toxic greed

Oil-Rigs-Industrial-Site

The modern oil industry, vertically integrated exploration, extraction, refining and distribution of oil on a mass scale, began no later than 1825 in Tsarist Russia. In 1825 Russia produced 3500 tons of crude and refined it, mostly into kerosene. By 1850 the Russian output had doubled to over 7000 tons. By 1906 Russia had a pipeline over 400 miles long stretching from the oil fields in Azerbaijan to the Black Sea port of Batumi, the first major pipeline in the world. By the 1900 there were great strides being taken to develop oil fields in the United States and at other locations around the world, although Russia still accounted for over one half the world’s production.

Interestingly, in the history of the modern oil industry, one hundred and eighty-four years, there has not been even one year in which oil was not spilled, spewed, exploded or otherwise involved in a mishap. Not one accident free year in all that time. Granted, most of these accidents were, and remain, relatively small and involved limited damage to people, property and the environment. On the other hand, at least once every decade, there is a lalapalooza of an accident. One that results in loss of human life, destruction of property related to the oil industry and property that is merely collateral damage, or significant, often wide spread, damage to the natural environment. That means there have been, at least, eighteen to twenty seriously destructive accidents since the oil industry was born.

There is no reliable estimate of the number of humans killed directly as a result of industrial accidents involving oil. To offer one would be the swagiest of swags. It is safe to assume that the number would at least stretch into the thousands. If one adds in the people whose health has been weakened by the pollution resulting from the ubiquitous use of oil and other hydrocarbons, the number of indirect deaths would number in the hundreds of thousands, if not in the millions.

It is not simply oil, human health issues related to the burning of coal and other hydrocarbons is every bit as destructive as that done by oil and its by-products. Recent events in North Carolina tell you everything you need to know about the ability to safely use coal in the production of electricity. Not to mention the recurring theme in modern history of mining accidents related to the extraction of coal.

Keep in mind, this stuff is valuable. The companies that run the hydrocarbon industry are the most profitable in the world. With the possible exception of Apple, MicroSoft and their ilk, nothing has ever come close to the wealth this industry generates. And yet, accidents continue and the environmental damage that the industry foists off on the world is increasing as companies grow ever more desperate to find new sources of oil and natural gas to exploit. Now, with the advent of fracking, the industry is actually causing the earth to quake in otherwise stable areas of Earth.

The companies doing the various activities associated with the oil and hydrocarbon industry have an extraordinarily valuable commodity. They have every economic incentive to prevent accidents. Aside from the money lost of ruined hydrocarbons, frequently the supply chain (as in the recent Houston Channel spill) disruptingoperations for days, weeks, etc. Such disruptions cost real money.

The companies have the resources to hire and train the best minds to carry out all these activities. Further, the people of these companies, I have no doubt, are decent folk who want to do the right thing and make every effort to do just that. Yet, massively destructive and damaging accidents continue to happen. They happen every year, sometimes accidents, mostly smaller accidents, happen every day.

Nobody, least of all the people who make up the hydrocarbon industry, want these accidents to happen. They, and we, simply are powerless to stop them. The system is too complex and the product being handled is too dangerous, so accidents simply cannot be prevented. If these accidents could be prevented, the industry would have already done so.

As a society we need to recognize what the hydrocarbon industry has known from the beginning. It is not safe to rely upon hydrocarbons to the extent society and the world economy has done and continues to do. If it were possible to be made safe, the hydrocarbon industry would have done so decades ago.

This is a hard truth to accept. I live, by myself (if you don’t count two dogs) in a 3700 square foot house. There are rooms in my house I have not visited since my wife died over a year and a half ago. (I do check on them occasionally when the kids are coming home but since I usually go to them, that isn’t so often) I heat the entire thing in winter and cool it in summer. I have two SUV’s (One is a hybrid but the other is an Escalade and drinks gasoline). I have a carbon footprint bigger than Jabba the Hutt’s belly and ass put together. I am a part of the problem.

Put aside the mindless debate about global warming (No point in going there, Charleston is sinking and no one in South Carolina is even allowed to discuss why and what we might do about it.), and simply focus on the direct damage done by the hydrocarbon industry to individuals, property and the environment. No one has ever added that number up but it is massive and, because it is an unfunded and uncompensated liability, constitutes a massive, direct subsidy to the hydrocarbon industry. Add that subsidy to the other subsidies the industry receives (such as special tax considerations and naval budgets to keep the sea lanes open, and on and on) and you quickly realize the hydrocarbon industry is not a private sector activity at all. It is, and has been from the beginning, a public sector activity in which all the profits are privatized. This is unfair to everybody.

The industry should be made into a truly private sector activity. This could be easily accomplished by insisting that the hydrocarbon industry contribute to a government run damage and social cost fund (DSCF) that can be used to defray the public costs of hydrocarbon activities. Some of these costs relate to environmental damages, some to costs like the world’s navies patrolling the oceans to keep sea borne commerce viable, some to direct damage done to people and property, etc. It will be a huge fund, I should think something amounting to a revolving funds of several hundred billion dollars, to which hydrocarbon related industries would contribute annually. At the end of each year damages and reimbursements for social costs would be paid out of the fund. To prevent good actors having to subsidize bad actors, additional assessments would be levied to make sure the specific companies primarily responsible for payouts in a given year received a surcharge.

Such a fund would offer the industry several advantages. One, the surcharges would give companies incentive to minimize accidents and insure that those companies that could or would not clean up their act would be at a continuous disadvantage in pricing and would be driven out of business. Two, persons with grievances with a hydrocarbon company would have a place to go and file a claim. Since the claims would be subject to binding arbitration, hydrocarbon companies and their victims would save untold millions in legal fees and issues would be quickly resolved. Three, the long term viability of the industry would be improved. As things stand now, the hydrocarbon industry will be subjected to increased government scrutiny and regulation. Should meaningful reform not be forth coming due to the pervasive influence of the industry over the political operations in the various nations of the world, the industry will, no doubt, be subjected to protests, civil disruptions, sabotage and outright gorilla warfare all over the world. I do not believe people will just continue to take it.

Should the DSCF be established, people like me will have to adjust. It will be painful. To accommodate the assessments, hydrocarbon companies will have to either raise prices or cut profits. The stock markets will not like the idea of cutting profits so some, probably most, if not all, the new assessments will have to be paid from increased prices. But there is a limit to how much the prices can increase before the true cost of hydrocarbon energy is exposed and alternative and renewable sources of energy for some purposes will become a far more attractive alternative to hydrocarbons.

I know I will be forced to change a great many habits under such a new economic régime. Major modifications related to how I heat and cool my home my will be required as well as other matters (for instance, my home could easily accommodate an apartment with a separate entrance). Probably, I would need to move to a smaller, more practical house, something nostalgia and simple inertia have prevented thus far.

The city planner in me tells me major modifications to how cites work, at least how they work in the USA, will take place resulting in a diminishing of our reliance on automobiles. No doubt, a great many more adjustments will be required and the ensuing disruptions will be painful and costly, especially to those of us set in our ways. However, the current hydrocarbon based economic system will not work for very much longer. For most of us, there is ample evidence it isn’t working now.

We need some real leadership. Not just in South Carolina, though, God knows, we haven’t had any of that since Dick Riley left office, not just in the USA. We need international leadership, as this is an international issue.

In history, wars happen, societies collapse and nations die for one single reason. It is the same reason every time. When the elites of a society, those with the most political, economic and social control, faced with an obvious and well defined game changer requiring basic structural changes, lack the imagination and the will to embark upon a migration to the other side of the problem, any and all of these very bad things happen. That’s it, lack of imagination to see the other side and lack of will to peacefully migrate to the other side results in catastrophe. Of course, the great irony is, the failure to make peaceful changes ends up in the same place for the migration must be made one way or the other. Failure to act just means the change will occur after millions die and everybody is needlessly impoverished.

The truth is, God never drove us out of the Garden. We live in it still. However, if we don’t do something soon, we will drive ourselves out.

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Image credit: Group oil rigs and brightly lit industrial site at night licensed by LikeTheDew.com - bashta / 123RF Stock Photo
Mike Copeland

Mike Copeland

I am old enough to know better. I have a B. A. from Birmingham Southern College and a Master's in City Planning from Georgia Tech. I have worked in SC State government for over a decade leaving as the Deputy Executive Director of the State Budget and Control Board, the state's administrative agency. I have owned the Fontaine Company since 1984 and am the managing member of viscerality.com.llc a management, marketing and consulting company.

I am the author of several novels, some of which you may buy and read if you are of a mind to do so.