
The High Cost of Oil - pmcpinto
http://www.outsideonline.com/outdoor-adventure/nature/The-High-Cost-of-Oil.html
======
netcan
Ultimately, we need energy. Lots of energy. Cheap energy. It's the thing at
the core of everything from food & basic materials, to the manufacture of
stuff (like houses & shoes) from those materials, energy is a big piece of
what goes into it and ultimately the limiting factor. It's also important to
remember that there is a negative correlation between wealth in an
industrialized economy and sensitivity to energy costs. IE, the poorer you
are, the more sensitive your purchasing power is to energy prices.

The effect runs up and down the value chains. Steel & concrete are mostly
energy. Cheap enough energy opens up the possibility of desalination and
improves the productive value of land. Deserts become viable places.

A 10X improvement in energy availability (the supply curve) would have an
economic effect that permeates everything.

~~~
DaniFong
We're remarkably close. Solar is already cheaper than oil and more
geographically available. It's just not temporary as available -- that's the
energy storage problem, and that's what we're working on.

It is very difficult in many respects however. The biggest problem is that
public funds, bonds, and internet companies attract most of the financing. Our
best strategy to avoid this is to work with group for whom it would be
strategic, and also for people who are already rich (e.g. Bill Gates, Peter
Thiel) and thus are able to weather the development period and take on more
long term projects.

~~~
S_A_P
My father in laws ranch is surrounded by wind farms. I asked him why they were
suddenly cropping up all around his land, and he told me 2 reasons:

1) TAX BREAKS AND/OR 2) Huge government subsidies

The folks that lease these things get huge tax breaks for allowing them on
their land, and there is massive government incentives out to build these
things. That would signal to me that they are not yet economically viable.
When people start building them on prospect(similar to wildcatting an oil
well) then I will believe the economics work out. Until then, its a bad
business to be in.

~~~
jshen
There are huge subsidies for fossil fuels. Does that mean they are not viable?

~~~
hodder
I'd be interested in an outline of these subsidies (in the US) if you have a
source.

~~~
jshen
[http://en.m.wikipedia.org/wiki/Energy_subsidies#United_State...](http://en.m.wikipedia.org/wiki/Energy_subsidies#United_States)

~~~
SilasX
Of the top three purported oil subsidies in the link:

1) Foreign tax credit: everyone gets that to avoid double taxation.

3) Deduction of exploration costs: deduction of expenses is typical and again
something everyone does when you're being taxed on profits. This is better
understood as "the tax code explicitly recognizes this as an expense, just as
it does for hiring workers or warehousing unsold inventory".

Would you mind articulating what you think the oil subsidies are? The
alternative fuels subsidy (2) seems like a legit case but only gets you 14 of
the 370 billion claimed.

(I get that there are environmental costs but that's not what people have in
mind with the vague "oil subsidies" I keep hearing about.)

~~~
jshen
Here's one

In the United States, the federal government has paid US$74 billion for energy
subsidies to support R&D for nuclear power ($50 billion) and fossil fuels ($24
billion) from 1973 to 2003. During this same timeframe, renewable energy
technologies and energy efficiency received a total of US$26 billion.

~~~
SilasX
That's not very convincing, considering that, on closer inspection, the
previous ones turned out not to be subsidies...

~~~
jshen
convincing of what? Someone said that renewables aren't viable because they
are subsidized. I said that fossil fuels are also subsidized so that is an odd
argument to make. I've shown that fossil fuels do get subsidies. I'm not sure
what you are going on about.

~~~
SilasX
You asserted that they get subsidies. The subsidies turned out to be largely
a) (1) not double taxing them, and b) (3) a tax code clarification that
exploration costs are valid expenses.

If you want to establish that oil gets subsidies, please be specific about
what they are so that I can learn more about them and confirm it is not simply
a case of "something everyone gets".

~~~
jshen
[https://www.americanprogress.org/issues/tax-
reform/news/2011...](https://www.americanprogress.org/issues/tax-
reform/news/2011/05/05/9663/big-oils-misbegotten-tax-gusher/)

~~~
SilasX
The thread started with you giving a link that I had to digest before
realizing it didn't say what you claimed. Now you're giving another link to a
less neutral source.

Suggestion: learn legit example of oil subsidies and describe them in your own
words so that I can first vet whether that would count as a subsidy before
reading further.

~~~
jshen
It did say what I claimed, fossil fuels are subsidized. You want to add a
qualification that isolates special subsidies that the fossil fuel industry
gets which aren't stanfard for all businesses. That's a useful distinction and
my second link breaks down some of the specific subsidies. You can read it or
not, it's up to you. I'm not your personal summarizer.

I'm confident tab intelligent people reading this will agree that the fossil
fuel industry is subsidized.

~~~
SilasX
Yes: when someone tells me X is subsidized, I expect to hear about something
the X industry gets that others don't. Because that's what the term means.

It's not enough to tell me "X makers get to deduct _expenses_! Clutch the
pearls!"

------
arca_vorago
I'm currently working in the industry in the Permian Basin area (Texas/New
Mexico) and can say that my main concern is environmental. With the fracking
operations, you get a huge load of oil, saltwater, and
sand/crud/junk/chemicals. They truck them to a SWD disposal facility (my
company does PLC's and controls etc for these) which then separate the oil
out. The problem is that, at most of the SWD disposal places I have been too,
disposal consists of pumping the junk/crud/chemical water straight back into
the ground.

They say they drill below the Ogillalah aquifer, but what if they don't?
Having actually been a contractor for one of the bigger public oil companies,
I can just say I don't really trust them to do things like that properly, and
my guess is that within a few years we will find out, oh shit,

"Someone poisoned the water hole".

That's when T. Boone Pickens will unleash his high-priced water. I don't thing
people realize how close the south is to major water shortages and is
vulnerable to a drought. Hopefully this upcoming winter will help offset some
of that.

~~~
adolph
Maybe you are referring to aquifers other than the Ogallala in terms of
poisoning? Since Pickens seemed to have been trying to sell Ogallala water,
it'd be strange time to unleash it.

[http://www.businessweek.com/stories/2008-06-11/there-will-
be...](http://www.businessweek.com/stories/2008-06-11/there-will-be-water)

~~~
arca_vorago
The Ogallala (thanks for the correction, I don't spell it out very often), is
a huge aquifer. T Boone's well is up North and not technically in the Permian
Basin area.

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kitsune_
I watched a German / French documentary [1] about the Yamala peninsula [2],
and the impact Russian gas drilling has on the native inhabitants of the
peninsula, the Nenets people [3] - It is absolutely jarring to see how the
homeland of these last nomads and their reindeer herds is being cut up by
ultra-modern, gargantuan Gazprom operations. Vast road networks are being
constructed across the Tundra, entire gas cities are being built, there are
even futuristic drilling rigs that travel on rail roads, a fast and cheap way
to lay gas taps across the landscape.

[1] [http://www.arte.tv/guide/de/044102-000/360-geo-
reportage](http://www.arte.tv/guide/de/044102-000/360-geo-reportage)

[2]
[http://en.wikipedia.org/wiki/Yamal_Peninsula](http://en.wikipedia.org/wiki/Yamal_Peninsula)

[3]
[http://en.wikipedia.org/wiki/Nenets_people](http://en.wikipedia.org/wiki/Nenets_people)

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josephschmoe
I'll be honest. I much prefer these oil sands operations that ruin sparsely
populated bits of remote wilderness in the Canadian Arctic to other operations
that destroy pristine wilderness near somewhere livable to more than ~300
people or contaminates water supplies for hundreds of thousands of people.

~~~
adrdr
In other country like Indonesia, they actually "ask" local people to destroy
their house for drilling spot without good compensation for the house they
destroyed.

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ArkyBeagle
I have never had an effective counter to the following argument:

We can use human population in 1790 as a rough estimate of Earth's carrying
capacity for humans pre-industry.

There were roughly 1 billion people then.

Now we have 7 billion.

So we need to be _extra careful_ in our thinking about energy policy.

------
oldspiceman
They'll never stop drilling. But there's hope in solar. Check out the chart in
this article. [http://www.bloomberg.com/news/2014-10-29/while-you-were-
gett...](http://www.bloomberg.com/news/2014-10-29/while-you-were-getting-
worked-up-over-oil-prices-this-just-happened-to-solar.html)

~~~
danieltillett
They will never stop drilling because oil is an amazingly useful resource -
using it as a source of energy is about the least useful thing you can do with
it.

~~~
lunarcave
Explain?

~~~
guard-of-terra
Everything is made out of plastic, and plastic is made out of oil.

~~~
seren
Plus our agriculture in the first world is heavily dependent on fertilizers,
that are mostly oil based. We are eating oil by gallons.

~~~
jjoonathan
Fertilizer is oil based? I thought plants got almost all of their carbon from
the air. Are you talking about the hydrogen feeding into the Haber process?
Because most of that comes from gas-shifted water and IIRC the energy and
carbon for gas-shifting water comes from natural gas. The nitrogen itself
comes from air, of course.

~~~
seren
Apparently, I was wrong, thanks for pointing it out, it seems to be actually
natural gas dependent.

------
pmoriarty
The End of Suburbia[1]

[1] -
[https://www.youtube.com/watch?v=Q3uvzcY2Xug](https://www.youtube.com/watch?v=Q3uvzcY2Xug)

