Ms. Rogers raised another important point (among many) which consumers tend to conveniently overlook. More awareness of this fact might offer just enough of an opportunity for more of us to consider with an appropriate measure of caution the behind-the-scenes motivations, priorities, and rationales for statements and efforts by the fossil fuel industry and its various officials/mouthpieces. A bit of skepticism can lead to asking better questions, and who knows what that can lead to?
It is … imperative to take a dispassionate view of this industry. Platform rhetoric about energy independence is nonsense as most within the industry realize. Further, oil and gas companies are not in business to steward the environment, save the family farm or pull depressed areas out of economic decline. If these things should by chance happen, they are merely peripheral to the primary mission of the companies and certainly were never considered in corporate exploration and production plans. Further, given shales’ steep declines and thus limited lives, such benefits will be short-lived as well. It would be the height of naïveté to assume that such companies have altruistic intent towards a region or its residents. They do not. Oil and gas companies are in business to extract hydrocarbons as cheaply and efficiently as possible and get them to the customer that will pay the highest price. If they can shave dollars off already thin margins by refusing to use pollution control devices then that is precisely what they will do if it is not mandated, regardless of whether this will increase costs for a region due to pollution or negatively impact other industries. Even though pollution and degradation involve real costs, they are not borne by the industry that perpetrates them in today’s economic accounting. This is especially true of the oil and gas industry as they are exempt from federal environmental protection statutes.
That’s not necessarily a blanket critique of capitalist enterprise. What commercial endeavor is not undertaken with a base goal of maximizing profit and minimizing expense? Most of us understand that this approach is a fundamental operating strategy of the market system.
What’s important to recognize is that most for-profit businesses do not carry the potential for so much harm to so many and in so many ways as does the fossil fuel industry. And, thanks to the heart-warming efforts of the kind-hearted Dick Cheney et al, the industry does not bear much responsibility for the environmental harm generated from exploration and production efforts.
The purported economic benefits of shale gas and oil have been consistently and egregiously overstated by industry in every shale play to date. While there is some initial economic boost, it has proved short-lived and will almost certainly never cover the peripheral costs of production such as long-term environmental degradation, air quality impacts, aquifer depletion and potential contamination, road repairs and health costs just to name a few.
Almost weekly now, we are getting more information from more sources about the ongoing damage to communities brought about by enhanced oil recovery options. That’s not to say the harm is committed intentionally. It’s not and I’m not suggesting that.
But not worrying about being held responsible does free one up to stretch the boundaries of actions which can be undertaken in pursuit of an objective. Given the stakes, that’s a temptation not easily ignored.
In order for a publicly traded oil and gas company to grow extensively, it must manage not only its core business but also the relationship it enjoys with its investment bankers. Thus, publicly traded oil and gas companies have essentially two sets of economics. There is what may be called field economics, which addresses the basic day to day operations of the company and what is actually occurring out in the field with regard to well costs, production history, etc.; the other set is Wall Street or ‘Street’ economics. This entails keeping a company attractive to financial analysts and investors so that the share price moves up and access to the capital markets is assured.
But as has been discussed by others as well as in several blog posts of mine [see the links in the first part of this series], investments are now flowing as freely as once was true. When that financial pipeline tightens, the intensive production efforts needed to produce adequate fuel supply are no longer as readily justifiable with margins thinned. That’s set a row of decreased production dominoes in motion which will be to almost no one’s enjoyment.
~ My Photo: Corona del Mar, CA – 02.18.14
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Peak Oil Matters is dedicated to informing others about the significance and impact of Peak Oil—while adding observations about politics, ideology, transportation, and smart growth.