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Vilification of the Petroleum Industry

Let’s vilify the petroleum industry! It’s fun and so easy!

Let’s first mention the vast profits this industry earns. Millions and millions! Millions of millions! Then let’s show photos of ruptured pipelines and oil wells on fire. What great visuals to show how dangerous and careless the industry really is. Then let’s go to today’s most popular vilification: the fracking of oil and gas wells. Let’s take the few examples of where this common process has gone wrong and make it seem that all fracked wells behave this way.

It should be no surprise that the industry defends itself when attacked in such a way. Its main strategy is to mention its very useful products, high-paying jobs, the secondary economic effects, royalties and taxes paid to governments, corporate donations to charities, shares held by pension plans, and a much improved environmental record. All this petroleum propaganda skillfully influences the more neutral citizenry not to be swayed into the same thinking of anti-petroleum activists, making it difficult for the politicians to go in the direction that activists want.

Despite the caviling of the anti-petroleum lobby, the industry really does not fear regulations and resource rentals (royalties and taxes). Rather, its fear comes from the thousands and thousands of business calculations conducted by engineers, geologists, business analysts, and field personnel to determine whether the thousands and thousands of decisions made in the industry are indeed profitable. Many of these calculations are based on current regulations and resource rentals. Moderate changes to these parameters will make many of these calculations invalid. When such changes are made, the industry temporarily loses its bearing on whether it can earn a profit or not like a ship with no rudder and GPS. And many of its good decisions previous to such changes have been made into bad decisions just by a few strokes of legislation. The industry just doesn’t like such changes.

So the defense mounted by the petroleum industry has two purposes. First, it ensures the anti-petroleum lobby is not successful in making severe changes which could render all previous investments totally valueless. Second, it helps minimize or delay moderate changes. While the industry often does not get its way with the political process, the expense of its self-defense is actually a good investment!

With the vilification and the expected self-defense, the public discourse becomes reduced to a conflict between two extremes: the good of petroleum vs. the evil of petroleum. It seems there is no other way to frame this discussion. The result: we find solutions somewhere in the middle — with each side being somewhat satisfied that it prevented the other side from not fully getting its way.

Let’s change the public discourse from this “either-or” dichotomy to a portrayal of the petroleum industry as a necessary part of the transition from our former horse-coal-steam economy to our future hydrogen economy. When we acknowledge the petroleum industry is an important contributor to this process, we no longer need to vilify it. We will allow it to earn profit under certain regulations and economic rents. With such thinking, we are more likely to create a better balance from resource extraction during this transition.

Of course, many vilifiers will claim that the petroleum industry is already steering public discussion away from any such hydrogen economy. If there is indeed such a conspiracy, the vilifiers, with their portrayal of “evil petroleum”, are providing more than enough ammunition for petroleum industry to keep the discussion where it currently is. The industry need only prove that is not so evil to win.

Published on in 2014

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