Saturday, June 26, 2004

Why Oil

Someone asks my contractor friend in Iraq, " I want to know why we haven't done more than a half-hearted try to circumvent the oil problem by developing viable alternate energy sources. I've been wondering this for years now. It is plain to see that if we did that we could cut loose our dependency on the Mideast and begin to solve a raft of problems." It's something I've wondered, too. Here's her answer:

I took a bit of extra time to think about this, and still haven't set everything straight in my head. Sometimes you can know something very clearly, but still have a hard time explaining it, you know? Still, take a look at the list below.

Ink Dishwashing liquids Paint brushes Telephones Toys Unbreakable dishes Insecticides Antiseptics Dolls Car sound insulation Fishing lures Deodorant Tires Motorcycle helmets Linoleum Sweaters Tents Refrigerator linings Paint rollers Floor wax Shoes Electrician's tape Plastic wood Model cars Glue Roller-skate wheels Trash bags Soap dishes Skis Permanent press clothes Hand lotion Clothesline Dyes Soft contact lenses Shampoo Panty hose Cameras Food preservatives Fishing rods Oil filters Combs Transparent tape Anesthetics Upholstery Dice Disposable diapers TV cabinets Cassettes Mops Sports car bodies Salad bowls House paint Purses Electric blankets Awnings Ammonia Dresses Car battery cases Safety glass Hair curlers Pajamas Synthetic rubber VCR tapes Eyeglasses Pillows Vitamin capsules Movie film Ice chests Candles Rubbing alcohol Loudspeakers Ice buckets Boats Ice cube trays Credit cards Fertilizers Crayons Insect repellent Water pipes Toilet seats Caulking Roofing shingles Fishing boots Life jackets Balloons Shower curtains Garden hose Golf balls Curtains Plywood adhesive Umbrellas Detergents Milk jugs Beach umbrellas Rubber cement Sun glasses Putty Faucet washers Cold cream Bandages Tool racks Antihistamines Hair coloring Nail polish Slacks Drinking cups Guitar strings False teeth Yarn Petroleum jelly Toothpaste Golf bags Roofing Tennis rackets Toothbrushes Perfume Luggage Wire insulation Folding doors Shoe polish Fan belts Ballpoint pens Shower doors Cortisone Carpeting Artificial turf Heart valves LP records Lipstick Artificial limbs Hearing aids Vaporizers Aspirin Shaving cream Wading pools Parachutes

If we completely eliminate the use of gasoline we'd save about 47% of our total petroleum consumption. If we completely eliminated the use of diesel fuel and fuel oil, I think we'd eliminate another 23% or so. It would just about take that to eliminate our present use of imported oil. Believe it or not, the US is still one of the largest oil producers in the world.

Unfortunately, a number of the products above are not only produced using petroleum, but are also manufactured through processes that require fuel oil. And of course this list doesn't directly name all of the urethanes, nylons, coolant mixtures and other products that are essential to the machines that produce the items on the list. Those products include things like rollers, conveyor belts, motor housings and parts, shielding, piping, etc. And of course it doesn't mention that even with those items that can be economically produced using electric energy, oil is often used to produce that electricity, both in the US and abroad.

When everything is said and done, I believe the primary problem is technology. In some cases viable alternative technology already exists. What doesn't exist is the ability to radically and immediately make the change. This is due to a number of problems, but the most significant one is the simplest-- money.

For automobiles alone, we have to consider the retooling costs for construction of these new vehicles. Then we have to consider the means by which fuels will be transported, stored, and distributed, which includes the equipment that must be built in order to make that possible. The expense isn't borne just by the auto makers, but also by shipping companies, fuel producers, trucking companies and truck manufacturers, and even gas station owners. Decades of innovations have produced products and systems that are relatively efficient and safe, but revolve around the use of petroleum. Now we're looking at newer technologies and require much the same level of refinement in order to be able to completely replace petroleum fuels. And we can't get that without incredible expenditures, all of which we (the consumer) eventually must pay.

We also don't want a situation where current investments made in good faith by Americans or others are simply legislated away. For instance, if the US government was to simply ban the use of petroleum products in all cars by the year 2010, those with investments in auto companies, shipping companies, and petroleum corporations would immediately see a significant drop in the value of their investments, primarily because at that moment, all of their present assets in machinery, employees and facilities would become liabilities, and the mission of the companies they were invested in would be, in lay terms, to spend money. It is concievable that any such legislation would cause such a rush to sell in those markets that it would collapse the markets. In such a situation, the only way to save a company such as UNOCAL, for instance, would be to place a hold on trading, but that doesn't necessarily mean that the remainder of the market wouldn't react in such a way as to lower the overall value of the total market. Either way, it's not fair to those who have invested in these companies in good faith.

The word is out. The petroleum supply is getting smaller. New technology has to be developed to replace it. But this has to occur over a broad market, including everything from cars to machinery to shipping to clothing to medical equipment. As the technology develops to make this possible, more and more of these products will begin to arrive, and the economic effect will snowball. But in order for that to occur, it has to develop slowly, so that the dollars required to make that development progress can process throughout the whole economic system. Again, not just in the US, but everywhere else.

This is something that is understood by many of the extremists in the Middle East. For them, full control of the majority of the world's oil supply means a last great stab at power. If they can grab control, they can not only enrich themselves, but they can also slow or even halt the economic progression of other countries, particularly those who do not meet their religious approval.

And you are seeing this in action, right now. This isn't a debatable thing. The attacks on Iraqi oil lines, the attacks on foreign workers in Saudi Arabia, the threats of piracy in Indonesian waters, the increased spending necessary for both countries and companies to secure their equipment and employees-- all take away needed funds for the development of new technologies. And all indicate the economic power which can be brought to bear by these people if they can take and control the world's oil reserves. The US and other nations are at the moment seeing a slowdown in economic growth, and in some cases, a decrease in growth and wealth, largely because of increases in fuel costs. And this is with Saudi production running as close to wide open as they can presently handle.

Reserves aren't production capacity. Iraq has far more in reserve, and even that it can pump, than it can physically deliver to port. The only way you can increase that volume is by constructing new pipelines, new pumping stations and new port loading facilities. Those are in the works. And if we have our hands on them, then US and foreign companies working to create new technologies have the economic stability necessary to develop them. If not, then the US has a fleet of ships, jets, tanks, APCs, etc. with no fuel to operate, and no fuel to keep the economic engine that drives the US in operation.

The change over is happening. But it's not and cannot be an overnight affair. Think of cell phones. When I was a kid they were huge. Now they're tiny. The difference is in battery cell technology. The same would hold true for electric cars. Changes in battery construction and capabilities have made it possible for electric cars to actually be a viable form of transportation. But we still have to use some type of fuel in order to initially power up those cars. If all of the US could convert to those or to hydrogen autos then we could actually run coal fired power plants in the US with scrubbers, and still have less pollution in the air than we do today. And we have more coal in the US than in any country in the world save Russia.

And if the people in the Middle East wanted to hoard their oil, continue to use petroleum technology because it was cheaper for them, more power to them. It wouldn't make any difference, because we'd be doing the same. But right now, that would put most of the rest of the world at their economic, and ultimately, military, mercy. And the extremists amongst them don't believe in that.

That's about it. I don't know what else to tell you. This is a race. And even though oil, and even money is a big issue, it's not matter of greed. It's a matter of survival. Believe it or not, we need this oil, and we need these profits, in order to actually make the change and remain stabile. And those who we are fighting know this, even if many in the US, don't.