Editorial
RIO DE JANEIRO, BRAZIL – We did it. Humans somehow discovered fire, then eventually fossil fuels, combustion engines and oil wells. It is what makes the world go round, it keeps the lights on, the food on the table and the bed warm. But it’s not always pretty.
Maybe that is relative, as a friend and I where discussing an image of a massive oil refinery system and had different impressions. The photo looked like some Dr. Suess factory with pipes and gears in every turn.
My impression was it looked like a scary vision of the future. His impression was it looked like sophistication and progress. And he doesn’t even work in the oil business.
Even the hairiest tree-hugger appreciates a hot shower, and when the trail mix runs out we all know how he has to get to the food co-op. Fossil fuel, machines and oil wells are a here to stay, until we humans figure out how to harness a TBD clean, renewable and affordable energy sources.
Oil wells are big, complex marvels of human ingenuity, but they cost money. Some sources indicate a deep water drilling rig cost around $420,000 per day just to to operate, with other additional supply chain services, a duration of 100 days can cost around US$100 million.
But it is a business with profits to be made. An article from April of this year reported that in 2010, Exxon Mobil made US$284.7 billion in revenue and US$19.3 billion in profit, while Chevron made US$163.5 billion in revenue and US$10.5 billion profit.
With so much at stake, it is easy to see how things can take on a life of their own, and some commies may suggest the oil industry does not necessarily act in humanity’s best long-term interests. However in the wide world there are different systems and investor-owned and government-controlled oil companies both exist.
There are investor-owned oil companies, like ExxonMobil, Royal Dutch Shell, and BP (formerly known as British Petroleum), who are primarily concerned with maximizing shareholder return.
Then there are national oil companies that function as corporate entities, like Petrobras (Brazil) and Statoil (Norway), trying to balance profits and the objectives of their country.
Finally there are national oil companies that operate as an extension of the government like Saudi Aramco (Saudi Arabia), Pemex (Mexico), and PDVSA (Venezuela). The United States has no national oil company.
It would be easy to blame big business for not taking precautions at the expensive of the environment, but a look at the largest oil spills does include a 1979 incident with Pemex (the above mentioned Mexican government-owned oil company.)
The same way we can’t make parents take a competency test before having children, we can’t make countries prove capability before spiking the earth. In a way, maybe the investor-owned oil companies are better vetted… by capitalism.
Either way, with so much profit being made, there is no excuse for accidents. Chevron in Brazil said the recent incident released an oil slick on the ocean surface about 163km² (about 63 square miles), but the really scary part is it ended up just 75 miles (120km) from the coast of Rio.
The company of – US$10.5 billion 2010 profit – was fined about US$60 million for this ‘leak’. The CEO of Chevron, John Watson made US$14.0 million in 2010 alone.
