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Crude: The Story of Oil By Sonia Shah November 18-20, 2006. Crude is the product of the decayed remains of billions of sea creatures. Foraminifera fossils commonly found in crude oil. Oil seeping to surface, Iraq.

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Crude: The Story of Oil By Sonia Shah November 18-20, 2006

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crude the story of oil by sonia shah november 18 20 2006

The Story of Oil

By Sonia Shah


18-20, 2006

spontaneous combustion of natural gas seep in iraq the everlasting fire of biblical times
Spontaneous combustion of natural gas seep in Iraq: the “everlasting fire” of Biblical times
crude is uniquely energy intense
Crude is uniquely energy intense

Energy in 1 gallon of oil equal to

= 5 kilograms of the best coal

=more than 10 kg of wood

=more than 50 days of full-time human labor

=100 times more energy than its extraction requires

First market for crude = kerosene lighting
  • “Give the poor man his cheap light” John D. Rockefeller, Standard Oil
  • Octane was waste
Kerosene market crumbled after Edison invented light bulb in 1879; but Standard Oil was swimming in oil

A forest of oil derricks, California

The first “horseless carriages”
  • Automobile races held to entice skeptical public
per person per mile
Per person per mile
  • Cars require three times more energy than trains
  • Cars require 30 times more energy than bicycles
the paving of the united states
The paving of the United States
  • 1907: less than 200,000 miles of U.S. roads had any kind of surfacing
  • Today, nearly 4 million miles of paved highway alone
1955: 50 million cars owned by Americans
  • 1975: 100 million cars
  • 1990: one car owned per licensed driver
  • Today, a new car is bought in the US every 3 seconds
  • We consume crude 100,000 times faster than it can accumulate underground
M. King Hubbert delivering his speech to the American Petroleum Institute, 1956
  • Minutes beforehand, employer Shell urged him to tone down his findings
the first oil shock
The first oil shock
  • 1960: Organization of Petroleum Exporting Countries formed
  • OPEC countries govern access to over half of the world’s conventional oil
  • 1971: US oil production peaks
  • 1973: OPEC embargoes oil to US and Netherlands
  • Price of oil rises from $3/barrel to $12/barrel in six months
  • Between 1970-1980 consumer prices double
any means necessary
“Any means necessary”
  • The Carter Doctrine: the US will defend access to Persian Gulf oil using any means necessary
  • Oil is lifeblood of US economy
  • 70 percent of weight of US army = fuel

North Sea and Alaskan oil decline

  • North Sea oil peaks in mid-1980s
  • Alaskan oil peaks in 1988
  • $10 billion needed to rehabilitate North Slope
  • 300 million gallons of toxic sludge in North Sea
new oil an heroic effort
New oil: an heroic effort
  • Over 2,000 icebergs
  • 15,000 ton rig sank in 1982
  • New rig built with 400,000 tons of concrete and 69,000 tons of steel
  • Submerged with 400,000 tons of iron
  • Total production = 0.5 billion barrels


declining discoveries of new oil
Declining discoveries of new oil
  • Since 1960, the size of new oil finds has declined
  • Since 1980, the rate of discovery of new oil finds has declined
  • Last year, one new barrel of oil found for every 6 consumed, despite industry spend of $238 billion on oil exploration
  • Flow of oil from known oilfields declines 3 to 5 percent a year
fuelling petro demand
Fuelling petro-demand
  • Increasing oil demand in China and India is “crucial to the long-term growth of oil markets,” according to the DOE
  • World Bank spends 15 times more on fossil fuel projects than renewable energy
  • World Trade Organization accepted China’s membership contingent on slashing tariffs on car imports
Bicycles banned in Shanghai
  • 40,000 new miles of highway planned in India
  • Developing countries led by China and India expected to consume 90 percent as much oil as industrialized countries by 2020
asian brown cloud
Asian Brown Cloud

A 2-mile thick cloud of toxic pollution permanently hanging above Asia

dutch disease the curse of crude
“Dutch Disease”: The curse of crude
  • Oil production in Algeria, Angola, Congo, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Peru, Qatar, and Trinidad Tobago coincided with a decline in the standard of living
  • Per capita income in Saudi Arabia dropped from $28,000 in 1981 to ~$10,000 in 2004
  • War in Angola, Colombia and elsewhere paid in petro-dollars
challenges for oil industry
Challenges for oil industry
  • Public disapproval of high prices and profits in industry
  • Declining discoveries of new, conventional oil
  • Declining production of old oil
  • Record profits from high oil prices
  • $10 trillion invested in current oil and gas infrastructure
  • Minimal investments in renewables
  • Increasing investment in natural gas
  • Increasing investment in unconventional oil resources

300 billion potentially recoverable barrels of oil

  • Globally, 2.5 trillion barrels oil locked in tar sands
  • Cost of extraction in 1980: $30/barrel (compared to Saudi oil at $2/barrel)
  • Cost of extraction today: $5-7/barrel

Tar sands: Open-pit mining, Alberta

turning tar sands into oil
Turning tar sands into oil
  • Burns up to a fifth of Canada’s natural gas supply
  • Emits 6 times more C02 than producing a barrel of conventional oil
  • Requires 6 barrels of freshwater for each barrel
  • Threatens Alberta’s forests with acid rain
crude s royal successor natural gas
Crude’s royal successor: natural gas
  • Exxon invested $7 billion in new project to turn natural gas into diesel
  • Half of BP’s $8 billion investment in alternative and renewable energy is in natural gas
natural gas an environmentally friendly fossil fuel
Natural gas: an “environmentally friendly” fossil fuel?
  • Burning natural gas emits less carbon dioxide than burning oil
  • Unburned natural gas (methane) absorbs 23 times more heat than carbon dioxide
  • With 3 percent leakage, using natural gas has same climate-warming effect as burning oil
  • With 6 percent leakage, using natural gas has worse effect on atmosphere than burning coal
  • Most recent data suggests present leakage of at least 2.3 percent

“Our biggest problem is not the end of our resources.That will be gradual. Our biggest problem is a cultural problem.We don’t know how to cope with it.” —M. King Hubbert

toward a sustainable energy future
Toward a sustainable energy future
  • Appropriate price signals
  • Energy literacy
  • Challenging power of oil industry
  • Modelling a post-oil society
based on crude the story of oil

Based on Crude: The Story of Oil

By Sonia Shah

November 18-20, 2006