The Unflattering Economics of Oil

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The oil spill from BP and the Deepwater Horizon started me thinking about the way we people look at things and the perspectives we hold. Yes, this is a human and environmental tragedy of still untold proportions, and it’s highly unpleasant to run through the list of effects this event will have.

We can begin with the loss of human life in the name of saving an old industry, and then move to the chain of life that has been bitterly abused or ended, on down to the long lasting serious environmental impacts, and over to the gulf coast economy that won’t soon forget what it’s like to have Katrina #2 sitting at their weary doorsteps once again.

And the list will continue to go on…

But even as this oil spill is akin to a catastrophe, I’d like you to stop for just a moment, and change perspectives with me. Events like this often change humanity’s course (as long as we are aware enough to see that we have the ability to change it, of “course”…).

Changing perspectives means taking a look at the timing of this. On the surface it appears to be very, very bad because in so many ways it is. But it’s also an exclamation point bringing attention to something else. Looking deeper clearly shows sluggish governmental cooperation in not only protecting the environment, but just as importantly, applying solid forward movement to a sustainable industry we all know is necessary right now. So if anything, this will definitely place many politicians right in the middle of the hot seat with not only our environmentalists, but really anyone who either likes eating fish or looking at a clean ocean.

It is also something that can be looked at as a big white elephant in the room when applying the economics of oil production vs. renewable energy production.

Fossil fuels are pumped from the ground, ran through their processes, given several additives, transported to filling stations and made available to be put into your car.

You, the auto owner, pay a price for that fuel and drive away.

But think a little deeper into the poor economics of this. Your investment is gone by the time your tank is empty. The amount of money it costs to get the fuel out of the ground and into your car is very high compared to how much you actually end up paying at the pump. That large amount of money being spent on securing oil is going to an investment that isn’t able to replenish or even begin to sustain itself. Thus, the money you spent out of your pocket to fill your tank is going to something that doesn’t grow, but shrinks.

And following that chain of events, you then have several layers of business and industry that now face serious consequences should they not either up-grade their technology or buy carbon credits to reduce their carbon footprint. They, in turn will most likely have to raise their prices to cushion the cost of saving the environment and humans from the pollution caused by fossil fuels…and the drilling of…

So as you watch the ‘who knows how many’ thousands…millions of gallons of oil as it is seeping from the ocean floor, take a look at what is REALLY coming up and screaming at you to pay attention to…

We’re smarter humans than this.

Economically, renewable energy is a no brainer. Wouldn’t it have been nice if every time we dug into the ground to get those fossil fuels, that they immediately replenished themselves? Now that would be an investment!

Then just imagine running your car on water or clean electricity. Your investment doesn’t run dry when your car does. Your investment is counted because you have just put your hard-earned cash into something that actually helps everyone! You’ve also just saved yourself the couple thousand dollars you’d have ended up spending on the pollution clean up – either directly or indirectly.

It’s really an easy choice.



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