Oil Industry Must Clean Up Its Act & The Gulf
The oilmen and investors must be forced to recognise that the true costs and risks to society of oil exploration are far greater than the costs and risks of investing in alternative energy. By relying on fossil fuels, the West is risking catastrophic climate change and also foregoing the opportunity to develop new energy technologies. And in a Robin Hood-type move Kevin Costner’s company Ocean Therapy Solutions is providing thirty-two centrifuge machines to assist in the cleanup of oil in the Gulf of Mexico.
Anatole Kaletsky in The Times (17 June 2010):
ABOUT 10 years ago, I was at a City lunch where the guest of honour was the chairman of one of the world’s biggest oil companies – not BP, but it might as well have been. I asked him why his company had invested so little money in alternative energy projects.
My question to the oilman was partly prompted by the fact that BP had recently started its rebranding campaign, in which it tried to use the slogan “Beyond Petroleum” to identify itself with alternative energy research. Even a decade ago, it was apparent that some combination of new technologies would eventually have to replace fossil fuels.
Yet despite all the fuss about global warming, the US government halved its energy research spending in the past decade to just $US5 billion a year – one-fourteenth of military research and one-sixth of government spending on medical R&D.
The private sector’s research efforts were even more pathetic – and still are. The entire global research effort on all forms of non-carbon energy, including nuclear power, in the past decade was only about double Microsoft’s spending on repeatedly upgrading Windows and Office.
By contrast to the $US10bn spent globally on alternative energy and nuclear research, $US250bn was spent annually, according to the Stern report, on subsidising the extraction and burning of fossil fuels.
BP’s much-touted $US45 million investment in Solarex, the world’s biggest solar-energy company, was minuscule compared with the $US70bn it paid at about the same time to buy US oil giants Amoco and Arco, making BP the biggest US oil producer.
So when I asked the oil company chairman my question, I expected the oilman to scoff at the very idea that new technologies would ever replace fossil fuels.
He conceded that alternative energy sources might displace oil, but the prospects of success for any particular technology were too uncertain and financially risky for his shareholders to stomach.
It is impossible to say whether President Barack Obama will prove right in his prediction last night that the global energy outlook will be changed forever by the Deepwater Horizon oil spill. What he can do is see to it that no oil company will ever again claim that prospecting for oil is a less financially risky proposition than installing wind turbines or investing in nuclear power.
The Obama administration’s strategic objective, beyond sealing the gusher and cleaning up the mess, should be ensure that drilling for oil becomes prohibitively expensive. The oilmen and investors must be forced to recognise that the true costs and risks to society of oil exploration are far greater than the costs and risks of investing in alternative energy or nuclear power.
Whether or not BP is found by the courts to have been negligently culpable, the company now faces catastrophic financial losses. If these losses threaten BP’s survival as an independent company, then oil drilling in technically challenging or environmentally sensitive locations may be recognised as too expensive.
And if Big Oil persists in drilling in some of the world’s most dangerous environments, then shareholders may replace the oilmen with new managers with a better understanding of the new energy economics – or the share price will be pushed down.
A panic among shareholders after the Gulf of Mexico blowout could put an end to the world’s dependence on fossil fuels much faster than any amount of regulation or protest.
Consider now what would happen if financial markets imposed an effective moratorium on exploration in challenging locations.
At first sight this might seem a disaster, strengthening the monopoly power of Saudi Arabia and OPEC, potentially sending oil prices from $US70 a barrel to $US150 or above and redirecting an additional $US1 trillion of income annually from Western democracies to Middle Eastern supporters of terrorism and other hostile regimes.
It was to avert such a disaster that the US Republicans coined their 2008 election slogan, “Drill, baby, drill”.
However, an end to oil exploration in the US would have the opposite effect to that predicted by Republicans. Suppose the US government and Western financial markets accepted that it was economically irrational to drill 4.8km down into rock formations under stormy waters, when oil can be extracted for one-tenth of the cost from Middle Eastern deserts or Siberian steppes.
Governments, instead of imagining energy prices reflect market forces, would realise oil markets are rigged by cartels and distorted by unrecognised environmental and geopolitical costs.
Voters, instead of imagining they are being punished when energy taxes are increased, might realise such taxes make oil-consuming countries richer by stopping money being siphoned to Saudi Arabia, or Venezuela through ever-rising oil revenues.
Oil-producing countries might realise they have only 30 years or so to sell as much oil as possible.
And energy companies – instead of wasting more than $100bn a year on exploration for oil reserves outside the accessible fields in OPEC countries – would invest in new technologies.
The industrialised world’s addiction to oil is not just environmentally destructive and geopolitically suicidal, but also economically irrational.
By relying on fossil fuels, the West is not only risking catastrophic climate change and subsidising some of the world’s nastiest political regimes to the tune of $US1 trillion annually, it is also foregoing the opportunity to develop new energy technologies in which knowledge-based societies, such as Europe and the US, would enjoy a clear competitive advantage.
Continuing to feed the world’s oil addiction rather than developing alternative energy sources is the real crime committed by BP and accomplices in Big Oil.
Report from Energy Boom:
Robin Hood may just be coming to the rescue once again! It’s official. Academy award winning actor Kevin Costner and his company, Ocean Therapy Solutions, has signed a contract with British Petroleum for 32 “dream machines.”
According to the company website, BP signed a letter of intent to “deploy thirty-two centrifuge machines to assist in the cleanup of oil in the Gulf of Mexico.”
Years in the making, Costner’s machines use centrifugal force to separate oil from water. The “dream machines” are available in five different sizes. The largest centrifugal oil-water separating machine, the V20, is capable of cleaning “210,000 gallons of oily water per day.”
The machines are transported to the spill area on barges. Once the oil is separated from the water, the more than 99 percent crude-free water is released back into the ocean and the oil is stored in tanks.
Putting his money where his mouth is, Costner invested US$20 million of his own money into his dream machines. For more than 15 years, Costner and his team have been working on the 4,000 pound machines. Costner’s brother, a scientist, has also been involved in the project. Ocean Therapy Solutions will manufacture the devices.
As of June 10th, three V20 machines were operational in the Gulf and 10 more were expected to be operational shortly. While financial details have not yet been disclosed, the 32 units are expected to be deployed and working within the next 60 days.
While BP, the EPA and the Coast Guard are screening submitted proposals to help in the clean-up effort, even Robin Hood himself had trouble getting his invention past the barrage of red tape.
In fact, Costner spent over US$1 million in the past month promoting his technology before BP finally signed on. Costner testified before a U.S. Senate Committee on Small Business and Entrepreneurship on June 17, 2010. Costner told the committee:
“I believe there are other small companies out there in the private sector just like us. How do we let them in? How do we create an environment that fosters and encourages investment in critical technologies? I leave that to this body. But you should know, that negotiating your way, as a small business, through the bureaucratic maze that presently exists is like playing a video game that no one can master. It’s like trying to get to a next level that doesn’t exist.”
Costner also testified earlier this month before the House of Representatives Science and Technology Committee.
Born in California in 1955, Costner has received two Academy Awards in his career to date. Costner won an Oscar for Best Director and Best Picture in the 1991 film, Dances with Wolves. He was also nominated for Best Actor for the same film.
Ironically, Costner starred in Waterworld, a 1995 futuristic film where all the polar ice-caps on earth have melted and little land remains. The post-apocalyptic story was panned by both critics and the public alike.