The right wing investment sheets will tell you that we’re sitting on a trillion barrels of oil under the ground in North America. What they don’t tell you is that it’s wax and tar – and hard to process. “Hard,” as in, “dissolves and destroys steel.”
But the thing nobody seems to say is that it’s simply a matter of volume versus use. Let’s look at it like this:
During the oil discovery of the 1930s, a barrel of oil (42 gallons in need of being distilled) could be bought for 30 cents. In fact, oil was so abundant, there were periods of 5 cent per barrel oil. That’s because there was so much of it — and the world didn’t require it. Most of the world’s work was done by hand, or by animal plow.
Sure, the big cities and industrial centers used oil and coal. But most of the world was still rural. That was true until about 10 years (or 10 minutes) ago, as the “economic miracle” of the ’90s insisted that everybody needed a car and to work in an office.
We were under a dollar for a gallon of gas until the US peaked (reached maximum and began to decline) in the early 70s – and well under – in the 20 cent range – for much of that period.
In fact, a whole barrel was under 2 dollars from the 1880s to nearly the 1950s. [LINK]
Some fields produced a return ration of 1,000 barrels for every one invested. Some produced 35,000 for every one invested (the Kern County, California Lakeview Gusher, for example – but much of that – 9 million barrels – was spilled!) [LINK]
The average for the period up to 1940 was 100 to 1.
The Spindletop field in Beaumont, Texas, came in at 100,000 barrels per day after a laborious dig.
“Lucas continued drilling and on January 10, 1901, at a depth of 1,139 ft, what is known as the Lucas Gusher or the Lucas Geyser blew oil over 150 feet in the air at a rate of 100,000 barrels per day (4,200,000 gallons). It took nine days before the well was brought under control. Spindletop was the largest gusher the world had seen and catapulted Beaumont into an oil-fueled boomtown. Beaumont’s population of 10,000 tripled in three months and eventually rose to 50,000. Speculation led land prices to increase rapidly. By the end of 1902, more than 500 companies had been formed and 285 wells were in operation.” [LINK]
But the world did not have a place to use it – so it was CHEAP.
And for every one we used, geologists were discovering six more out in the world’s untapped oil fields.
The Empire State Building was built in 1929 to ’31, during a long period of cheap oil. That’s when we built the big North American cities.
We now get a return on oil of about 11 (for fracking) to 20 (conventional) for every 1 we invest.
“From 1750-1950, the EROEI of oil discoveries was very high. For instance, discoveries in the 1930s had 100:1 EROEIs. That ratio declined to 30:1 by the 1970s. Today, that ratio is at about 17:1 with few recent discoveries above 10:1.” [LINK]
And for every five to six we use, we discover one.
Gas has fluctuated from $2 to over $5 per gallon over 6 years – and is rapidly unstable. (The largest fluctuations occurred within months, not years. Rapid instability is a mark of uncertain sources of oil or gas.) [LINK]
Oil approached $150 a barrel, and was lowered when Saudi Arabia decided to flood the market after the US invested billions (trillions?) in expensive fracking – which needs about 70 to 90 dollars per barrel to be profitable.
We built the world on dollar a barrel oil that came in at a return of 100: 1 (and often at 1,000:1).
And we expect to maintain it at $90 dollar per barrel oil, that gives us an energy return of 11:1.
The average depth of a well has increased to over a mile deep (more than 6,000 ft); and most fields are now in the ocean and are several miles deep. [LINK] This is a very expensive ball game compared with running drills on dry land. But that’s the game of oil – it’s all temporary.
Spindletop is now a grass-covered hill – because like all fields, production declines to an unsustainable rate – that is – no one wants to pay for a pint or two a day of oil by running pumping machinery (that requires far more than is produced).
“Today a flag pole flying a Texas flag marks the location of the wellhead, at Spindletop Park, about 1.5 miles southwest of the museum, off West Port Arthur Road/Spur 93. There is a viewing platform with information placards there, about a quarter mile from the flagpole, which is in the middle of swampland on private land and not accessible. Directions to the site are available at the museum.” [LINK]
What goes up, in oil, always slides back down.
You can begin to appreciate our dilemma.
Liam Scheff is author of Official Stories, a reverse textbook to all the fibs you were taught in school; his current project and next book is “The Oil Alarm” all about the collapse we’re just beginning to soak up, coast to coast.