Fossil Fuels: Oil
Introduction History We are a country that runs on oil. From the gasoline in our cars to the plastic in our computers to the detergents that we put in our dishwashers, we rely on oil for our modern way of life. It cannot be understated just how strong of a role it plays in our economy and politics. It is used in tractors that plow and harvest food. It is used to power manufacturing plants and as feedstock in commercial goods. It powers all the trains and trucks that bring goods to market. It runs our cars, heats and cools our homes, and powers our electrical devices. Because of its ubiquitous nature in the marketplace, any small increase in the price of oil will cause a widespread increase in the price of living. This dependence of our economy, coupled with the fact that we import over 50% of our usage, means that oil is a primary consideration in international politics. This situation has not always been so, even though ancient cultures knew of the existence of crude oil. Many years ago, oil and tar that had seeped out of the ground were used to seal boats and light lams. Its scarcity severely limited its use, though. This all changed in 1859 when Edwin Drake struck oil at a depth of 69 feet in a well that he drilled in Pennsylvania. His success spurred wells to be drilled in other locations around the world that were thought to hold oil, creating enough of a supply that new uses, such as home heating, could be actualized. These new uses spurred further production, which led to even newer uses and inventions. With the refinement of the gasoline-powered internal combustion engine in the 1880’s and its subsequent use in a car, the die was cast. Oil had become a hot commodity, and its impact on the economy and politics grew very large. As documented in the Pulitzer Prize winning book The Prize by Daniel Yergin, oil has been behind many historical events. The U.S.’s naval blockade of oil headed to Japan from Indonesia in 1941 led directly to their attack on Pearl Harbor an our entry into World War II. Hitler’s belief in the power of oil and his quest to acquire large resources of it caused him to fight two very unsuccessful campaigns in Northern Africa and Russia, which led to Germany’s defeat in WWII. America’s support of Israel in the Six Days War in 1967 and the Yom Kippur War in 1973 led to an OPEC embargo of the U.S., causing a steep increase in inflation and a collapse of the American auto market. Our support of the Shah of Iran furthered our troubles with inflation when the Islamic Revolution overthrew the Shah and increased the embargo of the U.S. Even recently, our involvement in two wars in Iraq is a direct result of our attempts to keep control of a large supply of Mid East oil in the hands of people friendly to our interests.1 Current Usage Our involvement in the political affairs of other countries is a direct result of our inability to meet our own needs for oil since the 1960’s. While domestic production of crude oil has decreased since that time, peaking in 1970 at 9.6 million barrels per day (Mbbl/d), our demand for oil has increased such that we now supply less than half of all of the oil that we use. Figure 1 shows a graph of our usage and production since the early 1960’s. The huge increase in demand during the 1960’s (from about 10 Mbbl/d to about 17 Mbbl/d) was due mostly to an American society that was Figure 1: Historical U.S. Oil Data (Data: DOE)2
moving to the suburbs and driving many more miles in large cars that got horrible gas mileage. During the 1970’s, demand leveled off and then plummeted as gasoline prices increased from about $.25 per gallon to over a dollar per gallon. Since a low spot in the early 1980’s, oil demand has increased steadily as prices stabilized while inflation continued to increase. When one accounts for inflation, the price of oil in the 1990’s was at all-time historical lows. During this time, the average mileage of passenger cars in America...
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