For those of us who live far away from the Gulf of Mexico, the oily videos and doomsaying headlines are getting to be a bit wearying and are drifting to the back of the news.
After all, we get stunned by the repetition after a while and in the end we can live with environ mental disaster as long as it hap pens elsewhere and as long as it doesn’t really affect us. In this case, specifically as long as oil prices don’t go up. So far so good, right?
Well, maybe not. Here’s the other side of the story. Among the energy institutes, oil economists and other thinkers, the question is whether we have in fact come to the long-predicted tipping point with regard to oil production and prices.
Suddenly we realize that we’re out of our technological and environmental depths in the deep sea, in the Arctic, on the tar sands and elsewhere — the places on which hopes for keeping the party going are pinned as the cheap oil runs out. And now there’s a crimp even in the expensive oil.
Prices are being held back for now because Europe is in finan cial turmoil and the world econo my is in recession. When it all shakes out, is there anywhere for prices to go but up, fast?
The U.S. government has stop ped all drilling in the Gulf for six months, pending an investigation. If deep sea drillers are required to develop more secure systems, prices will rise — a lot, if the rest of the world follows suit. After all, says Britain’s The Guardian, the only reason oil is at around $70 a barrel instead of $200 is because the oil companies “are getting away with murder in the Third World” with regard to doing it on the cheap.
The worst example is Nigeria, where it’s estimated that as much oil has spilled into the Niger delta from rusty old pipes, thanks to Exxon and Shell, as has spewed out of the BP blowout in the Gulf so far. But of course, who’s ever heard about that? BP, now being demonized in the U.S. for shorting safety, perhaps even in a criminal manner, is no different than the others, say the experts.
It was just unlucky that its rig blew in the U.S. If it had hap pened in Indonesia or the West Coast of Africa, oil would have spewed for months without cam eras on the seafloor or even con tainment booms, fisheries would have been ruined, people plunged into misery — a standard feature in Third World oil economies, where oil companies are virtually parallel governments – and who would have cared?
Meanwhile, the estimates are that the BP disaster will wipe out the entire year’s insurance fund paid by oil companies, possibly leading to the bankruptcy of some insurers and certainly higher insurance rates – to be passed to you eventually at the pump.
Meanwhile, these companies have to raise capital on equity markets to finance the drilling.
Higher costs might make it harder to raise money, further crimping drilling and eventually supply, meaning higher prices.
Watch for it.
And what about Georges Bank?
you ask. Surely BP’s bad example will deter us forever from the thought of drilling there. Alas, Georges is not deep-sea but most ly shallow-sea. In other words, a choice plum for oil companies as the deep-sea becomes problematic and the world gets more desper ate.
The fact that the provincial government put off an impending review of drilling on Georges for a mere couple of years is an in dication that the instinct to drill on Georges is only temporarily in the closet. In Yarmouth, my bar ber, Gerard, clipping my few re maining hairs, stated gravely: “Mark my word. Darrell Dexter’s plan for this end of the province is to drill on Georges.”
But there’s also good news, in a grim way. The BP blowout — and ultimately rising oil prices — will hopefully inject some realism into our fantasy that the oil can flow cheaply forever without conse quence, and juice up the trans formation to conservation and to alternate energy forms, without which things will unravel at an ever-increasing clip.
Richard Heinberg, a prominent American expert on oil depletion, writes on the website Energy Bulletin that “we are paying more and more for what we put in our gas tanks – more not just in dollars, but in lives and health, in a failed (U.S.) foreign policy that spawns foreign wars and military occupations, and in the lost integ rity of the biological systems that sustain life on this planet. Our only solution is to do proactively, and sooner, what we will end up doing anyway as a result of re source depletion and economic, environmental and military ruin: end our dependence on the stuff.” Then there’s the other view: we haven’t hit the brick wall yet. The disaster will get written off, tech nology will improve once again, and we’ll carry on as before — until the next, bigger disaster.