The Power, Politics The Power, Politics and Ethics of Oiland Ethics of Oil

Villanova UniversityVillanova UniversitySpring 2011Spring 2011

Oil Foot PollOil Foot PollHow much do you know How much do you know

about oil?about oil?

Going green: Going green: How long could you go without How long could you go without

oil?oil?A.A. Six months? Six months?

B.B. a month? a month?

C.C. a week? a week?

D.D. a day? a day?

Oil Fact: The Oil Fact: The Hydrocarbon AgeHydrocarbon Age Petroleum oil is more than just Petroleum oil is more than just

gasoline; it is the primary gasoline; it is the primary component of much of modern day component of much of modern day society…..society…..

diesel oil for transportation and power plantsdiesel oil for transportation and power plants

engine and machinery lubricants engine and machinery lubricants home heating oilhome heating oilasphaltasphaltrubberrubberplasticsplasticsfertilizersfertilizerssynthetic fibers in clothingsynthetic fibers in clothing

Record high gas prices Record high gas prices are the result of...are the result of...

A.A. the aftermath of the BP Spill the aftermath of the BP Spill

B.B.environmental & taxes environmental & taxes

regulationsregulations

C.C.political uncertainty within oil political uncertainty within oil exporting countries exporting countries

D.D.increasing global demand increasing global demand coupled with fears that we are coupled with fears that we are running out of oil reservesrunning out of oil reserves

Oil Fact: US Daily Oil Fact: US Daily DemandDemand

987,000,000 gallons987,000,000 gallons

23.5 million 42 gallon barrels of oil 23.5 million 42 gallon barrels of oil (BPD = (BPD = barrels per day)barrels per day)

25%-30% of daily global demand25%-30% of daily global demand 45% - 55% for gasoline 45% - 55% for gasoline Roughly the equivalent of the Roughly the equivalent of the completecomplete

freshwater supply of the Delaware River Basin freshwater supply of the Delaware River Basin ((for NJ, E. PA, Delaware & NYC) for NJ, E. PA, Delaware & NYC)

400% increase from consumption in 1950400% increase from consumption in 1950 Demand projections for 2020: 30 Million BPDDemand projections for 2020: 30 Million BPD

or 1,650,000,000 gallons daily!or 1,650,000,000 gallons daily!

Oil Fact: Annual Global Oil Fact: Annual Global DemandDemand

3,616,200,000,0003,616,200,000,000 gallons gallons 86.1 billon 42 gallon barrels of oil 86.1 billon 42 gallon barrels of oil The equivalent of the monthly supply The equivalent of the monthly supply

of all fresh water used in the of all fresh water used in the entireentire United States United States

Driven not only by the developed US Driven not only by the developed US market, but the exponential growth of market, but the exponential growth of the emerging Chinese, India and the emerging Chinese, India and Southeast Asia marketsSoutheast Asia markets

So what? Given our So what? Given our demand, the United demand, the United

States…. States…. A.A. should not worry about oil just as should not worry about oil just as

long as the supply keeps cominglong as the supply keeps coming

B.B. is far too dependent on foreign oil is far too dependent on foreign oil

C.C. is too dependent on oil from the is too dependent on oil from the Middle East Middle East

D.D. is too dependent on oil..… period is too dependent on oil..… period

Oil Facts: U.S. SupplyOil Facts: U.S. SupplyUS imports approximately 58% of daily supply US imports approximately 58% of daily supply

US became a “net importer” in late 1990’sUS became a “net importer” in late 1990’s

Our domestic options are….Our domestic options are…. Intensified deep off shore oil exploration Intensified deep off shore oil exploration in the Gulf of Mexico in the Gulf of Mexico

Artic National Wildlife Reserve (ANWR)Artic National Wildlife Reserve (ANWR)

Legally restricted Pacific coastlineLegally restricted Pacific coastline

Oil shale project in the Pacific Northwest Oil shale project in the Pacific Northwest

Where is the “hot spot” for Where is the “hot spot” for U.S. oil exploration for U.S. oil exploration for

potential reserves? potential reserves? A.A. Russia Russia

B.B. The Middle EastThe Middle East

C.C. South America (Venezuela and South America (Venezuela and Columbia)Columbia)

D.D. AfricaAfrica

Oil Facts: U.S. SupplyOil Facts: U.S. SupplyTop 5 Oil Exporters Top 5 Oil Exporters to the U.S.to the U.S. (68% of (68% of all US imports)all US imports)

CanadaCanada MexicoMexico Saudi ArabiaSaudi Arabia VenezuelaVenezuela NigeriaNigeria

Oil Facts: About Supply Oil Facts: About Supply from Africafrom Africa

Africa has become a key growth market in oil Africa has become a key growth market in oil exploration.exploration.

Foreign oil companies have invested over $50 Foreign oil companies have invested over $50 billion into African oil exploration and billion into African oil exploration and production. production.

African petro-states received over $300 billion African petro-states received over $300 billion in oil revenue in 2008.in oil revenue in 2008.

By 2025, 30% of the oil imported to the US will By 2025, 30% of the oil imported to the US will be from Africa. (Currently 12%) be from Africa. (Currently 12%)

For the people of these For the people of these African African

states, oil…. states, oil….

A.A. has greatly enhanced their livelihoodhas greatly enhanced their livelihood

B.B. has just begun to create an economic has just begun to create an economic boomboom

C.C. creates no real change for the creates no real change for the average personaverage person

D.D. has intensified political oppression has intensified political oppression and economic regression and economic regression

The Paradox of Plenty The Paradox of Plenty Tight concentration of power and resources…. Tight concentration of power and resources….

PROPERTY RIGHTSPROPERTY RIGHTS: exploratory block grants in hands : exploratory block grants in hands of political eliteof political elite

TECHNOLOGYTECHNOLOGY: very specialized knowledge in the hands : very specialized knowledge in the hands of “big oil”of “big oil”

MONEYMONEY: highly capital intensive business: highly capital intensive business

Leads to the prevalence of “rent seeking”…. Leads to the prevalence of “rent seeking”…. IInefficient even corruption business practices on the part nefficient even corruption business practices on the part of both governmental and corporate actors funnel oil of both governmental and corporate actors funnel oil revenues for personal gainrevenues for personal gain

Causing “Dutch Disease” and other societal Causing “Dutch Disease” and other societal illsills

If Not oil then what????If Not oil then what????

SolarSolar

NuclearNuclear

WindWind

Bio-fuelsBio-fuels

U.S. Energy Sources U.S. Energy Sources Today:Today:

Non-RenewablesNon-Renewables PetroleumPetroleum 40%40% CoalCoal 22%22% Natural GasNatural Gas 23%23% NuclearNuclear 8% 8%

RenewablesRenewables Biomass Biomass 3% 3% Hydroelectric Power Hydroelectric Power 2.8% 2.8% Wind energy Wind energy 0.1% 0.1% Solar energy Solar energy 0.06% 0.06%

When will we run out of oil?When will we run out of oil?

A.A. 20202020

B.B. 20502050

C.C. 21002100

D.D. NeverNever

Reframing the Reframing the Question…Question…

When will global oil reserves “peak”?When will global oil reserves “peak”?(Peak= When more than half of all earth’s oil reserves (Peak= When more than half of all earth’s oil reserves are extracted) are extracted)

When does the Energy Return on When does the Energy Return on Energy Invested become negative?Energy Invested become negative?

When do the environmental When do the environmental consequences catch up with society? consequences catch up with society?

Summation: Seven Key Summation: Seven Key QuestionsQuestions

1.1. How steep will the global demand curve be?How steep will the global demand curve be?

2.2. Is there supply to match the exponential Is there supply to match the exponential

demand? demand?

3.3. What are the economic cost to obtain excess oil? What are the economic cost to obtain excess oil?

4.4. What are the socio-political consequences? What are the socio-political consequences?

5.5. What are the environmental consequences? What are the environmental consequences?

6.6. What should be our long term energy plan?What should be our long term energy plan?

7.7. Will we come to understand the dangers on our Will we come to understand the dangers on our pervasive dependence on petroleum and make pervasive dependence on petroleum and make difficult choices?difficult choices?