oil Archives - Kevin Low

Hoarding resources

New York Times just ran an opinion piece about Big Oil and whether the rhetoric about these big international oil companies actually push for the energy transition or not, their contribution to the development was probably not that significant anyways. There is minimal capital redeployment from oil & gas towards renewable energy. The truth is that capital coming into renewable energy is largely from other sources and areas.

The big oil players were in any case just trying to defend their turf when they invest into renewable energy; and in other instances, it was probably just more of a PR exercise. The recent big retreats from the rhetoric around energy transition can only serve to create more climate anxiety amongst the younger ones, and discourage us further about our ability to get the climate transition right. There’s really limited plan B options for us as the human race on earth facing climate change so everyone needs to work together regardless what the big oil is trying to do.

The biggest challenge for the world with the big oil not doing much to withdraw from the fossil fuel business is not about the market, the demand from the energy users but perhaps more about the people who are continuing to work within the big oil’s supply chains and operations. If we are serious about the transition, we need to give oil rig workers something new to work on that can help with the climate transition; we need to get the refinery process engineers to work for some other sort of plants. In general, we need a coordinated effort to transform our economies by making it a mission to do so.

When the world sent people to the moon decades ago, we were creating new industries using taxpayers’ dollars. We were using military spending to drive advancements that would usher in a new era. We could do the same with energy transition. It will take a lot of political will and convincing people but there is enough resources to redirect ourselves from the global warming path that we are on.

Big Fossil has a chance

I don’t want to call them big oil or big coal, or big gas anymore. They are big on fossil, fossil fuels. And they have a chance to make the future a better place; one that we all want to be part of. They have the opportunity; enormous opportunity to create the products and services that people need and want which will be good for them, and good for everybody else, not just good for the big fossil companies.

But to take advantage of this opportunity, they need to recognise people are not demanding for fossil fuels. They are demanding for energy, for access to energy, for cheaper energy. But that form of energy is fossil fuel, big fossil might retort. It is not. Fossil fuel is not cheap. It is not cheap because we all are paying in the form of greater natural disasters, in facing once-in-a-hundred-year floods almost every decade, in having to pay even more for heating during winters and cooling during summers. Fossil fuel is not what the world is demanding for.

Big fossil can ignore the NGOs, they can ignore the activist investors or the climate activists, and even government. Heck, they could buy out those sitting on the fence. They could even subsidize all manner of appliance, infrastructure, systems that entrench fossil fuels further. But they cannot ignore climate change; they cannot ignore the fact that we are not destroying earth with carbon emissions. We are destroying ourselves. And for what? Profits? What good are profits if that’s just creating a future no one wants to be part of?

What about the baseload?

I get asked this question a lot; by the people operating power systems, by the Oil & Gas industry, and the traditional old school bankers. They also ask about price of intermittent renewable energy plus energy storage; and when that will reach grid parity. Essentially, they are saying that the new innovations cannot replace the current technologies because the cost don’t stack.

I’m not sure those are the right conversations to have or the right questions to ask. Economics do drive a lot of systems and considerations but they probably should not be hijacking our priorities and our realities. Climate change is real; and if we are to put our best foot forward to make the difference, we are not going to make it. Putting our best foot forward is about using our minds, engaging our hands and changing our lives.

Yes, baseload power will be changed, energy prices will increase, perhaps our spaces, our wealth will have to be sacrificed. But our earth can remain a sanctuary for life, and our world can remain intact; if only we are putting our best foot forward. Not dragging our feet, not trying to maintain status quo. Not trying to exercise malicious obedience.

Your oil comes from… Venezuela?

Following up from my write-up on why petrol is expensive in oil-producing Alaska, another article written by The Green Conservative Jim DiPeso in The Daily Green argues that pumps should feature where their oil comes from. And the reason for such features are not just for the geography student like me keen to know where my products come from.

“Country of origin labels on gas pumps” are being advocated in the USA, the land where federal regulations dictate that agricultural products be labeled for their country-of-origin and customers like to demand for the right to knowledge about the products they consume. It helps people choose which country’s oil they want to use, and hence avoid supporting “despots” like Hugo Chavez of Venezuela or Vladimir Putin of Russia. But it will be too complicated, as much as it sounds like a really cool idea. As mentioned in my previous write-up, all that oil from different countries are pooled together then sold, so chances are the gas / petrol in your tank comes from all over the world literally. An alternative he suggests is the proportion of oil coming from which country, so consumers get to know.

And perhaps choose to boycott petrol stations that buy oil from “evil” countries to sell. (Venezuela, Iran & Russia for starters…) Not that they would have much of an option, considering that coincidentally many oil producing countries happen to be rather undesirable in aspects ranging from democracy and freedom of expression to living standards, so if you wish to make a statement you’d probably have to stop driving to stop using petrol.

Drill, baby, drill… not!

I subscribe via email to The Daily Green, a website that advocates green consumption as well as champions environmental initiatives by the green movement. I chanced upon this article on high gas prices in Alaska one day in my email. It took me by surprise because one would think that since Alaska produces quite a significant amount of America’s gas (gasoline, referred to as oil or petrol in the Singaporean context), one would be surprised by how expensive petrol can be in Alaska. And what caught me by greater surprise is that this article was written by a green Republican! Jim DiPeso, The Green Conservative of The Daily Green, is policy director of Republicans for Environmental Protection, and if you, like me, used to think that Republicans do not believe in saving the environment, then you thought wrong.

Coming back to this article, in the “Land of Sarah Palin”, to have oil prices higher than the rest of the country and to have stage legislators calling for fuel price regulations would be a surprise given our assumptions that Alaskan oil would fuel the state and that Republicans are against price controls or regulation. The article highlights the components of the cost of petrol, and highlights that essentially all that crude oil pumped out of Alaska goes into the global market, subject to global market pricing, which is subjected to influence by OPEC (Organisation of Petroleum Exporting Countries) as well as influence by global events that will affect demand and supply of crude oil worldwide.

In addition, Alaska’s petrol market is described as oligopolistic, i.e. players have more pricing power in a relatively-small state with little competition in supply of petrol compared to other states. Given that competition in refining and distribution of petrol is limited in Alaska, the prices would probably already been higher even if Alaskan oil went straight to Alaska. The fact that petrol producers in Alaska even need to import crude oil from other countries will debunk the myths about Alaskan-produced oil.

So essentially, the “drill, baby, drill” lobby who claim that the answer to lower petrol prices would be to open up more oilfields in Alaska are quite mistaken. Looks like The Green Conservative is pitting himself against other Republicans who belong to that lobby. And perhaps the solution might turn out to be more competition instead, which is something the Republicans should focus on instead of drilling their way out of an energy crisis in America (and give the environment a reprieve!)