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On the 150th anniversary of first commerical U.S. well, the oil industry is headed toward oblivion — and trying to take civilization down with it

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"On the 150th anniversary of first commerical U.S. well, the oil industry is headed toward oblivion — and trying to take civilization down with it"

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http://www.solcomhouse.com/images/drake_well.jpg“I claim that I did invent the driving Pipe and drive it and without that they could not bore on bottom land when the earth is full of water.  And I claim to have bored the first well that ever was bored for Petroleum in America and can show the well.”

So wrote Edwin Draka aka Colonel Drake, who is “popularly credited with being the first to drill for oil in the United States” on August 27, 1859 in Titusville, Pennsylvania.  His methods were quickly copied by others and “By 1871, the entire area was producing 5.8 million barrels a year.”

As Daniel Yergin wrote in his still must-read Pulitzer Prize-winning history, The Prize: The Epic Quest for Oil, Money, & Power (where I found Drake’s quote):

Drake’s discovery would, in due course, bequeath mobility and power to the world’s population, play a central role in the rise and fall of nations and empires, and become a major element in the transformation of human society.

Combined with Henry Ford’s mass production and moving assembly line, the oil boom ushered in the American Century.  For two world wars, America was not just the arsenal of democracy, we were the engine fuel of democracy.  As late as the mid-1950s, we still produced roughly half of all the world’s oil — twice as much oil as the Middle Eastern and North African states combined.

But our drain-America-first policy — coupled with the gross inefficiency of our oil consumption and successful conservative efforts to block an energy policy built around efficiency and alternatives — caused U.S. production to peak decades ago.  And now world oil consumption is peaking, even as the nation’s and the world’s fossil fuel consumption are driving us toward catastrophic climate impacts, Hell and High Water, which would outlast the oil age by a thousand years.

The U.S. oil industry, going back to John D. Rockefeller and Standard Oil, has long been guilty of the most anti-competitive tactics.  Originally, those harsh tactics focused on competitors, with the worst impact for most Americans being higher prices than they might otherwise have experienced.  “The U.S. Supreme Court ruled in 1911 that antitrust law required Standard Oil to be broken into smaller, independent companies,” but “ExxonMobil, however, does represent a substantial part of the original company.”

ExxonMobil and the American Petroleum Institute are still guilty of harsh, anti-competitive tactics, but the worst impacts of their massively funded disinformation campaign will be to ruin a livable climate for the next 100 billion people to walk the planet.  If we don’t overcome that campaign and reverse emissions trends quickly, then long after an oil-driven economy is a distant memory, future generations will curse the industry for engaging in the most despicable act in human history — persuading just enough Americans, opinion makers, and politicians to delay or weaken efforts to restrict greenhouse gas emissions.

http://www.greenpeace.org/usa/assets/graphics/exxonlies

It bears repeating on this anniversary that Big Oil is manufacturing ‘Energy Citizen’ rallies to oppose clean energy reform and funding economic disinformation (see “Even fantasy-filled American Petroleum Institute study finds no significant impact of climate bill on US refining“).

It bears repeating that the country’s biggest oil company has funneled millions of dollars to fund the disinformation campaigns of the Competitive Enterprise Institute, the American Enterprise Institute, and the Heritage Foundation, all of which continue to advance unfactual anti-scientific attacks as I have detailed recently (see posts on Heritage and CEI and AEI). Chris Mooney wrote an excellent piece on ExxonMobil‘s two-decade anti-scientific campaign. A 2007 Union of Concerned Scientists (UCS) report looked at ExxonMobil’s tobacco industry-like tactics in pushing global warming denial (see “Today We Have a Planet That’s Smoking!”).

The oil giant said it would stop, but that was just another lie (see “Another ExxonMobil deceit: They are still funding climate science deniers despite public pledge“).

Let me end with an excellent commentary from Tuesday by award-winning journalist, Eric Pooley, “Exxon Works Up New Recipe for Frying the Planet“:

Exxon Mobil Corp. is trying to put one over on you.

The world’s biggest publicly traded oil company wants you to believe that it actually supports the fight against global warming. But its tactics, which have been unfolding on opposite sides of the globe, are just another recipe for cooking the planet in three easy steps.

Exxon’s old formula wasn’t working anymore. The oil giant used to bankroll scientists who claimed all that stuff about starving polar bears and melting ice caps was just mumbo jumbo. In a 1998 memo, the American Petroleum Institute — the industry group in which Exxon has long been dominant — said it would achieve “victory” when doubts about climate science become “part of the ‘conventional wisdom.’” That helped create a noisy minority of skeptics, but it won’t block climate legislation forever.

So now Exxon is playing a more subtle game. It runs plenty of ads featuring people in lab coats talking about clean energy. It spent $15 million on Washington lobbyists in the first half of this year — more than all the solar and wind companies combined. And it has created its new three-step program, which is based on bad economics instead of shady science.

Step One: Gin up some frightening numbers, and use scare tactics and lobbying muscle to kill the Obama administration’s proposed mandatory cap on carbon emissions.

Job-Killer

As the U.S. Senate begins work on the climate-change bill, which squeaked through the House of Representatives in June, Exxon is among those denouncing the plan to cap emissions as a stealth tax that would destroy jobs and drive up energy costs. How does the oil producer know this? Because think tanks funded by Exxon and others say so.

The company announced last year that it had stopped giving money to global-warming skeptics who “divert attention” from the need for clean energy.

Instead, it supports groups such as the American Council for Capital Formation and the National Center for Policy Analysis, which issue industry-friendly research. One study released in May by the Heritage Foundation, which received at least $50,000 from Exxon last year, claims that by putting a price on carbon, the measure will kill millions of jobs and send gasoline soaring.

The study has been criticized for making wildly pessimistic economic assumptions — no energy efficiency gains, no increased use of renewables — and for ignoring the bill’s many cost containment provisions. The non-partisan Congressional Budget Office found that middle-class households would pay only $175 a year more in 2020 because of the legislation.

Doomsday Study

But let’s look closer. This doomsday study claims the measure would drive gasoline prices to $4 a gallon — in 2035! If we don’t develop alternative energy, which is the whole point of climate legislation, a gallon of gas will cost a lot more than that in 25 years. The price of inaction is far higher than the cost of acting now, though that’s not a discussion Exxon wants to have.

Step Two: Organize demonstrations. On Aug. 18, about 3,500 people rallied in Houston against the bill — the first of some 20 such “Energy Citizen” events sponsored by API and other industry groups. The participants were energy industry workers, many of whom wore T-shirts saying, “I’ll Pass on $4 Gas.”

How did they come to be there? A leaked memo from API president Jack Gerard asked the group’s member companies to send employees to the rallies to “focus our message” against “Waxman-Markey-like legislation, tax increases, and (energy) access limitations.” He also asked them to keep it quiet.

Legislative Caricature

Royal Dutch Shell and BP refused to participate in the events because they support cap and trade, but Chevron, ConocoPhillips and Anadarko Petroleum are involved, along with more than 60 other businesses and associations. Exxon advised its workers that attendance was “at their own discretion and not required,” spokesman Rob Young told me, while saying that Exxon “opposes this deeply flawed legislation” and agrees with the rally’s job-killer message. How could it not? It helped pay for studies that “prove” the point.

Step 3: Offer a seemingly sensible alternative policy. Having caricatured the legislation, Exxon then offers a compromise. That’s what it did in Australia earlier this month, after the legislature shot down Prime Minister Kevin Rudd’s climate proposal. Last week the chairman of Exxon’s Australian unit, John Dashwood, called for replacing cap and trade with a carbon tax. Echoing a January 2009 speech against cap and trade by Chief Executive Rex Tillerson. Dashwood said the carbon tax “is more transparent to consumers, will achieve greater environmental benefits and is more difficult to manipulate than a cap-and-trade program.”

Tax Without Change

Let’s get this straight. Exxon is demonstrating against a climate bill in the U.S. because it is supposedly a hidden tax, and on the other side of the globe it is lobbying for a tax. This may seem contradictory, but it’s not. I believe the company simply recognizes what so many others have missed in the debate over the tax versus the cap: The cap requires economy-wide emissions reductions, and the tax doesn’t.

Exxon doesn’t want to do business in a world where cuts in carbon dioxide are mandatory. It would prefer to pay a modest tax and keep on polluting.

A tax wouldn’t guarantee any carbon reductions, let alone bring about the steep cuts needed to stave off the worst climate changes. By calling for a small tax instead of a mandatory cap, that’s exactly the kind of solution Exxon is proposing.

(Eric Pooley, a former managing editor of Fortune magazine who is writing a book about the politics of global warming, is a Bloomberg News columnist. The opinions expressed are his own.)

Come 2059, oil consumption will be far smaller than today and on a sharp downslope.  The only question is whether we were smart enough to voluntarily abandon fossil fuels starting now, staving off the worst climate impacts or we stupidly listened to the Siren song of the big oil Delayers.

The industry is inexorably headed toward oblivion.  Are we?

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17 Responses to On the 150th anniversary of first commerical U.S. well, the oil industry is headed toward oblivion — and trying to take civilization down with it

  1. Jeff Huggins says:

    Dear Eric Pooley, if you’ll send me a mailing address (office, PO Box, home, whatever), I’d like to send you a recent evaluation and analysis of ExxonMobil that I did. I present the results on DVD, and I think you’ll find it helpful. You can reach me via my website, if you like: www DOT ObligationsOfReason DOT com. Actually, I think you’ll get there if you click on my name. I was a chemical engineer and have worked in the industry before, for Chevron. I’ve also been a consultant with McKinsey and Company, and so forth.

    In an article in The New York Times by Jad Mouawad last year, in response to the questions “Where do you see your company in 20 years? Will oil and gas still be your dominant business?”, ExxonMobil’s Chairman Rex Tillerson is quoted as saying:

    “Yes. In 2030, oil and gas will represent 60 percent of the world’s energy needs. My view is I am going to keep doing what we do better than anyone else in the world–finding, developing and delivering oil and gas to the world.”

    (as reported by Jad Mouawad, The New York Times, July 19, 2008)

    To H_LL with the climate, I guess?

    About a year earlier, in a speech, Tillerson concluded by quoting Bertrand Russell about the need to care about the world of our grandchildren!

    It’s time to shine light on, and reveal, the entire ExxonMobil “elephant” for the public to see and understand. It’s not pretty, and it says one thing and does another.

    Sigh,

    Jeff

  2. Tyler says:

    A little-known factoid: James Miller Williams of Hamilton, Ontario, struck oil in the summer of 1858 – a year before Colonel Drake — after digging a shallow well in an area of southwestern Ontario now called Petrolia. It’s believed to be the birthplace of the North American oil industry.

  3. Ray Duray says:

    Hi Jeff Huggins,

    You’ll have better luck reaching Eric Pooley at:

    epooley2@bloomberg.net

    That was quite a remarkable article for Bloomberg to publish. Considering how timid they are about criticizing Bernanke, Geithner, et al, I’m surprised they sorta took the gloves off with Exxon.

    Best, Ray

  4. Kate Cell says:

    Jeff, I am in touch with Eric Pooley on another matter and will do my best to pass along your message.

  5. Jeff Huggins says:

    Thank you Kate (4). I’ll wait to hear from him or you. Thank you also Ray (3). Very helpful.

    Be Well.

  6. Leif says:

    Joe
    An auxiliary effect of CO2 increases that does not get enough air time is ocean acidification. The disruption of the base of the ocean food chain is clear and unambiguous. Effects are happening now, will only get worse, and be very difficult to mitigate.
    Although I am sure that most of your readers have at least some familiarity with this issue, the the public at large appears to be woefully ignorant.

    Thank you, Leif

  7. Nancy says:

    I would like to see this blog’s headline as the NYT’s Sunday headline with a cover story exposing Exxon Mobil. It would certainly cause an uproar. But I will not hold my breath.

  8. van says:

    While I’m all in favor of reducing oil consumption and co2 emissions, I think it’s a mistake to use the “peak oil” argument. After Katrina when gas prices spiked they were all over the place yelling about the end of civilization, and how the price of gas would go higher and higher. Well guess what, it came back down. To some extent the “peak oil” people are like the Y2k people. Why don’t we stick to the climate science( which is alarming enough)? I suspect the reason oil companies are against climate change legislation is that they know there is plenty of oil out there and they want to keep selling it.

  9. It’s disappointing to see you highlight Eric Pooley’s opinion piece which relies on inaccuracies to reach conclusions that are blatantly untrue. First and foremost it is absolutely false to suggest, as Mr. Pooley does, that ExxonMobil funded the study by the Heritage Foundation on the impact of the Waxman-Markey Bill. And second, regarding the recent Energy Citizen Rallies, I was advised by my company that these were not ExxonMobil events and that any decision to attend was entirely my own.

    And with respect to the debate about policy alternatives it is worth noting that we have been talking about the merits of a revenue-neutral carbon tax over a cap and trade scheme for some time now – not just in the context of Waxman-Markey. As Mr. Pooley references, our chairman spoke in January this year about our views on a carbon tax as the most effective, simple and transparent measure to manage rising greenhouse gas emissions. I encourage you to read it. http://exxonmobil.com/corporate/news_speeches_20090108_RWT.aspx

    What I also know from first hand experience as an employee is that ExxonMobil takes climate change seriously and we believe the risks warrant action. I am proud of the fact we have reduced emissions from our operations by 10 million metric tons since 2007 and we’re investing over $1.5 billion to further reduce emissions and to improve efficiency.

    Adrienne Fleming, ExxonMobil blogger

    [JR: Talk is cheap. Disinformation is expensive, which is where millions of ExxonMobil dollars go. Future generations will remember who bears culpability for ruining their livable climate. Your company will be near the top of the list.]

  10. Donald B says:

    Maybe Ms. Fleming can tell us the specific projects the ExxonMobil money went for. Otherwise, money is notoriously fungible.

    I am glad that ExxonMobil is reducing emissions; many companies are finding that reducing emissions leads to cost savings and increased profit. But when the product that they make produces CO2 emissions orders of magnitude larger than the “process emissions reductions,” it is barely relevant to this discussion.

    ExxonMobil knows that it could work against aspects of a carbon tax with hidden provisions but it will be much harder to manipulate a cap on all industrial carbon emissions. They are also probably hoping that they could gin up perceived inequities in any implementation of a “straight” carbon tax, which would almost certainly be much more complex to put in a bill that would pass. It would then turn on these “inequities” as reasons not to pass the bill.

  11. Jeff Huggins says:

    Dear Adrienne (of ExxonMobil), Comment Number 9

    Adrienne,

    You quote a number or two, but I follow ExxonMobil closely, and they/you always tell us the quantified savings, or reductions, according you to folks, but never all the other figures that provide the larger picture. It’s downright deceiving.

    For example, if one starts with the published statistic of the total liquids available for sale, per day, in oil-equivalent barrels (in 2008, that was 3.9 million oil-equivalent barrels per day, I believe), and then does a simple calculation, we arrive at this:

    The net approximate result when those products are used as fuel is that over 1 TRILLION pounds of CO2 are generated, from using the stuff as fuel, not even including all the energy used and CO2 produced in finding the oil, producing it, transporting it, refining it, distributing it, and etc.

    That’s over 1 TRILLION pounds of CO2, in one year. From the products of ExxonMobil alone. Not including all the stuff that was generated while making the products.

    To put that into perspective, that is more than the weight of the entire human species today (i.e., the weight of all 6.8 billion of us added together).

    To get to the figure, all you need is the 3.9 figure (from your reports) and the following figures, as approximations but close enough:

    365 days per year
    42 gallons per barrel
    19 pounds of CO2 generated per gallon of fuel burned

    The resulting figure is actually roughly 1.1 TRILLION pounds in a year.

    Now, I understand that two of these figures are approximations. The 42 is just the standard (pre-refined) volume of a standard barrel. The 19 is actually a rounding-down of the amount of CO2 generated per gallon of gasoline burned. So, the actual figures (representing the real mix of all the products you include in the 3.9 figure) will be slightly different.

    That said, would you be kind enough, transparent enough, balanced enough (after all, you provided the savings figure), and honest enough to provide a more accurate figure than the 1.1 TRILLION pound estimate, if the figure is any different from 1.1 TRILLION pounds, either higher or lower than that?

    If so, would you please tell us, and briefly explain to us, the accurate comparable figures that replace the 365, 42, and 19, in arriving at your more accurate number.

    I think a lot of people would like to know the total CO2 resulting from ExxonMobil products when they are used. That would seem to make sense to know, analytically speaking, if ExxonMobil likes to tell us how many pounds or tons here or there they are saving by flaring less or using cogen in the refineries.

    I look forward to hearing from you.

    Then, I’d also like to know how you reconcile what Simon told Congress last year with the fact that you’ve sent nearly $150 billion back to shareholders during the last five years? Didn’t Simon tell Congress, or strongly imply to them in no uncertain terms, that ExxonMobil can’t afford changes to taxes or incentives because they absolutely need all of the money in the up-times in order to fund the business in the down-times? If that’s true, how does that relate to ExxonMobil sending $150 billion back to shareholders? When I was at Harvard Business School, I must have missed the day in class when they explained that sort of logic.

    But back to the point, I look forward to your better number, if any, that would adjust my estimate of 1.1 TRILLION pounds of CO2 in 2008.

    Thank you,

    Jeff Huggins

  12. Jeff Huggins says:

    And Two More Questions For Adrienne Fleming (Comment Number 9)

    Thank you for your attention Adrienne. Just two more questions:

    Could you please tell us what unit and department of ExxonMobil you’re from, if you are actually with the company? Are you in PR or Marketing or Corporate Relations or Legal or etc.?

    Whether or not you are from within the company, please let us know what “ExxonMobil blogger” means. Is that an internal role? External role? Paid? Unpaid? Are you with an outside think-tank or representation firm? I’m just looking for transparency.

    In an exchange of transparency, I’ll sign off with some of my own information:

    Jeff Huggins
    California
    U.C. Berkeley, class of 1981, chemical engineering
    Chevron Research Corporation and Engineering Department, 1981-84
    Harvard Business School, class of 1986
    McKinsey and Company, 1986-90
    Kransco (toy company, now owned by Mattel), 1990/91-94
    The Walt Disney Company, 1994-2001
    Currently working independently, unemployed, for no pay
    Concerned parent and citizen

  13. The enemy my enemy is not necessarily my friend.

    The fact that (former?) climate change deniers oppose cap-and-trade doesn’t make it a good idea. And the fact that they support a carbon tax doesn’t mean that it isn’t a the best option. A good indication of anyone’s seriousness is to ask whether they support a carbon price rising briskly enough to reduce emissions and CO2 levels to 350 ppm as Rep. John Larson has proposed.

    See (“Some) Carbon Tax Advocates Are Serious” at http://www.carbontax.org.

  14. Adrienne again. As I said in my post I am an ExxonMobil employee, but to be specific I work in media relations.

    As you correctly identify, managing emissions from our own operations is only a minor part in managing global emissions – our operations are very small emitters in a global perspective.

    In fact, if we are to deal with the risks posed by rising emissions then we need to develop policies that help address the major sources – that being the use of transport fuels and the generation of electricity.

    That is why one solution we have advocated for is a carbon tax – because it would, in fact, send a price signal to consumers of these products and it would do so in the most transparent, simple and economically efficient manner. It also is more likely in our view to be easily harmonized across countries as a global solution than would alternatives such as a cap and trade system.

    A couple of other items that may be of interest which you asked about:
    - ExxonMobil’s 2008 Corporate Citizenship Report details the investments and actions we’ve made to reduce emissions and to improve efficiency.
    - This report is reviewed by an External Assessment Panel made up of independent members who had expertise in sustainability issues.
    - You can visit the report at http://exxonmobil.com/emissions.
    - This report does not include our recently announced $600 million investment to conduct a long term research and development program into next generation bio-fuels from algae which you can read more about at http://exxonmobil.com/algae.

  15. Jeff Huggins says:

    Dear Adrienne Fleming of ExxonMobil (Comment 14),

    Thank you for following this thread and for your response.

    Please, Adrienne, could you please provide a figure for the total CO2 generated annually from the use of ExxonMobil fuels — gasoline, diesel, jet, etc. the whole thing? A total will be fine, thank you.

    I’ve estimated the figure (based on your own statistics and a few standard figures) at 1.1 Trillion pounds of CO2 in 2008. I’ve provided the figures above, and the calculation should be a very easy one for ExxonMobil scientists.

    I ask for several reasons, of course.

    First, that number is WHAT MATTERS.

    Second, ExxonMobil is always quantifying the “savings” or “reductions”. So many tons from using your motor oil. So many tons from keeping our wheels properly inflated. So many tons from internal savings in your operations. So many tons from lighter bumpers. And so forth. In the print and other media, you are always telling us about the reductions, and putting specific numbers to them. So, quite clearly, if you want to be honest and balanced, you should provide us with this total number, for comparison and context. How much CO2 is generated when we buy and use ExxonMobil products in a year?

    Third, and very importantly, people would like to know.

    Fourth, ExxonMobil itself has advertised (not long ago) in favor of transparency. If you genuinely want to help contribute to public dialogue and responsible decision-making, then surely you can tell us what the figure is. Right? What reasonable and honest and well-intentioned reason would there be for you not to provide us with that number? Indeed, what reasonable and honest and well-intentioned reason would there be for ExxonMobil not to include the TOTAL number, requested above, whenever it communicates a number about how much is saved by this action or that action?

    One of the members of your Board, Bill George of Harvard Business School, is a Prof. of leadership there and has written books about “True North.” I would hope and assume that he would want the company to be honest and transparent as well. I can’t speak for him, but I’ll assume so.

    Thank you for your attention. I hope you’ll answer the question.

    Be Well,

    Jeff

  16. TokyoTom says:

    Joe, I`m not sure how interested anyone else is, but to help you see where I`m coming from, please allow a few thoughts:

    It`s not that complicated: I`m quite concerned about our ongoing mismanagemeent of common resources around the world, including our large-scale and growing experiment on our climate system, but am also aware that governments frequently screw up the management of resources (Monbiot and environmental groups here make that point with respect to fisheries; see also forests, minerals, oil & gas and coal) or else give us enduring political battles, so I`m sympathetic to those who are honestly reluctant (as opposed to those representing those who are now dumping carbon for free) to get government involved in coercive carbon pricing programs that may very well turn into another program of government pork and back-room favoritism.

    Sincerely, TT

  17. Roger Sowell says:

    Such drivel, Mr. Romm. Petroleum has brought the world un-ending prosperity,

    [snip]

    Roger E. Sowell, Esq.

    [JR: Alas, not un-ending -- and that is where you miss the point of this post and this blog entirely.]