As we get to the steamy months of the summer, why not find a hammock on a beach somewhere and enjoy a good book. No need to send that email, all you will get in return are out-of-office notices any-ways. While heavy, you will need an uplifting beverage, Don Gillmore’s book On Oil is very thought provoking.
Don Gillmore’s perspective on the Oil industry is very interesting. As a student in the 1970’s, Don got through college by working on Alberta’s Oil rigs. It was backbreaking work, often done out in the middle of nowhere with very questionable safety practices (tales of rig-workers smoking next to the no-smoking sign, while drilling for natural gas are quite telling).
The connection between religion and oil seems strange at first, but the more I got into the book, the clearer the connection has become. Central to Don’s argument is how we often phrase the discussion. Instead of being grownups and looking calmly at the data, before making grounded conclusions, we tend to just consume media that tells us what we already believe. A casual perusing of say cnn.com or foxnews.com certainly confirms that view, no matter where you are in your beliefs.
Which is a shame, since the petroleum industry has greatly improved our quality of life, plastics are very convenient materials that serve as key enablers in modern life. Oil has kept us warm through the winters, and cool in the summers. Its enabled modern low cost air-travel and so on and so forth.
But as oil enters its twilight years, and the jobs in oil are mostly construction related, we see a dilemma. We can have profit or jobs, not both. For oil infrastructure to be profitable, we need 20-30 years to pay it off, but without infrastructure there wont really be oil jobs. These days, with talk of peak oil demand (source), that 20-30 year time-frame to pay off your investment is starting to look shaky.
Don also makes the argument that the cleanup, should be counted as a subsidy, unless adequately funded by industry. Alberta has a cleanup fund of only 1 B or so, against a potential bill stretching well into the tens of billions. Just the tailing ponds alone would cost Alberta somewhere between 20 and 50 B$ to clean up (source), to say nothing of carbon-capture and storage, retraining the employees that work in oil and gas or dealing with the orphaned oil wells. The list of environmental liabilities is long.
Throughout Alberta’s oil industry from the 1970’s and onwards, the economics of Alberta’s oil have always been shaky. It has always been true that the Saudi’s can produce a barrel of oil (arguably of better quality), for $10 (source) while Alberta barely manages $40 (source), oh and that $40 ignores the cleanup. Yet the industry soldiers on despite the obvious problem of producing a worse quality product at a much higher price. Don Gillmore’s excellent book explores this conundrum, and rightly points out that Alberta’s price/quality problem means a bumpy ride with lots of boom/bust cycles, particularly as we enter the twilight years of Oil.
Electric car adventures 