The World has an Oil Problem
It's not just about climate change
Much talk about oil today seems either about how the world is finally abandoning it for “clean” energy, or the necessity for humanity to do so, now. Whereas the first claim isn’t true beyond the borders of aspiring rhetoric, the second deserves much agreement for its position but skepticism about its possibility.
True enough, climate change does demand a major reduction, and it will happen. There will be a shift away, especially from coal and oil, the most carbon-rich sources. But oil is too essential a resource worldwide, too deeply embedded in the tissues of contemporary life, for its death to be anything but greatly exaggerated for some time.
This is not the best news, I know. But it’s not fake: oil will be more difficult to leave behind than coal and possibly natural gas. Both these have multiple alternatives at scale—nuclear, hydro, geothermal, and oil too. Coal and gas are also alternatives for each other in power generation and industry. Oil has no such replacements. Electricity will gain greatly here in coming decades, but mainly for passenger vehicles. Biofuels will have their place, too, esp. perhaps for aircraft, but as a stand-in, not final substitute. It isn’t yet clear whether these can fulfill the needs of all cars plus the 100s of millions of trucks, planes, ships, trains, and—let us not forget—military vehicles.
I want to talk about why oil is special. This has real importance to any practical understanding about the challenges the energy transition faces. There is a great deal else to say about oil, to be sure. But this is a good and necessary beginning.
Love Requited
First, some blunt realism. During 2020, due to pandemic lockdowns, global demand for oil fell by 9% from 2019. This was huge, the biggest drop ever in so short a time. But by December, half of it had come back, more in thirsty places like China, the US, and EU. Depending on what data site you prefer, forecasts say 2019 levels of oil use will be back this year or next. But nearly all agree: demand will recover, then grow, even as EVs grow in number.
Let’s parse this a little. The pandemic may actually have accelerated something—a peak in oil demand by OECD (wealthy) nations. Demand here may not return to 2019 levels. This isn’t a shock; energy use in these places has largely plateaued (see earlier post), due to higher efficiency technology, less heavy industry, and low birth rates.
In contrast, demand keeps rising in the rest of the world, Asia above all. This is where economic growth, thus more transport of goods, is strongest. The graph shows this as a forecast for oil demand beyond early 2021. The increase is not sudden or massive, but it is steady, as it has been since mid-2020. By the end of 2022, it surpasses the historical highpoint of 2019.
So global oil continues to grow. When will there be a plateau in world demand? Again, it depends who you talk to: some say it will happen very soon, by 2026. Others put it off to a decade later. It’s tough to make predictions, esp. about the future (Yogi Berra).
Now consider this (please). Below are two photographs. One shows an old truck crawling over Sahara sand, bearing an impossible mass of migrant workers and their parcels. The vehicle can barely be seen. The other image presents a stunning contrast: a set of highways, packed with cars, SUVs, vans, and trucks, stretching into the distance toward a modern city of gleaming buildings.
The contrast may be startling. It should be. Without a single word, it reveals the immense energy inequality separating poorer and wealthier nations. The world has an enormous distance to go in this domain. What will it take for the children and grandchildren of those in the left photo to live in some version of the right photo (a better version, we might hope)? Please note that there are trucks of various sizes, not only cars, on the right. Also consider that the minds of virtually all the drivers have to be amended to fully embrace EVs.
Liquid petroleum has ruled the entire kingdom of modern transportation, on land, in the sea, and in the air for 120 years. Again, every other sector of energy use, industry, power generation, commerce, residences, has several options at least. So why hasn’t transport ever developed any?
Why, Indeed
The world’s oil problem. It is a problem not of addiction and unparalleled corporate evil, as often said, but of chemistry, abundance, invention, history, and culture. It is a problem that could not have occurred unless oil was something truly unique, a “miracle source,” as it has sometimes been called. To understand this requires a return to an early scientific study done on petroleum.
In 1855, Yale chemist, Benjamin Silliman Jr., was contracted by a group of investors. They wanted him to analyze a sample of “rock oil” that had seeped from the ground in northwestern Pennsylvania. They had a plan to lease some nearby land and drill a well. Silliman went to work in his lab, employing a process that his own father, Benjamin Silliman Sr., had invented: fractional distillation. It involves progressively heating a liquid and drawing off different fractions as they evaporate and are cooled to condense into separate fluids.
Silliman found that oil was not one substance but a mix of many hydrocarbons, each with a different composition and highly combustible. He wrote in his report, with what history would prove to be spectacular understatement: “There is much ground for encouragement…that your company have in their possession a raw material from which, by a simple and not expensive process, they may manufacture very valuable products.” In 1859, the first well flowed, and a new era in global energy began (for a rich telling of this story, see Daniel Yergin’s The Prize, a narrative history of the oil industry).
Silliman was more right than he could have imagined. Petroleum comprised an entire archive of possible fuels. Inventers would need time to fully appreciate this; for decades petroleum was used only to produce kerosene for lamps, replacing whale oil (yes, the joke is that oil saved the whales, though I’ve never heard a whale laugh at it). But by the 1920s, the internal combustion engine was powering cars, motorcycles, trucks, ships, and airplanes all with their own fuels. The door to the library had been opened wide.
Each fuel itself represented a blend, showing the library held more entries than earlier believed. Gasoline, for example, is a mixture of fractions with between 5-12 carbon atoms per hydrocarbon molecule, diesel between 12 and 24. Petro-fuels were more powerful and less smoky than wood, charcoal, or coal, the reigning sources of the 19th and early 20th century. Coal would continue to be widely used, especially in nations where it was plentiful. “Our civilisation [in Britain] is founded on coal,” George Orwell wrote in The Road to Wigan Pier (1937), “The machines that keep us alive, and the machines that make machines, are all directly or indirectly dependent upon coal.” In the wake of WWII, the European Coal and Steel Community was formed, forerunner of the EU, to rebuild from the wartime devastation.
In the U.S., a different trend existed. Out of the war came a host of new vehicles that opened the archive further. Jet engines worked best with kerosene blends that resembled designer fuels. Commercial planes, too, needed a blend formulated for safe use at high altitudes over the North Pole and for landing in desert states. The military had its own versions, and the Soviets did too.
No need for technical details. But two points. First: oil fuels are not only numerous but adaptable, as they can be prescribed, tested, adjusted, re-blended. Second: this protean quality has itself made possible the vast diversity in vehicles that now exist.
“Miracle Liquid”
Yet oil was a “miracle liquid” for more reasons than this. It was hugely abundant (and still is, as I discussed in an earlier post), easy and efficient to transport (a liquid), and did not go bad in storage, after millions of years underground.
After WWII, it became close to the universal source for which modern society had long hoped (and that coal could never be). By the 1960s, that is, its fuels had extended far beyond transport, finding use in electricity generation, industry, commerce, and residential sectors. For the U.S. and Europe, oil fed over half of all energy needs in 1970; in Japan, the figure stood at 75%. If coal had been king for some of these sectors, oil’s domain seemed unlimited.
None of this, moreover, includes the exploding realm of petrochemicals—fertilizers, medicines, nylon, rayon, food preservatives, dyes, perfume, detergents. And, of course, plastics, which entered a remarkable boom period in the 1950s and 60s. It was at this time that oil began to penetrate every aspect of U.S. society and thereafter wealthy nations one and all.
Iconic scene in The Graduate (1967), where Benjamin (Dustin Hoffman), with his shiny B.A., is advised by Mr. McGuire (Walter Brooke): “I want to say one word to you. Just one word. Are you listening?” “Yes,” says young Benjamin. “Plastics!” Unfortunately, Hoffman decided to stick with an acting career.
All of which helps explain why the first oil crisis of 1973-74 delivered a punch in the gut to many nations. No one seems to have paid enough attention to the national security implications of depending so hugely on a single energy source. The Japanese phrase “oil shock” (オイルショック)might be the best way to say it and the graph below shows why this was esp. true for Japan.
After the shock, wealthy nations got together, created the International Energy Agency (IEA), which produced a set of policy recommendations to reduce runaway oil dependence. One was to diversify sources in as many sectors as possible. Natural gas, coal, nuclear, and for a brief period, renewables all increased (see, however, my post on the last two). As the graph below shows, Japan did not go big into renewables. If you, or someone you love, believes that the Japanese have made their country a solar capital, a reality check is in order (updated info to 2019 here).
Transport never diversified. It remains over 90% dependent on oil in early 2021. California tried to alter this in 1990 when it passed its first zero-emissions vehicle mandate. You may have heard about the EV fiasco of the mid-90s from the film Who Killed the Electric Car? The story is messy. But attempts to answer the title question by blaming one or another factor typically miss the most important element of all—cheap ($1.15 gas prices) and abundant fuel. This, along with range anxiety (we now know), doomed massive consumer interest from the beginning.
My own estimates suggest that the greater global system of finding, producing, transporting, refining, and distributing oil and its manifold products have a value of around $30-$35 trillion. I’m probably too conservative, though.
Each part of the global system, though has its own supporting industries, which have their own in turn. Transporting oil means pipelines, tanker trucks, railroad tanker cars, storage tanks, and crude carrier ships, which utilize steel, electronics, paints, chemical coatings, and a dozen other, specialty products, made in countries around the world. Abandoning oil means deeply altering and eliminating parts of all of this. The number of jobs and professions involve is well beyond what people normally think of when they talk about “the oil industry.”
Only when you conjure the many millions of people whose work and lives are involved in the $30+ trillion enterprise of oil today can you begin to imagine what will actually have to happen in order for oil use to drop by half or more. To demand it happen in a single decade, or even two, is like demanding every child in the world be college-educated in the same time period.
Petrochemical products add a dimension to this that I will take up in a later post. Let us say that it is not small; nor is it forecast to be smaller in the future. I’ll just say that the world has shown a colossal, mind-numbing lack of foresight in allowing plastic waste to infiltrate the entire biosphere of Planet Earth. A mere 9% of this waste is currently being recycled.
Today, there are over a hundred thousand types of plastics, ranging in use from contact lenses to the Mars Rover. The entire cosmos of digital electronics (which includes all computing technology, thus the Internet) is encased in plastic. So is medical equipment, baby products, sports, cosmetics, clothing, and too much else to mention. In a wholly literal way, oil saturates daily life. Only in the poorest of countries is this not the truth. Yet people there want it to be. For them, it can appear that the real problem with oil is that we are burning so much of it up.
Not Gently
Where does this leave us? Does it mean there are no real alternatives to oil? In one sense, that’s exactly what it means. We won’t find another resource able to serve so many purposes.
But so be it. We will create other options for all that it does, with one exception. We will need to keep clearly in mind the price the world continues to pay for its oil dependence in terms of waste—carbon emissions, air pollution, plastic debris. As it rushed ahead with all that oil could do, the advanced nations never really thought to look back at what was created in the wake. This, too, is part of the challenge that replacing oil presents, this potent need to be clear-eyed and brutally honest about impacts. It very much applies to everything, including renewables, about whose waste we hear far too little (yes, another future post!).
The world’s oil problem will not go gently into the night. Petroleum runs every military in the world (something else we should keep in mind). This makes it a national security issue, still another part of the problem. Even leaving aside its geopolitical costs, enormous as they are and so terribly wasteful in blood and treasure, petroleum offers a tale that might have come from the Arabian Nights or Grimm brothers. It is the story of a wish granted an ambitious youth for great wealth, with the cost that each time any part of it is spent, a year of life is lost to the user.
At the last, the most problematic thing that has come from the long love affair with oil is likely the belief that complex and diverse energy needs can be solved by just one or two master sources. It is in the mind of far too many today that the world’s non-carbon endpoint will be a simple one—whether nuclear (fission and/or fusion), renewable (wind and solar only), fossil with carbon capture, new technology (e.g. fuel cell), or some final (magic) formula that selects combines a small selection of the above.