Oil forever, but at what cost?

Not so long ago, drilling a well in the floor of the ocean in 5,000 feet of water was unheard of.  Most of the oil platforms in the Gulf Of Mexico stood in less than 1,000 feet of water, which still required advanced engineering to work.  But the easy oil is almost gone, the oil that lies close to the surface, or in shallow water.  Not only are wells being drilled in deeper water, but the depth of the wells themselves have grown substantially.

Drill ships have to be able to maintain their position over the well without being anchored to anything, which demands advanced electronics, and huge motors that can spin in 360 degree circles, called thrusters.  Much work must be carried out by remotely controlled robots, working on the sea floor, and the drill ships have to stay on station irregardless of the weather conditions, or else the pipe to the well will break.

To drill a hole over a foot in diameter thousands of feet into the earth takes huge amounts of power, and hundreds and hundreds of pieces of pipe, threaded together.  The work goes on around the clock, seven days a week.  Workers must live on the rig, spending weeks at a time hundreds of miles away from land.  Shift rotation is usually by helicopter, with supplies coming out on barges.

All of this means that the oil that is pumped out of these deep underwater wells is going to be very expensive.  And plans are in the works to drill in much deeper water, in some cases up to 10,000 feet of water, and wells going 3 miles into the earth.  The areas that President Obama wants to open up for production are in much shallower water, closer to the shorelines.  They have been protected from drilling because of concerns over environmental damage due to accidents.

The technology has advanced enough that such wells are fairly safe, because of a great deal of experience with them.  The well that is now leaking into the Gulf is one of the newest wells, in an area which has been undeveloped because of the costs of producing oil in such conditions.  But the steadily increasing price of crude oil has made deep ocean wells profitable, in spite of the costs.

We will never run out of oil, but at some point it is going to be too expensive to use as fuel.  When that point arrives depends on what actions we take to supplement oil as a source of energy.  What we are paying now for oil would have been more than enough to subsidize the development of high speed rail, mass transit, and more fuel efficient vehicles.  Our government believes in letting the market decide what is too expensive, which is fine, except that the market makes no provision for when oil becomes too expensive.

It is not the responsibility of energy companies to ensure that we make a smooth transition to alternate sources of energy, and it would be bad business to do so.  Maximizing profits means maintaining the status quo as long as possible, and then switch to the new source of energy as quickly as possible.  But who is going to assist the consumer, the business person, in making that huge switch?  Changing energy sources can be horribly expensive, especially if it must be done in a short period of time.

So, we are likely to see energy costs related to crude oil rise steadily, until they reach the point of causing economic breakdown, and then, suddenly, a new source of energy will replace oil, which will require new kinds of engines, new kinds of cars, new methods of using the energy, just when the economy is in shambles because energy costs have been so high.  Allowing more off-shore oil production will help keep energy costs down,  for a while, but they are still going to rise.  Will we use this time to prepare for the change to new sources of energy, or will we continue to pay whatever it costs for oil?  It is up to the government to prepare us for this, and the government is avoiding doing so, in order to help the oil companies be as profitable as possible.

Is this how capitalism is supposed to work?  Do we have to drive off a cliff before we realize that the direction we are traveling must change?  Is economic chaos the only way progress can occur?  Stay tuned to this station, because we will find out in the coming years.

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