Checking the Oil: An Update on the Petroleum Industry

 
Photo Credit: johnny choura

Biofuels, electric cars, hydrogen highways: all these innovations are getting a lot of talk as government and public sentiment are finally coming together to promote alternative fuel sources. Meanwhile we are still using gobs of oil every single day and petroleum is still a dominant force in our daily lives. Yes consumption, demand, and prices are down considerably from near record highs just one year ago, but that has much more to do with struggling economy than any alternate fuel use.

Cost

The petroleum industry is changing however. The decline in prices, which averaged $100 per barrel in 2008 and projected at just $53 per barrel in 2009, has dropped the price at the pump from a near four dollar average to near two dollars at present. While that drop does relieve the economic pressure to develop alternative fuels — or find more oil — it does not alleviate the environmental impact, evidenced by the landmark adoption of low-carbon fuel standards in the state of California.

The lessening demand for oil has been offset somewhat by reducing production, mainly from OPEC countries. Reduced production combined with optimism about an economic recovery over the next year has the Energy Information Administration predicting a slight rise in oil prices in the short term –increasing from $53 in 2009 to $63 for 2010.

Environmental Impact

California’s new standards are exemplary of the larger societal need to move away from petroleum-based products. At every stage of production, including discovery and extraction, petroleum has some negative environmental impact. Emissions from cars, trucks, and other vehicles are a leading cause of environmental and atmospheric degradation. A recent EPA report officially posed greenhouse gas emissions as an environmental threat, finding that on-road vehicles account for 24 percent of total U.S. emissions.

Photo Credit: Robert Couse-Baker

The petroleum industry is struggling somewhat; certainly, more controversial projects such as tar sands exploitation are stalling under the weight of falling prices and lost demand, but our reliance on oil and the resulting impact on the climate are still dominant. The oil industry is also mixed up in human rights controversies around the world such as the forthcoming case against Shell regarding its role in Nigerian violations.

All transnational corporations and politics aside, the general mood toward the oil industry, while it has calmed somewhat with the fall in prices at the pump, remains a negative one. A growing number of citizens support alternatives to oil-based fuels and other products, with the main impediment being cost — gasoline or diesel cars and trucks are typically cheaper and still more reliable than comparable alternative-fuel options. Nonetheless a change in general mood tends to be the start of more radical changes to come. The next year could see a big change in the oil industry.

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Posted on April 30th in Solar News by Dan.