I got an interesting email today; it’s one of those well-meaning chain mails meant to change the world through grassroots consumer action. While it’s a very nice gesture, I fear that people aren’t really looking at the big picture. We continue to demonize the oil corporations and complain to our government without really thinking about the problem of oil on a WORLDWIDE PHYSICAL level. Oil doesn’t come back once we burn it, folks. It’s not sustainable.
Without further ado, here’s the email I received. Below are my notes on the original email, followed by my response to our raging American pulse.
This was originally sent by a retired Coca Cola executive (I’ll just point out argument from authority,) It came from one of his engineer buddies who retired from Halliburton. It’s worth your consideration.
Join the resistance!!!! (Indeed, fight the power.) I hear we are going to hit close to $ 4.00 a gallon by next summer and it might go higher!! Want gasoline prices to come down? We need to take some intelligent, united action. (United intelligent action like carpooling? Maybe reinstating some old rail lines?)
Phillip Hollingsworth offered this good idea. This makes MUCH MORE SENSE than the “don’t buy gas on a certain day” campaign that was going around last April or May! The oil companies just laughed at that (Did they laugh at it? Were a bunch of old white guys at a conference table laughing about this chain mail?) because they knew we wouldn’t continue to “hurt” ourselves by refusing to buy gas. It was more of an inconvenience to us than it was a problem for them. BUT, whoever thought of this idea, has come up with a plan that can really work. Please read on and join with us!
By now you’re probably thinking gasoline priced at about $1.50 is super cheap. Me too! It is currently $2.79 for regular unleaded in my town. Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at $1.50 – $1.75, we need to take aggressive action to teach them that BUYERS control the marketplace..not sellers. (Or in the case of a resource that’s not renewable–the AMOUNT we can produce kind of controls the marketplace too. Just a thought.) With the price of gasoline going up more each day, we consumers need to take action. The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas! And, we can do that WITHOUT hurting ourselves. How?
Since we all rely on our cars, we can’t just stop buying gas. But we CAN have an impact on gas prices if we all act together to force a price war. (“Forcing a price war” is a ludicrous plan, because in the end, we’re still consuming just as much. This plan really doesn’t tell us to do much of anything except to make some oil companies richer than others.) Here’s the idea: For the rest of this year, DON’T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL. If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit. But to have an impact, we need to reach literally millions of Exxon and Mobil gas buyers.
It’s really simple to do! Now, don’t wimp out on me at this point…keep reading and I’ll explain how simple it is to reach millions of people!!
I am sending this note to 30. If each of us send it to at least ten more (30 x 10 = 300) … and those 300 send it to at least ten more (300 x 10 = 3,000)…and so on, by the time the message reaches the sixth group of people, we will have reached over THREE MILLION consumers.
If those three million get excited and pass this on to ten friends each, then 30 million people will have been contacted! If it goes one level further, you guessed it….. THREE HUNDRED MILLION PEOPLE!!!
Again, all you have to do is send this to 10 people. That’s all! (If you don’t understand how we can reach 300 million and all you have to do is send this to 10 people…. Well, let’s face it, you just aren’t a mathematician. But I am. so trust me on this one.) 🙂
How long would all that take? If each of us sends this e-mail out to ten more people within one day of receipt, all 300 MILLION people could conceivably be contacted within the next 8 days!!! I’ll bet you didn’t think you and I had that much potential, did you! Acting together we can make a difference.
If this makes sense to you, please pass this message on. I suggest that we not buy from EXXON/MOBIL UNTIL THEY LOWER THEIR PRICES TO THE $1.30 RANGE AND KEEP THEM DOWN. (Ultimate problem: The prices aren’t going to just DROP to $1.30 like that. They would come down incrementally until people started buying from Exxon Mobil again. Picture this: you’re driving down the street, and you see Mobil gas for 2.19, and Sinclair gas for 2.29. Guess what? No one is going to buy Sinclair gas. They’ll buy Mobil, driving
the prices right back up.) THIS CAN REALLY WORK!!!!! (This CAN work, provided the unswaying determination of 150,000,000 people to NOT buy gas that’s 10 cents cheaper. Good luck.)
That’s the end of the brilliant plan–punish Exxon and Mobil because they’re the biggest, and therefore, most evil company.
Now for my response…
I started watching television again, and I’m watching the TODAY show in the morning on NBC. I find we’re talking about the American outrage about increased oil prices. I flip the channel to ABC, I find the same thing. Everyone everywhere is flipping out about paying a few cents more per gallon, so they blame the oil companies, OPEC, our government, and any other convenient faceless organization we can find to make the claim that we’re being shafted.
But here’s the problem no one’s talking about:
Oil is limited. There is a finite amount of it on the planet. If we apply some some simple economics and a little bit of global vision, we see clearly why gasoline prices will continue to rise until gasoline is no longer a viable fuel.
First off, gasoline doesn’t just spring from the ground. I’m sure all of you know that. The process in a nutshell is exploration, foundation, extraction, transport, refining, transport again, and delivery. Along that route, how many employees do you think these evil oil giants employ?
So let’s poke a little…
Exploration–how much do you think oil companies spend looking for new wells? You would imagine they spend plenty–exploration of new resources keeps them in business.
Foundation–how much money do you suspect it costs to build, maintain, and staff a field?
Extraction–this gets trickier because as we reach the 50% level of the well, we find it takes more time and energy to extract the remaining oil from it. This means as we deplete our larger fields, the extraction process gets more expensive. Has anyone calculated these costs in?
Transport–pipelines at this stage, normally. Now, let’s think about this: a pipeline a thousand miles long and 10 feet in diameter–a pipel
ine with safeguards so that it doesn’t snap or critically leak. How much do you suppose it costs to design, build, and maintain that?
Refining–think about a factory the size of a city, A factory that’s worth well over $250 million. How much do you suspect it costs to keep this running?
Transport (of finished product)–Now you’re talking oil liners, tanker trucks, etc., all the way down to the guy that fills our gas station tanks here at home. How much money do those oil liners cost? How about the tens of thousands of tanker trucks filling our stations every week?
Delivery–the end product gas station. In order to make any money at all, the places we get our gas have to push the price up a little more. If they don’t, they’re not a viable business.
So, after all the employees and capital costs we’ve determined, try and put all of that together and wonder to yourself how much money it must take to keep all of those systems running.
Now let’s add another factor. DEMAND. This is another piece of simple economics. China continues to skyrocket in industrial development. Guess what that means? They need oil too. In fact, they’ve needed quite a bit more in the last decade, and they’ve needed even more in the last five years. This means that we’re no longer the single biggest crude drain on the world. Now we have another. So let’s review. Oil is STILL finite, but DEMAND has doubled since 1986. Guess what that means for prices, kids?
Now lets drive the point home with the spoiled child analogy. For quite a while, Europeans have been paying double what we pay.
See that little blue line down there? Yeah, that’s us. Now, consider where we get most of our oil: Not just the Middle East, but the confluence of the European, Asian, and African continents. So, is Europe closer or father away? Good. You’re doing well. Europe is within continental reach of the major petrol resources minus South America (15% isn’t a lot.) So if Europe is closer to the massive wells in the Middle East and Russia, what’s the deal? Why do they pay so much more?
Two things: influence and buying power.
Think about American involvement in the Middle East in 1940. Not much, right? Well, Texas still had plenty of oil in 1940. Around the mid-fifties, however, a geophysicist named M. King Hubbert told the United States Geological Survey (USGS) that US oil would peak somewhere around 1970. After that point, domestic oil returns would be less and less. He was laughed off by some experts and lauded by others. Over time, Hubbert has become marginalized and forgotten, despite the fact that he predicted the world oil peak would happen sometime around…now.
The scary part about Hubbert’s two predictions is that the first one was dead on. I wasn’t around in 1970, but I do recall some sort of energy crisis happening around the middle of that decade. Are you still following me? After the steep slope of the US oil peak, we had to go elsewhere if we were going to continue to satisfy our massive hunger for crude. What’s more is that around that time the Soviets were toying around with the idea of major pipelines for energy interests. Now we have competition for a major resource, meaning we throw money and might at anything that would secure those energy interests for us instead of the Soviets. Enter, Afghanistan. Later on, Iran. Later still, Desert Shield/Storm.
So what was I saying? Influence. Do you think we pay low prices because we’re friendly and everyone loves us? Do you think we’re being treated to a favor because of our great reputation? Let’s talk buying power.
When you buy in bulk, you get a break. It’s another given rule. Bulk means less packaging, less middle men, and less the seller has to worry about. When the Netherlands buys the amount of oil they need for a month, it pales in comparison to the amount of oil we need for a month. So guess who gets the better deal?
But that doesn’t mean it’s going to last forever. As China and India continue to industrialize along with the rest of SE Asia, we’re going to find a few other powers that are not only closer to the supply, but they also need a increasingly bigger slice of the pie to continue their growth. Guess who’s going to get the better deal a decade from now?
In the end, we have to stop crying about it and start carpooling. In the United States, the average empty seats in a vehicle work out to be a little over three. Because each and every one of us have our own vehicles, we get away with feeding a 2500 lb. beast to carry our 150 lb. bodies. We could easily eliminate 2 or 3 cars per 6 people driving, but we won’t.
We’re American, and it’s our right to waste. It’s also our right to whine when we can’t get the same unfairly preferential treatment we’ve gotten from the Saudis for the past 30 years. It’s also our right to forget about the problem once gas drops a few cents again. The problem is greed, but it’s not just the oil companies’ greed; it’s ours.
The bottom line, after all this ranting, is this; the bubblin’ crude will not bubble forevermore, nor will it simply “run out” one day. It’s a curve. As we have less and less to pump out of the major fields, the cost of extraction goes up. As we spend more and more finding new fields, we find smaller and less voluminous supplies to tap. As we spend more time and money finding more oil, we get less and less to show for it. This doesn’t mean we’re going to run out–it means that eventually, it’s going to cost more money getting to the oil and distributing it than the companies can make selling it.
Unless we make a major breakthrough in solar power or find the elusive mythical secrets of controlled sustainable fusion, we’re going to have to change our lifestyles. Oil is not going to magically appear because we’re angry.
Let’s look at the bigger picture sometime before calling out the oil giants as the root of all evil. Let’s understand that if our politicians cap the price of gas, they’re not hurting OPEC, they’re hurting our local gas stations. After all, most oil companies are made up of (surprise!) private investors, many of them from this country, and many of them in the middle class.
If you’d prefer the government to regulate the oil prices, they’ll have to audit the oil companies. If they do that, they may as well control the distribution of oil. Now let’s look at our government and the people involved in it. Do you really want to cede control of our energy resources to them?
Berserker less. Think bigger. When you can do that, plea for the sanity of those around you.