Fossil Fuels vs. The Public Interest

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The fossil fuel industry often pretends to have the public’s best interests in mind. The operative word is “pretends.”

by Kurt Cobb
Scitizen, September 1, 2010

Fossil fuel executives get out of bed in the morning thinking about two things: 1) Making sure they can sell all their current in-ground inventory of fossil fuels at a profitable price and 2) finding more fossil fuels to replace those they’ve already taken out of the ground.

But it is how they do their jobs which should interest us. In the past when few suspected that carbon emissions might affect the climate or that fossil fuels were limited enough in their ultimate supply that the world needed to be looking for alternatives, these executives had an easier job. Almost no one questioned the wisdom of using fossil fuels to power the expanding industrial base of the world, a base that was bringing ever greater material wealth to whomever was able to build it. The job of the fossil fuel companies was simple: Get fossil fuels out of the ground and deliver them in ever greater quantities to voracious industrial, commercial and residential customers.

Then the 1969 Santa Barbara oil spill, a huge jump in oil prices in the 1970s associated with the Arab oil embargo, the publication of Limits to Growth, rising concerns about air pollution from the burning of fossil fuels, and preliminary concerns about climate change linked to carbon emissions, all combined to make the public and policymakers question the world’s heavy reliance on fossil fuels.

Fossil fuel companies have fought back both in the media and in the halls of government so successfully that today some 40 years are the Santa Barbara spill, the world remains dependent on fossil fuels for 86 percent of its energy. How have these companies argued their case?

  1. They have contended that new technology would open vast new reserves of fossil fuels not previously available.
  2. They said price would stimulate exploration for new reserves and would make previously uneconomic reserves viable.
  3. They suggested that increased safety and environmental measures could make fossil fuel extraction less harmful to the environment.
  4. They instituted (as a result of government regulation) pollution control measures for coal-fired power plants which vastly reduced their contribution to acid rain, lowered particulate emissions and will now reduce mercury emissions.
  5. They have simultaneously embraced a strategy of denying that climate change is linked to carbon emissions, while also touting “clean coal” technology and carbon sequestration as approaches that would allow the continued burning of fossil fuels in a way that will not affect climate.
  6. They have frightened the public with messages that restrictions on greenhouse gas emissions and a transition to nonfossil fuel energy would mean large increases in utility bills and in the prices of motor fuels and energy-intensive products.

Let’s take their arguments one at a time:

1. Technology. It is true that new technologies such as those associated with deepwater and directional drilling have made previously inaccessible resources available. And, the technologies for fracturing natural gas reservoirs have made previously inaccessible shale gas economically recoverable. But the U. S. Energy Information Administration projects very little growth in the rate of natural gas production in the United States as the decline of conventional sources almost completely wipes out growth in shale gas production. (PDF) Likewise, production from previously inaccessible oil resources has failed to produce anything but a plateau in oil production worldwide from 2005 onward.

2. Price and exploration. The great slump in energy prices of the 1980s and 1990s followed a period of intense exploration in response to the high prices of the 1970s. This brought on much new supply. But the high prices of the last decade have failed to bring on a similar supply surge in oil leading some to believe that high oil prices will no longer do much more than ration consumption. Natural gas and coal production have risen in response presumably to higher prices reflecting higher demand.

But, according to the U. S. Energy Information Administration, total liquid fuel production has been on a plateau since 2005 between 84 and 85 million barrels per day. That means that oil–the most important fuel to the world economy providing some 36 percent of total energy and overwhelmingly the dominant transportation fuel–seems to have hit a supply peak. High prices have run up against the realities of geology.

3. Safety and environment. As technology has evolved in the fossil fuel industry, so have safety and environmental practices. But many of those practices have been largely in response to regulation. Lax regulation is clearly an important factor in the recent BP well blowout in the Gulf of Mexico and so an important public interest was compromised. Beyond this mountaintop removal to access coal in the Appalachian Mountains continues unabated with its attendant dumping of overburden into seasonal streams. And, strip-mining continues in the western United States and elsewhere.

Those who live in areas where the fracturing of shale gas formations is now being done are rightly worried that their drinking water might be polluted with chemicals used in the process. The shale gas drillers in the United States are currently exempt from the federal Safe Drinking Water Act.

4. Emission controls. Of course, emission controls did not come voluntarily. And, there are giant loopholes for old coal-fired power plants and ocean-going vessels which burn the lowest quality petroleum fuels with virtually uncontrolled emissions and now produce more sulfur dioxide by themselves than all of the world’s cars, trucks and buses combined.

5. “Clean” coal and carbon sequestration. The fossil fuel industry’s campaign to confuse the public about the causes of climate change has stalled legislative efforts to pass truly effective greenhouse gas reduction laws. But the industry recognizes this is only a delaying tactic since the evidence for human-induced climate change is so strong. So, the next delaying tactic is to promise “clean coal.” The oxymoronic phrase is confusing and often means only that major pollutants such as sulfur and mercury are removed. Where the writer or speaker includes carbon sequestration, it is never clear where the gargantuan amount of carbon dioxide from all fossil fuel sources will be stored and at what cost. Vaclav Smil, who has written on energy extensively, tells us that

“[s]equestering a mere 1/10 of today’s global CO2 emissions (less than 3 Gt CO2) would thus call for putting in place an industry that would have to force underground every year the volume of compressed gas larger than or (with higher compression) equal to the volume of crude oil extracted globally by [a] petroleum industry whose infrastructures and capacities have been put in place over a century of development.” (PDF)

Nor is long-term testing and surveillance for possible leakage addressed. And, of course, emissions from mobile sources such as autos, planes and ships are never addressed. It is all part of what one journalist dubbed the “delay and fail strategy.” The industry holds out the hope of carbon sequestration while it continues to promote increasing fossil fuel use. When carbon sequestration fails to work, it will be too late to do anything about the expanded base of entrenched fossil fuel users.

6. Greenhouse gas restrictions and alternative energy. Fossil fuels appear cheaper than alternatives now because their costs do not fully reflect the damage they do to human health and the environment. The industry tells us that alternatives are too costly compared to fossil fuels while it vigorously lobbies to prevent the true cost of fossil fuels from being levied on the public through greenhouse gas emission controls and stricter (and therefore more expensive) regulations on environmental safety and cleanup. While the industry complains that alternatives can only be competitive through government subsidies, it is loathe to give up its many government subsidies through the tax code, through direct grants to industry for research and development, and through indirect costs for cleanup and economic damage suffered by the public as evidenced by the recent BP spill in the Gulf of Mexico.

The truth is the public would be better served by energy sources that 1) do not suffer such large price swings as fossil fuels have traditionally done, 2) cannot be exhausted by depletion, 3) do not endanger the environment, and 4) can be located in the communities that use the power.

It is true that fossil fuels have two properties not widely shared by renewable energy resources: Fossil fuels can be stored, and they can be more easily transported. But the most important drawback of fossil fuels is that they are finite. The International Energy Agency estimates that depletion for oil, for instance, is running at around 6 percent per year for existing wells. That means that we must replace that 6 percent before we can grow supplies needed for economic expansion.

So, while the industry touts its competitive pricing, as the depletion of those fuels starts to overcome our ability to extract them at the rate we require to run our society, prices will skyrocket if we have no alternatives in place. We’ve already had a taste of that in 2008. We can expect future spikes as long as we fail to make the transition away from fossil fuels.

Paying to put an alternative energy infrastructure in place now while there is still enough energy to do so will be a small price to pay to avoid possibly catastrophic disruptions and shortages of energy later. Even if it turns out there is a lot more fossil fuel energy available to us than the pessimists currently believe, we will be better off getting ready early rather than waiting until it is too late.

There is another harsh truth, however, which policymakers are loathe to explain to the public. Renewable energy alone cannot make up for the loss of fossil fuel energy as those fuels deplete. We will have to reduce our use of energy greatly, perhaps on the order of 80 percent, in order to live on renewables alone. We know how to do this, but it won’t be easy. (Note to Americans: Europeans are already living quite well on 50 percent of the energy Americans use per capita, so an 80 percent reduction in energy use should no longer seem out of reach given our current technology.)

Naturally, such a reduction in energy use and a transition to renewables would make it difficult for the fossil fuel industry to sell its remaining underground inventory. And, that’s why the industry is fighting so hard against the public interest.

Kurt Cobb is a freelance writer who speaks and writes frequently on energy and the environment. His work has been featured on Energy Bulletin, The Oil Drum, 321energy, Le Monde Diplomatique, Common Dreams, EV World, Life After the Oil Crash, Peak Oil News & Message Boards, and many other sites.  He maintains the blog Resource Insights.