oil consumption. New discoveries are in small, deep-buried, difficult fields that peak and deplete rapidly, in some cases resulting in net energy loss to extract the oil.

Industry propagandists regularly make reassuring noises about plentiful world oil reserves, but industry mavericks have seen the real figures. These are highly classified and prohibitively expensive, available only to those with deep pockets, including the world's intelligence agencies. What they show is that the peak year of oil production, and the consequent end of cheap prices, is much closer than touted, particularly as China industrialises and motorises. Only the wishful thinkers place the peak year beyond 2030. Realists hover around 2010. The pessimists are already looking in the rear view mirror.

The optimists roll non-conventional oils (shale and tar sand) into the mix to pad their comforting figures. Shale and tar sand, however, are expensive to mine, highly polluting, six times more CO₂-extravagant, and the production process sucks up two-thirds of the energy ultimately delivered.

Like shale and tar sand, each "next big thing" hits into foul territory. More fuel-efficient cars will only delay the inevitable because a new car rolls into a US driveway every three seconds, and being able to go further on a litre of petrol paradoxically promotes more car use. Hybrid petrol-electric motors run into cost problems because of lower economies of scale in production. Diesel engines have better fuel economy, but higher smog-causing nitrous oxide emissions. Ethanol is a "green" fuel, but growing more corn to ferment into ethanol requires nearly as much fossil fuel as it saves.

Hydrogen is promoted as a clean, sustainable wonder fuel, producing only pure water as a byproduct, but this a mirage. Hydrogen is the most plentiful resource in the universe, but rarely found in pure form. Extracting it from fossil fuels merely displaces the resulting CO2 from the tailpipe to the hydrogen factory. So-called "sequestration" of the CO₂ in underground or deep ocean traps is costly, unproven and would require monitoring for thousands of years.

Even if extracted from carbon-free renewable energy sources, hydrogen has serious issues with storage, high inflammability and massive motoring infrastructure needs. Detroit has promised a miracle-mobile before and never delivered, and the hydrogen car is no more than a ruse, an elaborate piece of window-dressing, to assuage concern over oil.

Nuclear power is an alternative to oil, but this particular cure is worse (from catastrophic accidents, radioactive waste, and nuclear weapons proliferation) than the disease.

Natural gas is the oil industry's "hitherto neglected step-child", a waste product found with oil and usually just burnt off, but is finding vocal oil industry advocates. Natural gas, however, has its own depletion curve and in its natural state (methane) has 23 times more global warming power than CO₂. Methane leakage rates of just 3% during production, transport and distribution would make it lose its advantage over oil as a greenhouse gas. Leakage rates are already over 2%.

Governments could promote a switch from oil to genuinely clean, inexhaustible, renewable energy. Oil demand, for example, could be controlled by taxing petrol to better reflect its true economic and social cost. Tax breaks and subsidies to the oil and car industries, and the costs of pollution, military occupation and ill-health start at conservative estimates of around US$200 billion a year in the US alone. If this cost was reflected at the petrol pump, between $4 and $14 would be added to a gallon of petrol. Public transport, and renewable energy, need to be subsidised as an alternative to the private car.

Yeomans, alas, does not seriously question the car culture and hangs his policy hat on the hope of a hydrogen-fuelled car. Shah goes further, questioning the sustainability of the private car and the paradigm of a high-energy consumption, hydrocarbon-based society. As she argues, the "petro-life" is an anomaly based on a precious, finite resource that has been squandered at a rate 100,000 times faster than it formed.

The remaining oil, she says, should be carefully husbanded for the mining of aluminium and silicon for windmills and solar panels before the planet is rendered uninhabitable. Where both Shah and Yeomans converge, however, is in displaying plenty of evidence that capitalism is going to be too short-sighted to get us to an oil-less future without immense, and potentially irreversible, damage.