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3 Surprising Sources of Oil Pollution in the Ocean
3 Surprising Sources of Oil Pollution in the Ocean.
An iridescent sheen spreads from a drop of crude oil on top of the water in the Gulf of Mexico.
PHOTOGRAPH BY JONATHAN BLAIR, NATIONAL GEOGRAPHIC
Christine Dell’Amore and Christina Nunez
PUBLISHED MARCH 25, 2014
Obvious oil spills, like the 168,000 gallons (635,000 liters) of oil that leaked into Galveston Bay on Saturday, usually make national news, accompanied by pictures of oil-blackened wildlife.
But such publicized events account for only a small part of the total amount of oil pollution in the oceans—and many of the other sources, such as automobile oil, go largely unnoticed, scientists say.
In fact, of the tens of millions of gallons of oil that enter North Americanoceans each year due to human activities, only 8 percent comes from tanker or oil pipeline spills, according to the 2003 book Oil in the Sea III by the U.S. National Research Council of the National Academy of Sciences, which is still considered the authority on oil-spill data.
Most oil pollution is “different than the pictures you see of beaches covered with tar and ducks getting stuck in it,” said David Valentine, a biogeochemist at the University of California, Santa Barbara. (Read more about how pollution harms the oceans.)
Here are three little-reported sources of oil that contribute to oil pollution in North American oceans.
1. Natural Seeps
Natural seeps of oil underneath the Earth’s surface account for 60 percent of the estimated total load in North American waters and 40 percent worldwide, according to the National Academy of Sciences.
These leakages occur when oil—which is lighter than water—escapes into the water column from highly pressurized seafloor rock. (Read about Gulf of Mexico seeps.)
Off Santa Barbara, California, some 20 to 25 tons of oil flows from seafloor cracks daily—making it one of the world’s largest seeps.
Valentine, who studies the Santa Barbara seep, noted that much of the natural oil is consumed by ocean bacteria that have evolved to eat certain oil molecules. (Read about how nature tackles oil spills.)
But in “places which don’t have natural oil seeps and you come along with an oil spill or a sewer pipe that delivers [oil pollution], organisms have not had an opportunity to adapt and are going to respond differently,” said John Farrington, dean emeritus and marine geochemist with Woods Hole Oceanographic Institution in Massachusetts.
2. Cars and Other Land Vehicles
A “pretty big issue,” Valentine said, is the oil on roads and other surfaces that’s flushed into the sea during rainstorms.
Most cars drip oil onto the ground, usually on impermeable concrete or asphalt, and that oil ends up trickling into the ocean. In drier places like California, the oil builds up on the asphalt and, when it finally rains, the water shuttles large amounts of oil into the ocean.
“We’re doing a much better job than 40 or 50 years ago of recycling motor oil,” Woods Hole’s Farrington said. “You can find storm sewers around the nation that have stencils on them that say ‘don’t dump, it goes to the sea.’ So there’s less input in that regard.”
But he notes that there are still a lot of cars and trucks contributing to the “dribble, dribble, dribble” effect of slow leaks that end up on asphalt and contribute to runoff pollution.
Not surprisingly, this sort of invisible pollution is more subtle than the Galveston Bay spill, which is much more localized and visible, Valentine noted.
Oil runoff from land is “complex in that it can hang around [in the ocean] and move between water and sediment, [which] makes it difficult to effectively track.”
A hotly debated topic, he added, is what these constant pulses of oil are doing to the environment and its inhabitants. Scientists know that animals directly exposed to oil suffer health problems, but what’s unknown is the impact of low, chronic oil exposures on wildlife, he said. (Related: “On 25th Exxon Valdez Anniversary, Oil Still Clings to Beaches.”)
3. Recreational Boats
People operating recreational craft, such as Jet Skis and boats, sometimes spill oil into the ocean.
“It’s usually operational error, human error or unpreparedness, [or] lack of education. A lot of time mostly it’s just negligence,” said Aaron Barnett, a boating program specialist at Washington Sea Grant, a state-federal partnership aimed at marine research and outreach across Washington State.
“It’s just not on [boaters’] radar scope. They’re there to have fun, it’s leisure, it’s recreation. … That means that certain things don’t get dealt with, like proper engine maintenance.”
Barnett added that boat owners will top off their fuel tanks as they would a car, and on a hot day the fuel expands and escapes through a vent.
Just like land-based pollution, though, oil spills by recreational boats are “hard to track, because about 80 percent of oil spills go unreported, so there’s really no way to know” on what scale this is happening, Barnett said.
Overall, he said, the Environmental Protection Agency “looks at the small-oil-spill problem as sort of like death by a thousand cuts.”
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China's Pollution Problem (In 1 Stunning Chart) | Zero Hedge
China’s Pollution Problem (In 1 Stunning Chart) | Zero Hedge.
The disgusting images of face-mask-wearing Chinese going about their daily business in minimal visibility and lung-busting conditions are strewen across the interwebs. However, even fake sun-rises pale into significance when the full dismal reality of China’s pollution problem is put in context. Perhaps the following chart is why China’s latest round of reforms appear to ‘declare war on pollution’.
h/t @conradhackett
And it seems that has finally tipped the Chinese over the edge to do something about it… (via Charles Kennedy via OilPrice.com)
On March 5th China’s Premier Li Keqiang declared war on pollution, outlining significant steps the Chinese government will take to improve air quality. China has suffered from truly epic smog over the last two winters, choking its cities’ inhabitants and cutting off visibility. The pollutants in the air have surpassed hazardous levels, at times jumping beyond the index that measures particulate matter.
“We will resolutely declare war against pollution as we declared war against poverty,” Li Keqiang told the legislature, according to Reuters. The central government’s top concern has always been social stability, and the Premier’s announcement that China will take some drastic measures to improve the environment indicates that the government is beginning to worry that air pollution may spark unrest around the country.
Among the measures the government will take, Li said the government’s focus will be on reducing particulate matter (PM 2.5 and PM 10). The government will shut down 50,000 small coal-fired furnaces in 2014, and overhaul power plants in high intensity industries. China will also reduce steel production by 27 million tonnes in 2014 – equivalent to the total output of Italy. Also, the government will look at reforming energy pricing in an effort to pave the way to greater use of renewable energy and nuclear power. The government also hopes to remove six million high-emissions vehicles from the nation’s roads.
The speech comes after an announcement last month by the powerful National Development and Reform Commission (NRDC) that the government will spend $330 billion to reduce water pollution. Much of China’s agricultural land and rivers are contaminated with heavy metals.
Over the last several decades, China has succeeded in lifting hundreds of millions out of poverty, often described as the greatest achievement in poverty reduction in human history. China hopes to continue to grow, but now with a greater pro-environmental focus.
Of course this all sounds great until growth is affected – or a coal plant is shutdown causing contagious defaults across the shadow banking system… at which time we will see just how committed the Chinese government really is…
Here, as we explained previously, are the coal-mining-industry-based trust products…
We believe that coal mine trusts are the most likely to default over the coming months because 1) coal price has dropped sharply in recent quarters; 2) most of the issuers are private enterprises; and 3) they tend to be from provinces whose governments rely heavily on resources related income, e.g., Shanxi and Inner Mongolia.
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China’s Pollution Problem (In 1 Stunning Chart) | Zero Hedge
China’s Pollution Problem (In 1 Stunning Chart) | Zero Hedge.
The disgusting images of face-mask-wearing Chinese going about their daily business in minimal visibility and lung-busting conditions are strewen across the interwebs. However, even fake sun-rises pale into significance when the full dismal reality of China’s pollution problem is put in context. Perhaps the following chart is why China’s latest round of reforms appear to ‘declare war on pollution’.
h/t @conradhackett
And it seems that has finally tipped the Chinese over the edge to do something about it… (via Charles Kennedy via OilPrice.com)
On March 5th China’s Premier Li Keqiang declared war on pollution, outlining significant steps the Chinese government will take to improve air quality. China has suffered from truly epic smog over the last two winters, choking its cities’ inhabitants and cutting off visibility. The pollutants in the air have surpassed hazardous levels, at times jumping beyond the index that measures particulate matter.
“We will resolutely declare war against pollution as we declared war against poverty,” Li Keqiang told the legislature, according to Reuters. The central government’s top concern has always been social stability, and the Premier’s announcement that China will take some drastic measures to improve the environment indicates that the government is beginning to worry that air pollution may spark unrest around the country.
Among the measures the government will take, Li said the government’s focus will be on reducing particulate matter (PM 2.5 and PM 10). The government will shut down 50,000 small coal-fired furnaces in 2014, and overhaul power plants in high intensity industries. China will also reduce steel production by 27 million tonnes in 2014 – equivalent to the total output of Italy. Also, the government will look at reforming energy pricing in an effort to pave the way to greater use of renewable energy and nuclear power. The government also hopes to remove six million high-emissions vehicles from the nation’s roads.
The speech comes after an announcement last month by the powerful National Development and Reform Commission (NRDC) that the government will spend $330 billion to reduce water pollution. Much of China’s agricultural land and rivers are contaminated with heavy metals.
Over the last several decades, China has succeeded in lifting hundreds of millions out of poverty, often described as the greatest achievement in poverty reduction in human history. China hopes to continue to grow, but now with a greater pro-environmental focus.
Of course this all sounds great until growth is affected – or a coal plant is shutdown causing contagious defaults across the shadow banking system… at which time we will see just how committed the Chinese government really is…
Here, as we explained previously, are the coal-mining-industry-based trust products…
We believe that coal mine trusts are the most likely to default over the coming months because 1) coal price has dropped sharply in recent quarters; 2) most of the issuers are private enterprises; and 3) they tend to be from provinces whose governments rely heavily on resources related income, e.g., Shanxi and Inner Mongolia.
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Reasons for our Energy Predicament – An Overview | Our Finite World
Reasons for our Energy Predicament – An Overview | Our Finite World.
Quiz: What will cause world oil supply to fall?
- Too little oil in the ground
- Oil prices are too low for oil producers
- Oil prices are too high for oil consumers leading to recession, debt defaults, and ultimately a cut back in credit availability and very low oil prices
- Oil exporters are subject to civil unrest and overthrow of governments, due to low prices and/or depleting reserves
- Lack of money (and physical resources that might be purchased with this money) to pull oil out of the ground.
- Pollution related issues–too much smog in China; too many problems with fracking; too many problems with CO2.
- The financial current system fails, and can only be replaced by one that allows much less debt. Oil prices remain too low under such a system.
In my view, any answer other that the first one is likely to be at least partially right. Ultimately, the issue is that to extract oil or any fossil fuel, we have to keep the financial and political systems together. These systems can be expected to fail, far before we run out of oil in the ground. Most oil in the ground (as well as most other fossil fuels in the ground) will be left in the ground, in my view.
Basing estimates of future oil production on oil reserves is likely to give far too high an indication with respect to actual future production. Even more absurd numbers come from using “resource” numbers (which are higher than reserve numbers) to make estimates of future oil production. Coal and natural gas production is likely to fall at exactly the same time as oil, because the problems are likely to be financial and political ones, not “resources in the ground” problems.
Direct Application of M. King Hubbert Theory is Incorrect
M. King Hubbert is known for his estimates of future oil production (1956, 1962, 1976) based on reserve amounts. There are two things of importance to notice about his estimates:
(a) The oil reserve estimates used are of free flowing oil reserves of the type that geologists currently were looking at. Thus, they were restricted to “cheap to extract” reserves, and
(b) When Hubbert showed graphs of world oil production following a generally symmetric curve (so downslope looks like a mirror image of upslope), Hubbert showed some other source of energy supply (nuclear in his early papers, solar in later ones) rising to high levels, before world oil production ever dropped. He even talked about making liquid fuels using a huge amount of energy plus carbon dioxide and water–in other words, reversing combustion (1962). In order to ramp nuclear or solar up to these very high levels, they would need to be extremely cheap.
The assumptions that M. King Hubbert makes are effectively ones that would allow the economy to continue to grow and the financial system to “hang together.” If a person looks at today’s situation, it is quite different. We do not have an alternate fuel supply that will allow the economy to continue to grow, regardless of fossil fuel consumption. The published reserves include large amounts of oil in the ground that are not of the very cheap to extract type. Extracting such oil will be impossible if oil prices are very low, or if credit availability is lacking. It is tempting for observers to look at oil reserves and assume that all is well, but this is definitely not the case.
Basic issue: Future oil extraction and future substitution is uncertain
One basic issue is the “iffiness” of the reported reserve and resource amounts:
There is lots of oil in the ground, if we can actually get it out. Getting it out requires a combination of a financial system that allows us to do this (high enough prices for producers, adequate credit availability for producers, equity investment available if credit is not available, buyers who can afford the products) and political system that allows this to happen (citizens in countries with oil extraction not rioting for lack of food; banks open in countries trying to import oil; adequate trade connections among countries).
Likewise, substitution is possible among energy products, if it is possible to overcome the many hurdles involved in doing this. There are two cost hurdles: the higher ongoing cost of the substitute and the transition cost. The transition cost gets to be very high if there are a lot of “sunk costs” that are lost–for example, if citizens are forced to quickly change from gasoline powered cars to electric cars, so that the resale value of their gasoline powered cars drops precipitously. There is also a technology hurdle: we need to have the technology to enable using the different energy source.
If the cost of the substitute is higher than the cost of the original energy source, a change to the substitute will tend to make the economy shrink, because wages will “go less far”. If citizens need to pay a whole lot more for new cars, or if electricity is more expensive, citizens will cut back on discretionary expenditures. This cut-back on expenditures will lead to layoffs in discretionary sectors, and will make it more difficult for the government to collect enough tax revenue.
Another basic issue: Wages don’t rise as oil (or energy) prices rise
Economists would like us to believe that we just pay each other’s wages. Wages can rise arbitrarily high independently of actually creating goods and services using energy products.
Unfortunately, this doesn’t seem to be true in practice. Based on my research, in the US high oil prices are associated with flat wages, in inflation-adjusted terms. Wages do not rise as fast as oil prices. Instead, wages tend to rise when oil prices are low, making goods and service affordable.
Part of the problem with rising oil prices is that they radiate through the economy in many ways: in higher food prices, because oil is used to produce and transpire food; in higher metal prices, because oil used in metal production; and in higher finished products, such as automobiles and new homes, because they use oil in their production. With wages not rising sufficiently, as oil prices rise, workers find they need to cutback on discretionary goods. The result is recession and job layoffs. I document this issue in the article Oil Supply Limits and the Continuing Financial Crisis, published in journal Energyin 2012.
The flip side of this issue is that without wages rising as fast as the cost of oil extraction, it is hard for the selling price of oil to rise high enough to provide an adequate profit margin for oil producers. It is inadequate oil prices for oil producers that seem to be the current problem. I talk about this issue in two recent posts: What’s Ahead? Lower Oil Prices, Despite Higher Extraction Costs and Beginning of the End? Oil Companies Cut Back on Spending.
Economists don’t think that prices can remain too low for oil producers. It can happen, because their model of supply and demand is not correct in a world with energy limits. Even if prices temporarily rise again, recession hits again, and we are back to low prices again.
Another basic issue: Diminishing returns
Diminishing returns occurs when it takes more and more energy or other resources to produce the same amount of goods. In the case of oil supply, we reach diminishing returns because companies extract the easy-to-extract oil first. Thus, the price of oil rises because the oil that can be produced cheaply is mostly gone. If we want to obtain more oil, we need to extract the more expensive to extract oil.
One way to see what diminishing returns does is to think about an economy producing two kinds of goods and services:
- The goods and services the consumer really wants–such as food, fresh water, transportation that takes the consumer from door to door, electronic goods, and housing that meets the person’s needs.
- All of the intermediate “stuff” that goes into making the end products in (1).
What happens with diminishing returns is more and more of society’s physical labor and its resources go into intermediate products, leaving less and less to produce end products, and less to actually “grow” the economy. In some sense, it is as if we are becoming less and less efficient at producing final goods and services. In my view, this is a major reason why wages stop rising as oil prices rise, and as other energy prices rise.
Another basic issue: The rate of growth in energy supply is closely tied to the rate of GDP growth
We use energy to make goods and services, so it stands to reason that using more energy would lead to more GDP growth. Economists don’t necessarily agree. They are sometimes of the view that the connection has only to do with “Demand”–in other words, when the economy is growing rapidly it needs more oil and energy products to support it its growth. I discuss Steve Kopits’ talk on this subject in Beginning of the End? Oil Companies Cut Back on Spending.
Something that is perhaps not obvious is the fact that cheap energy supply tends to easier to ramp up than expensive energy supply. Cheap energy supply requires relatively less investment. Goods created using cheap energy supply tend to be inexpensive, making them easier to sell to consumers and more competitive in the world market. I talk about these issues in Oil Limits Reduce GDP Growth; Unwinding QE a Problem.
Another basic issue: The role of debt
Long term debt plays an extremely important role in the economy, because it allows consumers to buy expensive goods like houses and automobiles that they could not otherwise afford, and because it allows businesses to invest in projects before they have saved up sufficient profits from past projects to fund the new projects. It also allows governments to spend more money than they have in tax dollars. All of this purchasing power tends to prop up the price of commodities such as oil and metals, making it feasible to extract them.
We had a chance to see how important a role debt plays in 2008, during the debt crisis in the second half of the year. During that period, the price of oil dropped from briefly hitting $147 barrel to the low $30s range. Major banks needed to be bailed out, and the insurance company AIG was taken over by the US government because of problems with derivatives.
Figure 1. Average weekly West Texas Intermediate “spot” oil price, based on EIA data.
The big drop in oil price in 2008 was due to a drop in oil demand because of lack of credit availability. I wrote an article in 2008 about the huge impact this decrease in credit availability had on energy prices of all kinds, even uranium.
A related concern relates to the fact that “borrowing from the future” — which is what we do with long-term debt, is a great deal more feasible in a growing economy than it is in a shrinking economy. There are a lot more defaults in the latter case, because people keep losing their jobs and businesses keep closing.
Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.
The concern I have is that as economic growth slows, we will reach a point where long term debt becomes very hard to obtain. The lack of credit in 2008 has not been fully fixed. It was only with the help of Quantitative Easing (QE), which added more demand to the marketplace because of very low interest rates, that oil prices have been able to rise again after the drop in 2008. With the very slow economic growth we have been experiencing recently, it has been necessary to use QE to keep interest rates low enough that people can still afford to buy homes and cars.
If the economy shifts from adding debt to subtracting debt, we are likely to see a huge drop in oil prices, perhaps similar to the drop in oil prices in 2008 to the low $30′s range. If this should happen again, it is not clear that the Federal Reserve would be able to find a way to make the price rise again because is already using a huge amount of stimulus, and thus has fewer options left.
If oil prices drop to a low level and stay down, a large share of oil production will be discontinued. Very little new drilling will be done. Similar effects are likely to happen for other fossil fuels and for mining for metals as well. Such a drop in oil production is likely to be steep–at least as steep as when the Former Soviet Union collapsed. Oil production dropped by about 10% per year, and other energy use dropped rapidly as well. Customers such as the Ukraine and North Korea saw even steeper declines in their oil imports.
Another basic issue: Government funding
Governments are only possible because of the surpluses of an economy. Greater surpluses allow more government employees and more services. Mario Giampietro (2009) is one researcher who writes specifically about this issue. Furthermore, as an economy grows, rising tax revenue makes it is easy to add more programs and services.
As an economy reaches diminishing returns, studies of past economies show that inadequate government funding is one of the major bottlenecks. This occurs because falling resources per capita leads to increasing disparity of wages, with new workers finding it difficult to find good-paying jobs. Governments are called on to provide more programs at precisely the time when their ability to raise sufficient funds to pay for these programs is lacking. A major factor leading to collapse is the inability of governments to collect sufficient taxes from increasingly impoverished citizens.
The Two Way Escalator Problem
As I see it, the economy as it is currently constructed only gives us two options: up and down. The markers of the “up escalator” are
- Cheap energy
- Growing energy supply
- GDP growth
- Wage growth
- Debt growth
- Growing government programs
The markers of the “down escalator” are
- Expensive to produce energy supply
- Energy supply grows slowly
- GDP Growth lags or declines
- Wages lag
- Outstanding debt tends to shrink
- Increasing inability to fund government programs
The two deal-killers with respect to these two escalators are
- Moving from debt supply growth to debt supply shrinkage. This is like moving from Keynesian economics to the opposite. Or from getting a credit card with a large available balance, to having to pay back old credit card debt without adding new debt.
- Increasing inability to fund government programs
The above two reasons are why I expect financial and governmental problems to lead to the end of our current system. Diminishing returns is already leading to higher oil prices, and thus moving us from the up escalator to the down escalator.
I am doubtful we can reestablish very widespread use of long-term debt after a collapse because by that time, the economy will clearly be shrinking. A person often hears people talk about getting rid of the fractional reserve banking system because it requires growth to maintain, but in fact, having such a system has been very helpful in enabling extraction of fossil fuels and allowing the economy to use metals and concrete in quantity. The availability of bonds for financing has been helpful as well.
One essential part of today’s economy is very long supply lines. These allow very complex products to be made, using supplies from all over the world. What we found in the 2008 credit crisis is that many businesses (both large and small) in these supply chains were hit hard by lack of credit availability. I see this issue as being very difficult to solve. If it cannot be solved, we will be faced with making goods locally using smaller companies and very much shorter supply lines. It would be a different system than we have today, and would likely support a smaller world population.
A lot of “peak oilers” would like to think that somehow it is possible to “get off at the mezzanine,” and have a viable economy similar to today’s with a small amount of expensive renewables, plus a continuing supply of fossil fuels. I have a hard time seeing this actually happen. One problem is the likelihood that fossil fuel supply will decline quickly because of low price. Another potential problem is a major cutback in credit availability making transactions difficult; a third issue is governmental problems, as taxes fall short of what is needed to fund programs.
We could in theory get back on the up escalator if we find alternative fuels that meet all of the required specifications–very cheap; available in huge quantity, expanding year by year; can be transformed to a liquid fuel similar to oil; and non-polluting. This seems unlikely right now.
Otherwise, what we do have is all the “stuff” we have today, for as long as it lasts. The economy won’t stop on a dime. We also have the ability to recycle things that we can no longer use, that might be more helpful in another place. Solar panels that people currently own will continue to function for a while (especially off-grid), and the grid will probably continue for a while. We know that many people lived in local economies, before we had fossil fuels, and it is likely to be possible again. We certainly live in interesting times.
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Reasons for our Energy Predicament – An Overview | Our Finite World
Reasons for our Energy Predicament – An Overview | Our Finite World.
Quiz: What will cause world oil supply to fall?
- Too little oil in the ground
- Oil prices are too low for oil producers
- Oil prices are too high for oil consumers leading to recession, debt defaults, and ultimately a cut back in credit availability and very low oil prices
- Oil exporters are subject to civil unrest and overthrow of governments, due to low prices and/or depleting reserves
- Lack of money (and physical resources that might be purchased with this money) to pull oil out of the ground.
- Pollution related issues–too much smog in China; too many problems with fracking; too many problems with CO2.
- The financial current system fails, and can only be replaced by one that allows much less debt. Oil prices remain too low under such a system.
In my view, any answer other that the first one is likely to be at least partially right. Ultimately, the issue is that to extract oil or any fossil fuel, we have to keep the financial and political systems together. These systems can be expected to fail, far before we run out of oil in the ground. Most oil in the ground (as well as most other fossil fuels in the ground) will be left in the ground, in my view.
Basing estimates of future oil production on oil reserves is likely to give far too high an indication with respect to actual future production. Even more absurd numbers come from using “resource” numbers (which are higher than reserve numbers) to make estimates of future oil production. Coal and natural gas production is likely to fall at exactly the same time as oil, because the problems are likely to be financial and political ones, not “resources in the ground” problems.
Direct Application of M. King Hubbert Theory is Incorrect
M. King Hubbert is known for his estimates of future oil production (1956, 1962, 1976) based on reserve amounts. There are two things of importance to notice about his estimates:
(a) The oil reserve estimates used are of free flowing oil reserves of the type that geologists currently were looking at. Thus, they were restricted to “cheap to extract” reserves, and
(b) When Hubbert showed graphs of world oil production following a generally symmetric curve (so downslope looks like a mirror image of upslope), Hubbert showed some other source of energy supply (nuclear in his early papers, solar in later ones) rising to high levels, before world oil production ever dropped. He even talked about making liquid fuels using a huge amount of energy plus carbon dioxide and water–in other words, reversing combustion (1962). In order to ramp nuclear or solar up to these very high levels, they would need to be extremely cheap.
The assumptions that M. King Hubbert makes are effectively ones that would allow the economy to continue to grow and the financial system to “hang together.” If a person looks at today’s situation, it is quite different. We do not have an alternate fuel supply that will allow the economy to continue to grow, regardless of fossil fuel consumption. The published reserves include large amounts of oil in the ground that are not of the very cheap to extract type. Extracting such oil will be impossible if oil prices are very low, or if credit availability is lacking. It is tempting for observers to look at oil reserves and assume that all is well, but this is definitely not the case.
Basic issue: Future oil extraction and future substitution is uncertain
One basic issue is the “iffiness” of the reported reserve and resource amounts:
There is lots of oil in the ground, if we can actually get it out. Getting it out requires a combination of a financial system that allows us to do this (high enough prices for producers, adequate credit availability for producers, equity investment available if credit is not available, buyers who can afford the products) and political system that allows this to happen (citizens in countries with oil extraction not rioting for lack of food; banks open in countries trying to import oil; adequate trade connections among countries).
Likewise, substitution is possible among energy products, if it is possible to overcome the many hurdles involved in doing this. There are two cost hurdles: the higher ongoing cost of the substitute and the transition cost. The transition cost gets to be very high if there are a lot of “sunk costs” that are lost–for example, if citizens are forced to quickly change from gasoline powered cars to electric cars, so that the resale value of their gasoline powered cars drops precipitously. There is also a technology hurdle: we need to have the technology to enable using the different energy source.
If the cost of the substitute is higher than the cost of the original energy source, a change to the substitute will tend to make the economy shrink, because wages will “go less far”. If citizens need to pay a whole lot more for new cars, or if electricity is more expensive, citizens will cut back on discretionary expenditures. This cut-back on expenditures will lead to layoffs in discretionary sectors, and will make it more difficult for the government to collect enough tax revenue.
Another basic issue: Wages don’t rise as oil (or energy) prices rise
Economists would like us to believe that we just pay each other’s wages. Wages can rise arbitrarily high independently of actually creating goods and services using energy products.
Unfortunately, this doesn’t seem to be true in practice. Based on my research, in the US high oil prices are associated with flat wages, in inflation-adjusted terms. Wages do not rise as fast as oil prices. Instead, wages tend to rise when oil prices are low, making goods and service affordable.
Part of the problem with rising oil prices is that they radiate through the economy in many ways: in higher food prices, because oil is used to produce and transpire food; in higher metal prices, because oil used in metal production; and in higher finished products, such as automobiles and new homes, because they use oil in their production. With wages not rising sufficiently, as oil prices rise, workers find they need to cutback on discretionary goods. The result is recession and job layoffs. I document this issue in the article Oil Supply Limits and the Continuing Financial Crisis, published in journal Energyin 2012.
The flip side of this issue is that without wages rising as fast as the cost of oil extraction, it is hard for the selling price of oil to rise high enough to provide an adequate profit margin for oil producers. It is inadequate oil prices for oil producers that seem to be the current problem. I talk about this issue in two recent posts: What’s Ahead? Lower Oil Prices, Despite Higher Extraction Costs and Beginning of the End? Oil Companies Cut Back on Spending.
Economists don’t think that prices can remain too low for oil producers. It can happen, because their model of supply and demand is not correct in a world with energy limits. Even if prices temporarily rise again, recession hits again, and we are back to low prices again.
Another basic issue: Diminishing returns
Diminishing returns occurs when it takes more and more energy or other resources to produce the same amount of goods. In the case of oil supply, we reach diminishing returns because companies extract the easy-to-extract oil first. Thus, the price of oil rises because the oil that can be produced cheaply is mostly gone. If we want to obtain more oil, we need to extract the more expensive to extract oil.
One way to see what diminishing returns does is to think about an economy producing two kinds of goods and services:
- The goods and services the consumer really wants–such as food, fresh water, transportation that takes the consumer from door to door, electronic goods, and housing that meets the person’s needs.
- All of the intermediate “stuff” that goes into making the end products in (1).
What happens with diminishing returns is more and more of society’s physical labor and its resources go into intermediate products, leaving less and less to produce end products, and less to actually “grow” the economy. In some sense, it is as if we are becoming less and less efficient at producing final goods and services. In my view, this is a major reason why wages stop rising as oil prices rise, and as other energy prices rise.
Another basic issue: The rate of growth in energy supply is closely tied to the rate of GDP growth
We use energy to make goods and services, so it stands to reason that using more energy would lead to more GDP growth. Economists don’t necessarily agree. They are sometimes of the view that the connection has only to do with “Demand”–in other words, when the economy is growing rapidly it needs more oil and energy products to support it its growth. I discuss Steve Kopits’ talk on this subject in Beginning of the End? Oil Companies Cut Back on Spending.
Something that is perhaps not obvious is the fact that cheap energy supply tends to easier to ramp up than expensive energy supply. Cheap energy supply requires relatively less investment. Goods created using cheap energy supply tend to be inexpensive, making them easier to sell to consumers and more competitive in the world market. I talk about these issues in Oil Limits Reduce GDP Growth; Unwinding QE a Problem.
Another basic issue: The role of debt
Long term debt plays an extremely important role in the economy, because it allows consumers to buy expensive goods like houses and automobiles that they could not otherwise afford, and because it allows businesses to invest in projects before they have saved up sufficient profits from past projects to fund the new projects. It also allows governments to spend more money than they have in tax dollars. All of this purchasing power tends to prop up the price of commodities such as oil and metals, making it feasible to extract them.
We had a chance to see how important a role debt plays in 2008, during the debt crisis in the second half of the year. During that period, the price of oil dropped from briefly hitting $147 barrel to the low $30s range. Major banks needed to be bailed out, and the insurance company AIG was taken over by the US government because of problems with derivatives.
Figure 1. Average weekly West Texas Intermediate “spot” oil price, based on EIA data.
The big drop in oil price in 2008 was due to a drop in oil demand because of lack of credit availability. I wrote an article in 2008 about the huge impact this decrease in credit availability had on energy prices of all kinds, even uranium.
A related concern relates to the fact that “borrowing from the future” — which is what we do with long-term debt, is a great deal more feasible in a growing economy than it is in a shrinking economy. There are a lot more defaults in the latter case, because people keep losing their jobs and businesses keep closing.
Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.
The concern I have is that as economic growth slows, we will reach a point where long term debt becomes very hard to obtain. The lack of credit in 2008 has not been fully fixed. It was only with the help of Quantitative Easing (QE), which added more demand to the marketplace because of very low interest rates, that oil prices have been able to rise again after the drop in 2008. With the very slow economic growth we have been experiencing recently, it has been necessary to use QE to keep interest rates low enough that people can still afford to buy homes and cars.
If the economy shifts from adding debt to subtracting debt, we are likely to see a huge drop in oil prices, perhaps similar to the drop in oil prices in 2008 to the low $30′s range. If this should happen again, it is not clear that the Federal Reserve would be able to find a way to make the price rise again because is already using a huge amount of stimulus, and thus has fewer options left.
If oil prices drop to a low level and stay down, a large share of oil production will be discontinued. Very little new drilling will be done. Similar effects are likely to happen for other fossil fuels and for mining for metals as well. Such a drop in oil production is likely to be steep–at least as steep as when the Former Soviet Union collapsed. Oil production dropped by about 10% per year, and other energy use dropped rapidly as well. Customers such as the Ukraine and North Korea saw even steeper declines in their oil imports.
Another basic issue: Government funding
Governments are only possible because of the surpluses of an economy. Greater surpluses allow more government employees and more services. Mario Giampietro (2009) is one researcher who writes specifically about this issue. Furthermore, as an economy grows, rising tax revenue makes it is easy to add more programs and services.
As an economy reaches diminishing returns, studies of past economies show that inadequate government funding is one of the major bottlenecks. This occurs because falling resources per capita leads to increasing disparity of wages, with new workers finding it difficult to find good-paying jobs. Governments are called on to provide more programs at precisely the time when their ability to raise sufficient funds to pay for these programs is lacking. A major factor leading to collapse is the inability of governments to collect sufficient taxes from increasingly impoverished citizens.
The Two Way Escalator Problem
As I see it, the economy as it is currently constructed only gives us two options: up and down. The markers of the “up escalator” are
- Cheap energy
- Growing energy supply
- GDP growth
- Wage growth
- Debt growth
- Growing government programs
The markers of the “down escalator” are
- Expensive to produce energy supply
- Energy supply grows slowly
- GDP Growth lags or declines
- Wages lag
- Outstanding debt tends to shrink
- Increasing inability to fund government programs
The two deal-killers with respect to these two escalators are
- Moving from debt supply growth to debt supply shrinkage. This is like moving from Keynesian economics to the opposite. Or from getting a credit card with a large available balance, to having to pay back old credit card debt without adding new debt.
- Increasing inability to fund government programs
The above two reasons are why I expect financial and governmental problems to lead to the end of our current system. Diminishing returns is already leading to higher oil prices, and thus moving us from the up escalator to the down escalator.
I am doubtful we can reestablish very widespread use of long-term debt after a collapse because by that time, the economy will clearly be shrinking. A person often hears people talk about getting rid of the fractional reserve banking system because it requires growth to maintain, but in fact, having such a system has been very helpful in enabling extraction of fossil fuels and allowing the economy to use metals and concrete in quantity. The availability of bonds for financing has been helpful as well.
One essential part of today’s economy is very long supply lines. These allow very complex products to be made, using supplies from all over the world. What we found in the 2008 credit crisis is that many businesses (both large and small) in these supply chains were hit hard by lack of credit availability. I see this issue as being very difficult to solve. If it cannot be solved, we will be faced with making goods locally using smaller companies and very much shorter supply lines. It would be a different system than we have today, and would likely support a smaller world population.
A lot of “peak oilers” would like to think that somehow it is possible to “get off at the mezzanine,” and have a viable economy similar to today’s with a small amount of expensive renewables, plus a continuing supply of fossil fuels. I have a hard time seeing this actually happen. One problem is the likelihood that fossil fuel supply will decline quickly because of low price. Another potential problem is a major cutback in credit availability making transactions difficult; a third issue is governmental problems, as taxes fall short of what is needed to fund programs.
We could in theory get back on the up escalator if we find alternative fuels that meet all of the required specifications–very cheap; available in huge quantity, expanding year by year; can be transformed to a liquid fuel similar to oil; and non-polluting. This seems unlikely right now.
Otherwise, what we do have is all the “stuff” we have today, for as long as it lasts. The economy won’t stop on a dime. We also have the ability to recycle things that we can no longer use, that might be more helpful in another place. Solar panels that people currently own will continue to function for a while (especially off-grid), and the grid will probably continue for a while. We know that many people lived in local economies, before we had fossil fuels, and it is likely to be possible again. We certainly live in interesting times.
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Opinion: Why oil drilling in Ecuador is ‘ticking time bomb’ for planet – CNN.com
Opinion: Why oil drilling in Ecuador is ‘ticking time bomb’ for planet – CNN.com.
Alicia Cahuilla’s Waorani tribe has lived on the edge of Ecuador’s Yasuni National Park for thousands of years. But they’re worried about new oil exploration in the area.- Ecuador’s Yasuni National Park is one of world’s most biologically diverse areas
- Last year the government cleared the way for oil exploration in the park’s most pristine area
- Villagers say oil exploration in Yasuni will dramatically affect their way of life
- Oil firms say they are complying with environmental regulations
Editor’s note: Antonia Juhasz, an oil industry analyst, is author of several books, including “Black Tide” and “The Tyranny of Oil.”Juhasz’s investigation is supported by a grant from the Max and Anna Levinson Foundation, which makes grants to nonprofits committed to “developing a more just, caring, ecological and resilient world.” Her work has also appeared in Rolling Stone, Harper’s Magazine, and The Atlantic’s website.The opinions expressed in this article are solely those of the author.
(CNN) — Alicia Cahuilla doesn’t try to hide her anger. The native Waorani tribal leader stands in front of an exposed, thickly black crude oil pit, as two gas flares burn violently overhead, the stinging stench of crude heavy in the air. Until about 50 years ago, this area, like most of the central Ecuadorian Amazon rainforest in which it sits, was Waorani land, a pristine expanse filled with nothing but trees and streams.
The Waorani have lived here, on the northwestern edge of one of the most biologically rich places on Earth, for thousands of years. But today their land is also home to hundreds of operations seeking to extract the vast oil reserves buried deep below the forest floor.
Experts believe that in order to avoid the worst of a future climate change catastrophe, most of the planet’s fossil fuels must be left in the ground. Ecuador’s ambitious Yasuni-ITT Initiative, launched in 2007, was hailed as a landmark plan to keep oil exploration out of the country’s most pristine forest and to preserve the homes of indigenous tribes living there. ButEcuador abandoned the plan last year, and drilling could now begin any time.
Leila Salazar of the U.S.-based NGO Amazon Watch equates oil exploration in Ecuador’s rainforests with “ignoring a ticking time bomb for the entire planet.” But the once global struggle to secure the Yasuni-ITT Initiative has now largely fallen on the shoulders of a few indigenous tribal communities who have pledged to fight, some to the death, to keep oil companies out of their communities and their oil in the ground.
Activists Killed in the Amazon
African rainforest fights for survival
Will the world back them up? It is a question with significance far beyond Yasuni National Park. The age of “easy oil,” if it ever existed, is over. What is left is in places like the Yasuni, previously deemed too sensitive, valuable, or risky to drill. The cost to both the planet and local people of pursuing such oil grows in tandem with the difficulty of extracting it. The Yasuni presents a critical opportunity to demonstrate that a different path is possible, though fortunately it is not the only place where the effort to leave our “oil in the soil” has taken root.
Yasuni: Biological and ethnic diversity worth saving
In November I travelled to the Yasuni National Park in northeastern Ecuador and marveled at its beauty, diversity, and bounty. It alone sits at the intersection of the Amazon, the Andes Mountains, and the Equator. It is a biological hot spot for mammals, birds, insects, plants, and more. One hectare of the Yasuni contains not only more tree species than are native to the whole of North America, but also 100,000 insect species, the highest diversity per unit area in the world for any plant or animal group, according to one estimate. The United Nations declared the Yasuni a World Biosphere Reserve in 1989.
READ MORE: Rainforest’s vast treasury of life
Within the park lies the Ishpingo, Tambococha, and Tiputini (ITT) area, home to one of the most intact sections remaining in the Amazon River Basin. Its natural bounty allows the ITT to support the only remaining uncontacted tribes left in Ecuador—two groups of Waorani who have remained in isolation from the outside world for thousands of years — the Taromenane and Tagaeri. It is also perched atop Ecuador’s largest untapped oil reserves.
Ecuador currently gets about half its national revenue from oil. President Rafael Correa hopes to increase this amount — and in so doing reduce rampant poverty — by carving up much of his country’s share of the Amazon into oil blocks.
Yet, in response to the global climate movement’s call for nations to leave their “oil in the soil,” in 2007 Correa made a bold proposal. If the global community agreed to put up $3.6 billion — roughly half the value of the 850 million barrels of crude estimated to be under the ITT area of Yasuni — Ecuador would leave the oil untouched indefinitely. World leaders failed to pay up, however, and Ecuadorpronounced the death of the deal last year.
Drilling in the ITT will come at a steep price, explains Dr. Matt Finer, a research biologist with the Amazon Conservation Association. “You’re basically talking about the only spot on earth where you get this maximum diversity for everything, in addition to being one of the last places on earth where people can still live without any contact with civilization,” he said. “You have a national park created to protect that super mega diversity, and you will now have drilling [there]. It represents a serious incursion into what should be a refuge.”
Lives in the balance?
Cahuilla was born in the Yasuni but today lives in the tiny hamlet of Noneno wedged between two oil fields, the Cononaco and Armadillo, where President Correa is trying to expand oil production.
Her community considers it their responsibility to protect and speak on behalf of the uncontacted Waorani still living in the ITT and Yasuni, but this is not just out of loyalty. Oil operations are already pushing the Taromenani into contacted Waorani land, resulting in escalating violence, including murder, kidnapping, and territorial conflict.
Dr. Matt Finer, research biologist
As we talk, Cahuilla says she wishes she had her spear so she can “kill someone.” Though she is nonviolent, it is not a hollow threat. It is how the male elders of her village have pledged to deal with any oil firm that dares come near their home.
The Waorani leader argues that regardless of how they’re perceived, her people are not poor. “We have the richness of the forest and the river. We need for nothing, except what the oil companies destroy.” As for the rest of Ecuador, she adds, “All the people need clean air to live. Clean water. With this oil development, what kind of life is the government actually hoping to give its people?”
An estimated 1,500 people call the Yasuni and ITT home. In addition to the uncontacted tribes, there are Waorani and Kichwa who, just like Cahuilla’s community, are in contact with the outside world but still primarily lead lifestyles that are not far removed from the traditions followed by their ancestors. Though I saw the odd television and radio on my way through the forest, the majority of the peoples’ needs are still met directly from the land and water.
As I hiked in the ITT, I was shown trees used to build houses, blowguns for hunting, and canoes; plants used to make jewelry and plates, and to cure ailments; and a bounty of seeds, fruits and even a pack of wild boar comprising the majority of the communities’ diet. In return, the tribes treat the forest with deep respect.
“Cutting a tree is like cutting a person,” Kichwa tribal leader Holmer Machoa of the community of Llanchama in the ITT, told me. “If the oil companies come, they will cut and they will kill. They will be the destruction of the forest. They will kill the water and poison the land.”
Environmental concerns
The Napo region, including the Yasuni, is now one of the 14 major deforested areas in the world. Ecuador has the highest deforestation rate of any Latin American country, in part because oil is located so deep within the forest that extensive systems of roads must be built to reach it. The roads also fragment the Yasuni, harming already threatened animal species that require large intact forest areas to survive, and opening the park to new settlers andincreased and illegal hunting.
This threat reaches beyond the Yasuni, as the two principal causes of global warming are the burning of fossil fuels and deforestation.
There are also other concerns. The Ministry of the Environment reported 539 oil spills in Ecuador between 2000 and 2010, a rate of nearly two a month. But INREDH, an Ecuador-based human rights group, says the rate is more than two a week, citing nearly 500 recorded spills from 2003 through 2005 alone.
Last June, Petroecuador’s Trans-Ecuadorian Oil Pipeline burstunder the weight of a landslide caused by heavy rains. Some 420,000 gallons of oil was dumped into the Coca River, which then spread into the larger Napo River. The oil polluted the drinking water of Coca, a city of 80,000 people, and at least thirteen smaller communities.
The waterways of rural Ecuador are filled with people bathing, washing dishes and clothes, playing, and drinking from the water. As oil operations expand, so too do the dangers of this way of life. The Napo River, which marks the entire northern edge of the Yasuni, is now a major industrial highway with a constant flow of giant barges carrying equipment to support oil operations leaving black clouds of pollution in their wake.
Melissa Schoeb, Vice President of Occidental
A 2002 study in the International Journal of Epidemiologyconcluded that the prevalence of cancer was significantly elevated in those counties in Ecuador where oil firms operated versus non-oil-producing regions. The study found significantly elevated rates for “cancers of the stomach, rectum, skin melanoma, soft tissue and kidney in men and for cancers of the cervix and lymph nodes in women,” and an increase in haematopoietic cancers in children under age 10.
Cahuilla also points to Texaco’s legacy in Ecuador’s Lago Agrio region. In November Ecuador’s highest court ruled that California-based Chevron (which purchased Texaco in 2000) owes locally-impacted communities $9.51 billion for decades of substandard practices that severely polluted land and waterways and which continue to harm human health and the environment today. Chevron has appealed the court judgment, calling it “a manifest denial of justice.”
Others point to California-based Occidental’s (Oxy) operation in Ecuador from 1985 to 2006.Oxy settled a court case filed in 2006 in which Ecuadorian plaintiffs charged it with “unauthorized drilling, expropriation of tribal lands, utilizing child labor, and polluting the local water supply” in Oil Block 15. People protesting against Oxy’s operations there, they argue, were “attacked on or near Block 15, tortured, and illegally detained by the [government] Special Forces” acting for Oxy. Oxy has denied each such allegation in the case, which was settled under a strict gag order.
In response to a request for comment, Melissa Schoeb, Vice President of Occidental, said in a written statement: “We are not aware that any adverse health effects occurred due to our operations. During the company’s tenure [in Ecuador], Occidental had an exemplary record of environmental and safety performance, both in complying with laws and regulations and in pursuing numerous voluntary initiatives.”
The Ecuadorian government did not respond to multiple requests for comments for this story.
On my visit to the Kichwa community of Sani Isla situated on land in the Yasuni and across the Napo River in Oil Block 15, schoolteacher Maximo Grefa told me: “For decades, oil companies have been causing environmental damage to the water and air. I think it is the reason why we have so many kids with special needs, mental and physical disorders. The children drink the water without any treatment. That affects their health.”
Fighting back with ecotourism
Within virtually every community in and near the Yasuni, I am told that tourists, not oil companies, are the preferred outsiders. I am then pointed to Sani Isla, renowned for the Sani Lodge, a highly successful ecotourism venture catering to wealthy Western clientele.
At Sani Isla, Kichwa tribal leader Blanca Lourdes Tapuy Grefa says that oil development is incongruous with a healthy environment, including that desired by tourists, and is in direct conflict with the success of her community. Without Sani Lodge she asks: “What are we going to leave our children?”
Alicia Cahuilla, Waorani tribal leader
In May, her brother, Leonardo Tapui president of the community, told President Correa that Sani Isla opposed new oil operations and warned that if the army came, they would respond with war. It is a war that Blanca and her fellow Kichwa, just like Alicia Cahuilla and the Waorani, intend to fight with spears, blowguns and machetes.
“It doesn’t matter what the government says,” Blanca told me, “because I have my machete and I have my spear, and I’m going to defend this place. I’m not afraid. No matter what.”
A fight of global significance
Local organizations such as Quito-based Accion Ecologica have gathered more than half of the requisite signatures needed by April to hold a national referendum on halting drilling in the Yasuni. That President Correa still proudly displays the UN Visionary 2012 trophy he received for the Initiative may be evidence that he and his government can yet be convinced to change course, particularly if the global community finally commits to the $3.6 billion.
Moreover, the effort that led Correa to propose the Yasuni-ITT Initiative is not limited to this proposal or to Ecuador. Last month, an international gathering of indigenous groups, NGOs, and others convened in Ecuador under the auspices of the Global Alliance for the Rights of Nature, members of which came up with the original idea for the Initiative in 1997. They declared their commitment to fight not only for the Yasuni, but also for continued success elsewhere.
In April, for example, Mora County, New Mexico became the first U.S. county to permanently ban all oil and natural gas development (Shell Oil company has sued, claiming its rights as a “person” to those minerals), while in November three cities in Colorado joined dozens of others U.S. cities and town in voting to ban hydraulic fracking (a technique used for both oil and natural gas).
These efforts come from a growing realization that with the end of “easy oil” and the intensification of climate change, we are all now ultimately on the front lines of the battle over what is to be done with the world’s remaining fossil fuels.
Guide/Translators: Jose Proano from Land is Life and Yury Guerra from Altruvistas.
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Opinion: Why oil drilling in Ecuador is 'ticking time bomb' for planet – CNN.com
Opinion: Why oil drilling in Ecuador is ‘ticking time bomb’ for planet – CNN.com.
Alicia Cahuilla’s Waorani tribe has lived on the edge of Ecuador’s Yasuni National Park for thousands of years. But they’re worried about new oil exploration in the area.- Ecuador’s Yasuni National Park is one of world’s most biologically diverse areas
- Last year the government cleared the way for oil exploration in the park’s most pristine area
- Villagers say oil exploration in Yasuni will dramatically affect their way of life
- Oil firms say they are complying with environmental regulations
Editor’s note: Antonia Juhasz, an oil industry analyst, is author of several books, including “Black Tide” and “The Tyranny of Oil.”Juhasz’s investigation is supported by a grant from the Max and Anna Levinson Foundation, which makes grants to nonprofits committed to “developing a more just, caring, ecological and resilient world.” Her work has also appeared in Rolling Stone, Harper’s Magazine, and The Atlantic’s website.The opinions expressed in this article are solely those of the author.
(CNN) — Alicia Cahuilla doesn’t try to hide her anger. The native Waorani tribal leader stands in front of an exposed, thickly black crude oil pit, as two gas flares burn violently overhead, the stinging stench of crude heavy in the air. Until about 50 years ago, this area, like most of the central Ecuadorian Amazon rainforest in which it sits, was Waorani land, a pristine expanse filled with nothing but trees and streams.
The Waorani have lived here, on the northwestern edge of one of the most biologically rich places on Earth, for thousands of years. But today their land is also home to hundreds of operations seeking to extract the vast oil reserves buried deep below the forest floor.
Experts believe that in order to avoid the worst of a future climate change catastrophe, most of the planet’s fossil fuels must be left in the ground. Ecuador’s ambitious Yasuni-ITT Initiative, launched in 2007, was hailed as a landmark plan to keep oil exploration out of the country’s most pristine forest and to preserve the homes of indigenous tribes living there. ButEcuador abandoned the plan last year, and drilling could now begin any time.
Leila Salazar of the U.S.-based NGO Amazon Watch equates oil exploration in Ecuador’s rainforests with “ignoring a ticking time bomb for the entire planet.” But the once global struggle to secure the Yasuni-ITT Initiative has now largely fallen on the shoulders of a few indigenous tribal communities who have pledged to fight, some to the death, to keep oil companies out of their communities and their oil in the ground.
Activists Killed in the Amazon
African rainforest fights for survival
Will the world back them up? It is a question with significance far beyond Yasuni National Park. The age of “easy oil,” if it ever existed, is over. What is left is in places like the Yasuni, previously deemed too sensitive, valuable, or risky to drill. The cost to both the planet and local people of pursuing such oil grows in tandem with the difficulty of extracting it. The Yasuni presents a critical opportunity to demonstrate that a different path is possible, though fortunately it is not the only place where the effort to leave our “oil in the soil” has taken root.
Yasuni: Biological and ethnic diversity worth saving
In November I travelled to the Yasuni National Park in northeastern Ecuador and marveled at its beauty, diversity, and bounty. It alone sits at the intersection of the Amazon, the Andes Mountains, and the Equator. It is a biological hot spot for mammals, birds, insects, plants, and more. One hectare of the Yasuni contains not only more tree species than are native to the whole of North America, but also 100,000 insect species, the highest diversity per unit area in the world for any plant or animal group, according to one estimate. The United Nations declared the Yasuni a World Biosphere Reserve in 1989.
READ MORE: Rainforest’s vast treasury of life
Within the park lies the Ishpingo, Tambococha, and Tiputini (ITT) area, home to one of the most intact sections remaining in the Amazon River Basin. Its natural bounty allows the ITT to support the only remaining uncontacted tribes left in Ecuador—two groups of Waorani who have remained in isolation from the outside world for thousands of years — the Taromenane and Tagaeri. It is also perched atop Ecuador’s largest untapped oil reserves.
Ecuador currently gets about half its national revenue from oil. President Rafael Correa hopes to increase this amount — and in so doing reduce rampant poverty — by carving up much of his country’s share of the Amazon into oil blocks.
Yet, in response to the global climate movement’s call for nations to leave their “oil in the soil,” in 2007 Correa made a bold proposal. If the global community agreed to put up $3.6 billion — roughly half the value of the 850 million barrels of crude estimated to be under the ITT area of Yasuni — Ecuador would leave the oil untouched indefinitely. World leaders failed to pay up, however, and Ecuadorpronounced the death of the deal last year.
Drilling in the ITT will come at a steep price, explains Dr. Matt Finer, a research biologist with the Amazon Conservation Association. “You’re basically talking about the only spot on earth where you get this maximum diversity for everything, in addition to being one of the last places on earth where people can still live without any contact with civilization,” he said. “You have a national park created to protect that super mega diversity, and you will now have drilling [there]. It represents a serious incursion into what should be a refuge.”
Lives in the balance?
Cahuilla was born in the Yasuni but today lives in the tiny hamlet of Noneno wedged between two oil fields, the Cononaco and Armadillo, where President Correa is trying to expand oil production.
Her community considers it their responsibility to protect and speak on behalf of the uncontacted Waorani still living in the ITT and Yasuni, but this is not just out of loyalty. Oil operations are already pushing the Taromenani into contacted Waorani land, resulting in escalating violence, including murder, kidnapping, and territorial conflict.
Dr. Matt Finer, research biologist
As we talk, Cahuilla says she wishes she had her spear so she can “kill someone.” Though she is nonviolent, it is not a hollow threat. It is how the male elders of her village have pledged to deal with any oil firm that dares come near their home.
The Waorani leader argues that regardless of how they’re perceived, her people are not poor. “We have the richness of the forest and the river. We need for nothing, except what the oil companies destroy.” As for the rest of Ecuador, she adds, “All the people need clean air to live. Clean water. With this oil development, what kind of life is the government actually hoping to give its people?”
An estimated 1,500 people call the Yasuni and ITT home. In addition to the uncontacted tribes, there are Waorani and Kichwa who, just like Cahuilla’s community, are in contact with the outside world but still primarily lead lifestyles that are not far removed from the traditions followed by their ancestors. Though I saw the odd television and radio on my way through the forest, the majority of the peoples’ needs are still met directly from the land and water.
As I hiked in the ITT, I was shown trees used to build houses, blowguns for hunting, and canoes; plants used to make jewelry and plates, and to cure ailments; and a bounty of seeds, fruits and even a pack of wild boar comprising the majority of the communities’ diet. In return, the tribes treat the forest with deep respect.
“Cutting a tree is like cutting a person,” Kichwa tribal leader Holmer Machoa of the community of Llanchama in the ITT, told me. “If the oil companies come, they will cut and they will kill. They will be the destruction of the forest. They will kill the water and poison the land.”
Environmental concerns
The Napo region, including the Yasuni, is now one of the 14 major deforested areas in the world. Ecuador has the highest deforestation rate of any Latin American country, in part because oil is located so deep within the forest that extensive systems of roads must be built to reach it. The roads also fragment the Yasuni, harming already threatened animal species that require large intact forest areas to survive, and opening the park to new settlers andincreased and illegal hunting.
This threat reaches beyond the Yasuni, as the two principal causes of global warming are the burning of fossil fuels and deforestation.
There are also other concerns. The Ministry of the Environment reported 539 oil spills in Ecuador between 2000 and 2010, a rate of nearly two a month. But INREDH, an Ecuador-based human rights group, says the rate is more than two a week, citing nearly 500 recorded spills from 2003 through 2005 alone.
Last June, Petroecuador’s Trans-Ecuadorian Oil Pipeline burstunder the weight of a landslide caused by heavy rains. Some 420,000 gallons of oil was dumped into the Coca River, which then spread into the larger Napo River. The oil polluted the drinking water of Coca, a city of 80,000 people, and at least thirteen smaller communities.
The waterways of rural Ecuador are filled with people bathing, washing dishes and clothes, playing, and drinking from the water. As oil operations expand, so too do the dangers of this way of life. The Napo River, which marks the entire northern edge of the Yasuni, is now a major industrial highway with a constant flow of giant barges carrying equipment to support oil operations leaving black clouds of pollution in their wake.
Melissa Schoeb, Vice President of Occidental
A 2002 study in the International Journal of Epidemiologyconcluded that the prevalence of cancer was significantly elevated in those counties in Ecuador where oil firms operated versus non-oil-producing regions. The study found significantly elevated rates for “cancers of the stomach, rectum, skin melanoma, soft tissue and kidney in men and for cancers of the cervix and lymph nodes in women,” and an increase in haematopoietic cancers in children under age 10.
Cahuilla also points to Texaco’s legacy in Ecuador’s Lago Agrio region. In November Ecuador’s highest court ruled that California-based Chevron (which purchased Texaco in 2000) owes locally-impacted communities $9.51 billion for decades of substandard practices that severely polluted land and waterways and which continue to harm human health and the environment today. Chevron has appealed the court judgment, calling it “a manifest denial of justice.”
Others point to California-based Occidental’s (Oxy) operation in Ecuador from 1985 to 2006.Oxy settled a court case filed in 2006 in which Ecuadorian plaintiffs charged it with “unauthorized drilling, expropriation of tribal lands, utilizing child labor, and polluting the local water supply” in Oil Block 15. People protesting against Oxy’s operations there, they argue, were “attacked on or near Block 15, tortured, and illegally detained by the [government] Special Forces” acting for Oxy. Oxy has denied each such allegation in the case, which was settled under a strict gag order.
In response to a request for comment, Melissa Schoeb, Vice President of Occidental, said in a written statement: “We are not aware that any adverse health effects occurred due to our operations. During the company’s tenure [in Ecuador], Occidental had an exemplary record of environmental and safety performance, both in complying with laws and regulations and in pursuing numerous voluntary initiatives.”
The Ecuadorian government did not respond to multiple requests for comments for this story.
On my visit to the Kichwa community of Sani Isla situated on land in the Yasuni and across the Napo River in Oil Block 15, schoolteacher Maximo Grefa told me: “For decades, oil companies have been causing environmental damage to the water and air. I think it is the reason why we have so many kids with special needs, mental and physical disorders. The children drink the water without any treatment. That affects their health.”
Fighting back with ecotourism
Within virtually every community in and near the Yasuni, I am told that tourists, not oil companies, are the preferred outsiders. I am then pointed to Sani Isla, renowned for the Sani Lodge, a highly successful ecotourism venture catering to wealthy Western clientele.
At Sani Isla, Kichwa tribal leader Blanca Lourdes Tapuy Grefa says that oil development is incongruous with a healthy environment, including that desired by tourists, and is in direct conflict with the success of her community. Without Sani Lodge she asks: “What are we going to leave our children?”
Alicia Cahuilla, Waorani tribal leader
In May, her brother, Leonardo Tapui president of the community, told President Correa that Sani Isla opposed new oil operations and warned that if the army came, they would respond with war. It is a war that Blanca and her fellow Kichwa, just like Alicia Cahuilla and the Waorani, intend to fight with spears, blowguns and machetes.
“It doesn’t matter what the government says,” Blanca told me, “because I have my machete and I have my spear, and I’m going to defend this place. I’m not afraid. No matter what.”
A fight of global significance
Local organizations such as Quito-based Accion Ecologica have gathered more than half of the requisite signatures needed by April to hold a national referendum on halting drilling in the Yasuni. That President Correa still proudly displays the UN Visionary 2012 trophy he received for the Initiative may be evidence that he and his government can yet be convinced to change course, particularly if the global community finally commits to the $3.6 billion.
Moreover, the effort that led Correa to propose the Yasuni-ITT Initiative is not limited to this proposal or to Ecuador. Last month, an international gathering of indigenous groups, NGOs, and others convened in Ecuador under the auspices of the Global Alliance for the Rights of Nature, members of which came up with the original idea for the Initiative in 1997. They declared their commitment to fight not only for the Yasuni, but also for continued success elsewhere.
In April, for example, Mora County, New Mexico became the first U.S. county to permanently ban all oil and natural gas development (Shell Oil company has sued, claiming its rights as a “person” to those minerals), while in November three cities in Colorado joined dozens of others U.S. cities and town in voting to ban hydraulic fracking (a technique used for both oil and natural gas).
These efforts come from a growing realization that with the end of “easy oil” and the intensification of climate change, we are all now ultimately on the front lines of the battle over what is to be done with the world’s remaining fossil fuels.
Guide/Translators: Jose Proano from Land is Life and Yury Guerra from Altruvistas.
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Our take on the State of the Union address: It’s time for climate action | – Environmental Defence
Our take on the State of the Union address: It’s time for climate action | – Environmental Defence.
President Obama delivered the annualState of the Union address last night. And while we usually keep our attention north of the border, there are a few key reasons that we tuned in. As climate impacts hit harder and closer to home with floods, forest fires, heat waves and cold snaps, the time for ambitious climate action has never been clearer.
Last night the President reaffirmed his commitment to climate action through emissions reductions, clean energy, cuts to fossil fuel subsidies, and efficiency. But a ramping up of the ‘all of the above’ energy strategy, with increased natural gas and oil, threatens to hold the U.S. back as a climate leader. Nonetheless, the President’s determination to protect future generations from climate change stands in sharp contrast to what’s happening here in Canada, where the reckless expansion of the tar sands is making it impossible to do our share to prevent the worst of climate change.
Here are the key reasons we watched the speech:
- A tale of two countries and climate changeThe Canadian government claims, when it comes to action on climate change, we are harmonizing with the U.S., our largest trading partner. So when President Obama stepped up earlier this year (in the President’s June climate speech) by committing to tackle the U.S.’s biggest source of pollution (coal), it put pressure on Canada to finally take action to regulate the tar sands, our fastest growing source of climate change pollution.Rather than being harmonized, it seems our leaders are singing different tunes. Recently, Prime Minister Harper suggested that any rules to deal with tar sands emissions are still a couple of years away. In contrast, as we heard last night, the President remains dedicated to working to tackle carbon pollution and invest in clean energy and efficiency – commitments that are lacking in Canada.
We’d welcome real cross-border collaboration on climate action, clean energy and efficiency. The U.S. is committed to taking advantage of the growing clean energy economy (solar got a shout out last night). If we don’t get on board soon with clean energy, Canada will miss out on the jobs and benefits of this growing sector.
- The Keystone XL tar sands pipelinePresident Obama holds the key to significant tar sands expansion (and climate pollution) through the Keystone XL tar sands pipeline. While he wasn’t expected to – and didn’t – mention the pipeline in last night’s speech, the heat was still on the President with over 100 people gathered in the cold outside of the White House,demanding a rejection of this massive pipeline that would enable major industry expansion and significant climate pollution.The pipeline is in the midst of a final environmental impact assessment, which the State Department is expected to release in the coming weeks or months. The impact assessment follows the President’s June climate speech, where he was clear that the pipeline would not be approved if it significantly exacerbatesclimate pollution. Industry and governments have been lobbying heavily for the Keystone pipeline, precisely because it would open up export routes and allow for tar sands expansion.
After the assessment is presented, the pipeline will go through a National Interest Determination process where the public can weigh in. But the final decision rests with the President. The Keystone XL tar sands pipeline is an example of the infrastructure we should not build if we’re serious about stabilizing our climate, which requires us to move away from polluting fossil fuels. Rejecting the pipeline would be yet another signal for investors who are coming to terms with the risks of investing in dirty fuels. And it would be very good news for the climate, which would be saved tens of millions of tonnes of carbon pollution.
- Our shared atmosphereBecause we share an atmosphere with the U.S, we care about what our southern neighbour does on climate change, pipelines, fracking, clean energy and energy efficiency. While we work hard every day to push for climate and clean energy policy in Canada, it isn’t just our pollution that matters. The U.S. is one of the world’s largest polluters and what it does or doesn’t do to tackle global warming pollution will impact us in Canada.Every country must try to do its fair share to reduce greenhouse gas emissions. Here at home we will work even harder, because we have further to go. Some important change is happening in Canada, led by cities and provinces. Look at Ontario’s move to shut its last coal plant down for good or Nova Scotia’s impressive success at cutting energy waste. But as a country we need to grapple with the fact that expanding fossil fuel production is incompatible with action on climate change. If the tar sands are allowed to expand, pollution from them will cancel out every other effort in the country to reduce greenhouse gas emissions.
The good news is that on both sides of the border there a diverse, powerful and growing movement of committed individuals, organizations and communities standing up for a safer future for our shared environment and climate. This movement has made the tar sands the defining energy conversation on the continent, with many voices calling for an end to expanding the tar sands. As the impacts of climate change continue to hit close to home, this movement is only going to get stronger.
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Shale gas, peak oil and our future
Shale gas, peak oil and our future.
The following interview with Richard Heinberg was originally published in Flemish at the Belgian website De Wereld Morgen. The interview was given in conjunction with the release of the Dutch translation of Richard’s Book Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future. The Dutch title is Schaliegas, piekolie & onze toekomst.
Josh Fox, director of the Gasland documentaries, recently said that the fossil fuel industry is so powerful that “democracy in the 21st century is impossible as long as we rely on fossil fuels”. What are your thoughts?Share this:
Beijing Citizens, Shrouded In Pollution, Flock To Giant Screens To View Artificial Sunrise | Zero Hedge
You know it’s bad when…The smog has become so thick in Beijing that the city’s natural light-starved masses have begun flocking to huge digital commercial television screens across the city to observe virtual sunrises. Following this week’s practical shutdown of the city of “beyond index” levels of pollution, as The Mail Online reports, residents donned air masks and left their homes to watch the only place where the sun would hail over the horizon that morning…
It’s grim…
The futuristic screens installed in the Chinese capital usually advertize tourist destinations, but as the season’s first wave of extremely dangerous smog hit, ths happened…
Via The Mail Online,
…
The air took on an acrid odor, and many of the city’s commuters wore industrial strength face masks as they hurried to work.
‘I couldn’t see the tall buildings across the street this morning,’ said a traffic coordinator at a busy Beijing intersection who gave only his surname, Zhang. ‘The smog has gotten worse in the last two to three years. I often cough, and my nose is always irritated. But what can you do? I drink more water to help my body discharge the toxins.’
…
The density of PM2.5 was about 350 to 500 micrograms Thursday midmorning, though the air started to clear in the afternoon. It had reached as high as 671 at 4 a.m. at a monitoring post at the U.S. Embassy in Beijing.
That is about 26 times as high as the 25 micrograms considered safe by the World Health Organization, and was the highest reading since January 2013.
In the far northeastern city of Harbin, some monitoring sites reported PM 2.5 rates of up to 1,000 micrograms in October, when the winter heating season kicked off.
…
Beijing reported 58 days of serious pollution last year, or one every six to seven days on average, Xinhua quoted Zhang Dawei, director of the Beijing Municipal Environmental Monitoring Center, as saying.
…
China has drawn up dozens of laws and guidelines to improve the environment but has struggled to enforce them in the face of powerful enterprises.
On Wednesday, China’s commercial capital, Shanghai, introduced emergency measures, allowing it to shut schools and order cars off the road in case of severe smog.
