tag:theconversation.com,2011:/fr/topics/petroleum-3240/articlesPetroleum – The Conversation2023-05-22T14:55:29Ztag:theconversation.com,2011:article/2056852023-05-22T14:55:29Z2023-05-22T14:55:29ZDangote launches Africa’s biggest oil refinery - 4 ways it will affect Nigeria<figure><img src="https://images.theconversation.com/files/527542/original/file-20230522-12563-92jqzl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Aliko Dangote</span> <span class="attribution"><span class="source">Epa/Daniel Irungu</span></span></figcaption></figure><p>Nigeria’s new <a href="https://www.dangote.com/our-business/oil-and-gas/">Dangote petroleum refinery</a> is Africa’s biggest – it will produce 650,000 barrels a day, giving it the potential to address the country’s energy supply crisis. First product from the refinery is expected to hit the market by the end of <a href="https://www.channelstv.com/2023/05/22/refinerys-first-product-to-hit-market-by-end-of-july-dangote/">July 2023</a>.</p>
<p>Owned by Nigerian industrialist and Africa’s richest man, <a href="https://www.forbes.com/profile/aliko-dangote/?sh=2f3d9d7222fc">Aliko Dangote</a>, the refinery is expected to boost domestic refining capacity, getting rid of the current consumption shortfall. It will also reduce import dependency and stimulate economic growth.</p>
<p>It is the <a href="https://www.channelstv.com/2016/06/24/dangote-set-to-launch-nigerias-first-private-refinery/">first</a> privately owned crude oil refinery in Nigeria. Nigeria’s existing refineries, plagued by operational inefficiencies under government control, have failed to meet the growing demand for petroleum products. Substantial imports have become necessary.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1659932605167419393"}"></div></p>
<p>Nigeria currently imports more than <a href="https://www.pwc.com/ng/en/assets/pdf/nigerias-refining-revolution.pdf#page=3">80%</a> of its refined petroleum products. The country is the <a href="https://oec.world/en/profile/hs/refined-petroleum">largest importer</a> of refined petroleum products in Africa. Local production will therefore massively cut the country’s import bill.</p>
<p>According to the <a href="https://www.cbn.gov.ng/Out/2023/CCD/Governor's%20Goodwill_Remarks%20at%20the%20Commissioning%20of%20the%20Dangote%20Refinery_May%202023.pdf#page=13">Central Bank of Nigeria</a>, the cost (including freight) of petroleum products imports into Nigeria doubled over a five-year period from about US$8.4 billion in 2017 to US$16.2 billion (indicating an annual average of US$11.1 billion), before rising further to US$23.3 billion by end-2022. </p>
<p>The central bank says the average annual cost of petroleum products imports to Nigeria could reach <a href="https://www.cbn.gov.ng/Out/2023/CCD/Governor's%20Goodwill_Remarks%20at%20the%20Commissioning%20of%20the%20Dangote%20Refinery_May%202023.pdf#page=14">US$30 billion </a> by 2027 if the country continues to rely on petroleum imports. </p>
<p>This money can now potentially be saved with Dangote refinery plugging the supply shortfall. </p>
<p>In my <a href="https://www.tandfonline.com/doi/full/10.1080/12269328.2015.1083486">previous research</a>, I have found that there is a link between Nigeria’s crude oil export dependency and its weak local refining capacity. This is also the case with Mexico, which exports its crude abroad for processing. </p>
<p>Based on my experience in the <a href="https://theconversation.com/nigerias-fuel-crisis-smaller-more-flexible-refineries-arent-the-full-answer-178043">sector</a>, I set out the four areas where the Dangote refinery is expected to make an impact on Nigeria’s petroleum sector and, by extension, the Nigerian economy. </p>
<h2>Reduced oil import dependence</h2>
<p>The most notable impact of Dangote refinery will be the increase in local refinery capacity, which will reduce imports.</p>
<p>Dangote refinery is expected to help Nigeria meet <a href="https://dangote.com/our-business/oil-and-gas/">100%</a> of it’s refined petroleum product needs (gasoline, 72 million litres per day; diesel, 34 million litres per day; kerosene, 10 million litres per day and aviation jet, 2 million litres per day), with surplus products for the export market. </p>
<p>The refined petroleum output from the refinery in combination with other refineries in Nigeria is expected to meet the shortfall of the estimated daily consumption of <a href="https://punchng.com/daily-fuel-consumption-jumps-to-72-million-litres-subsidy-hits-n541-66bn/#:%7E:text=Petrol%20consumption%20in%20the%20country,in%20the%20month%20of%20April.">72 million litres</a> of petrol.</p>
<p>The country has faced <a href="https://www.aljazeera.com/news/2023/2/2/shortages-causing-fury-among-nigerians-ahead-of-elections">several fuel shortages</a> in the past, which have caused <a href="https://www.premiumtimesng.com/news/headlines/517393-nigerias-inflation-rises-to-15-70-as-fuel-scarcity-affects-prices.html?tztc=1">prices to surge</a> for transport and basic commodities. </p>
<p><a href="https://apnews.com/article/russia-ukraine-politics-nigeria-2ff43cdc2014832e54255db54b89125b">Recent fuel shortages</a> have been blamed on the Russia-Ukraine war. The price of imported fuel rose more than 100%. Importers operated at a loss due to price ceilings set by the government. </p>
<p>Besides eliminating import dependency, the Dangote refinery can potentially reduce Nigeria’s crude oil export dependency as more crude oil will be refined domestically. </p>
<p>Refining crude oil locally will enable the country pay for the refined product in naira which will save scarce foreign exchange and generate revenue in exported refined petroleum products. </p>
<p>The Central Bank of Nigeria says Dangote refinery could engender foreign exchange savings of between <a href="https://www.cbn.gov.ng/Out/2023/CCD/Governor's%20Goodwill_Remarks%20at%20the%20Commissioning%20of%20the%20Dangote%20Refinery_May%202023.pdf#page=14">US$25 billion and US$30 billion</a> annually for Nigeria.</p>
<h2>Support for allied industries</h2>
<p>The establishment of the refinery is also likely to help reduce the cost of production for industries that <a href="https://businessday.ng/energy/oilandgas/article/fresh-pain-for-manufacturers-as-diesel-tankers-face-supply-hitches/">rely on petroleum products</a> such as diesel to power their operations. In turn, this should increase their competitiveness in the global market while promoting local industry capabilities. </p>
<p>The refinery could also create an environment for allied industries to emerge in and around it. For instance, businesses in transport, housing and telecommunications will benefit from the construction and operations of the refinery. </p>
<p>And the refinery should create jobs and entrepreneurship opportunities.</p>
<p>While under construction, the refinery employed about <a href="https://www.dangote.com/57000-personnel-to-benefit-from-work-at-refinery-site-says-dangote/">40,000 workers</a> – 29,000 Nigerians and 11,000 foreigners. </p>
<p>The jobs were in engineering, construction, manufacturing and operations, among other areas. </p>
<p>In full operation, the refinery, according to media reports, is expected to create over <a href="https://guardian.ng/business-services/dangote-refinery-to-create-250000-jobs/">250,000</a> direct and indirect jobs. I believe this is a fair estimate.</p>
<p>The country’s current unemployment rate is expected to reach <a href="https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/03/kpmg-global-economic-outlook-h1-2023-report.pdf#page=48">40.6%</a> in 2023.</p>
<h2>Possible increase in carbon footprint</h2>
<p>The operation of Dangote refinery raises concerns about its potential impact on Nigeria’s net zero emission goals. Net zero is an ideal state where the amount of greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere is balanced. </p>
<p>Decarbonisation efforts are required for countries to achieve net zero but the path and time might differ as countries may want to take a gas-led approach to transition to renewable energy. </p>
<p>At the COP26 climate change meeting in 2021, President Muhammadu Buhari <a href="https://climateactiontracker.org/countries/nigeria/net-zero-targets/#:%7E:text=At%20COP26%2C%20President%20Buhari%20committed,gases%20except%20NF3%20(Article)">committed</a> to net-zero emissions by 2060. This is to protect Nigeria’s environment and ecosystem from the impact of climate change and reduce the country’s greenhouse gas emissions. </p>
<p>Nigeria has an <a href="https://energytransition.gov.ng/">Energy Transition Plan</a> to get closer to a more sustainable economy. The plan assumes greater use of natural gas as a “<a href="https://www.vanguardngr.com/2022/08/natural-gas-energy-transition-fuel-for-nigeria-fg/">transition fuel</a>”.</p>
<p>Oil refineries contribute about <a href="https://www.frontiersin.org/articles/10.3389/fceng.2022.804163/full">4%</a> of the global carbon emissions. </p>
<p>The Dangote refinery <a href="https://pshan.org/dangote-refinery-set-to-be-commissioned/">complies</a> with World Bank, US, European and Nigerian norms for emissions and effluents.</p>
<h2>Conclusion</h2>
<p>The Dangote refinery is a significant step towards self-sufficiency in Nigeria’s energy sector. </p>
<p>However, the refinery is still reliant on fossil fuels, and it is not a long term solution to Nigeria’s energy needs. </p>
<p>Nigeria has significant <a href="https://encyclopedia.pub/entry/26194">renewable energy potential</a>, including solar and wind power.</p>
<p>Renewable energy can be harnessed to meet Nigeria’s energy needs in a sustainable manner. Therefore, Dangote refinery should be viewed as a stepping stone towards a transition to cleaner energy sources in the medium term. </p>
<p>It is essential that Nigeria continues to invest in renewable energy and explore ways to reduce its reliance on fossil fuels to achieve its net zero emissions goal.</p><img src="https://counter.theconversation.com/content/205685/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nnaemeka Vincent Emodi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Dangote refinery will reduce Nigeria’s dependence on imported petroleum products and create jobs. But it may not be the best for the environment.Nnaemeka Vincent Emodi, Research Fellow, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1933162022-11-03T13:47:26Z2022-11-03T13:47:26ZCOP27 must work out how to cut carbon and still develop African economies<figure><img src="https://images.theconversation.com/files/492718/original/file-20221101-18-iqric5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">LUDOVIC MARIN/AFP via Getty Images</span></span></figcaption></figure><p>Averting a climate disaster without compromising economic growth and development is a key issue for African countries. Energy production and use is the single biggest contributor to global warming, <a href="https://www.unep.org/explore-topics/energy">accounting for</a> roughly two-thirds of human-induced greenhouse gas emissions. Yet, electricity use and access are <a href="https://escholarship.org/uc/item/7jb0015q">strongly correlated</a> with economic development.</p>
<p>Many African countries are lagging behind in electricity generation and access. According to the <a href="https://trackingsdg7.esmap.org/">Energy Progress Report</a>, in 2020 the 20 countries with the lowest rates of access to electricity were all in sub-Saharan Africa. For example, just 7% of the population in South Sudan and 11% of the population in Chad have access to electricity. Even among the most populous countries in Africa, access to electricity is still limited – 55.4% and 51.1% of the populations of Nigeria and Ethiopia, <a href="https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=ZG-NG">respectively</a>, have access to electricity.</p>
<p>To close these gaps, energy demand on the continent is <a href="https://www.undp.org/africa/news/africas-just-energy-transition-priority-world-moves-toward-decarbonization">expected to grow</a> by 60% by 2040. </p>
<p>Sufficient energy <a href="https://www.rockefellerfoundation.org/wp-content/uploads/2020/12/Modern-Energy-Minimum-Sept30.pdf">is essential</a> for most economic activities. Coal, petroleum and natural gas made a significant amount of productive energy available during the industrial revolution. This led to human health and welfare improvements. Cost effective and abundant energy is a key driver for economic growth. </p>
<p>African countries will find it hard to grow their economies and pull their people out of poverty if they can’t take advantage of their abundant energy resources. For example, Africa <a href="https://www.iea.org/reports/africa-energy-outlook-2019">holds</a> 13% of the world’s remaining recoverable gas resources. </p>
<p>So the global effort to cut the use of these resources presents a barrier to Africa’s growth, unless sufficient financing is available to fully transition to renewable and sustainable fuels at a scale needed to support economic growth. </p>
<h2>Africa’s challenges</h2>
<p><a href="https://grist.org/politics/the-u-s-has-officially-stopped-financing-new-coal-plants-abroad/">Over the past few years</a>, the West has been taking a rather coercive approach to Africa’s decarbonisation – the removal or reduction of carbon dioxide (CO2) output into the atmospher. They’ve cut back financing for gas and coal energy projects in Africa, while still pursuing their own new gas and coal deals. In addition, an analysis by the International Renewable Energy Agency <a href="https://www.irena.org/publications/2022/Jan/Renewable-Energy-Market-Analysis-Africa">showed</a> minimum global renewable energy investments in Africa (only 2% out of all the renewable energy investments in the world) over the last two decades. </p>
<p>Without the West’s backing, Africa’s energy decisions might solely rely on resource abundance and cost efficiency. This could lead to further dependence on fossil fuels. </p>
<p>Global environmental problems such as climate change require cooperation at the local, national and international level. The West’s support for Africa is essential to align global decarbonisation targets with regional realities. </p>
<p>Without support to maximise the available resources, economies of scale, cost efficiencies, capacity building, and the potential to electrify large numbers of the population, a focus on renewables alone becomes unjust and unrealistic for Africa. </p>
<h2>Just electrification in a net-zero world</h2>
<p>My <a href="https://scholar.google.com/citations?user=U7pa2O0AAAAJ&hl=en">research</a> interests focus on energy production and sustainable development. The need to invest in alternative, sustainable fuels to meet the projected demand is critical. </p>
<p>One of the main challenges at COP27 – the 2022 United Nations Climate Change Conference – will be agreeing on who decides when and how countries ought to transition to net-zero emissions. Put simply, net zero <a href="https://www.un.org/en/climatechange/net-zero-coalition">means</a> cutting greenhouse gas emissions to as close to zero as possible.</p>
<p>Conversations at COP27 should centre on Africa’s interests in order to advance a “just transition” for all. A just transition is one in which social and economic opportunities of climate action are maximised, while challenges – such as inequitable distribution of benefits and costs – are minimised. </p>
<p>Africa <a href="https://www.scienceopen.com/hosted-document?doi=10.14324/111.444/000180.v1">bears</a> the brunt of climate change impacts without being responsible for them. This <a href="https://www.clubofrome.org/wp-content/uploads/2022/07/Earth4All_Deep_Dive_Ghosh.pdf">undermines</a> the opportunity to create a just energy transition for all with fair assignment of climate responsibility. </p>
<p>Negotiations must find pathways for Africa to deliver electricity for economic empowerment, while depending less on harmful fuels.</p>
<h2>Governance</h2>
<p>Deep decarbonisation and net-zero world goals are paramount to combating the climate crisis. However, the pace and methods of achieving them might come at the cost of leaving millions in the dark with little access to electricity. </p>
<p>A <a href="https://journals.sagepub.com/doi/10.1111/j.1478-9302.2010.00226.x">new polycentric model of international climate governance</a> is needed. The old one resembled an era of hierarchy and power concentration in fewer countries. This led to a lack of cooperation at the international level. </p>
<p>The polycentric model could help facilitate the understanding on the need to advance access to electricity while mitigating the climate crisis. This cooperative governance model could correct the past inequitable distribution of benefits and costs by implementing the following three main principles:</p>
<ul>
<li><p>Let those affected by climate change decide when and how to transition to net-zero emissions.</p></li>
<li><p>Replace hierarchical (or “double-standard”) principles with cooperative and polycentric approaches.</p></li>
<li><p>Make autonomy and partnerships pillars of decentralised international cooperation.</p></li>
</ul>
<p>COP27 should embrace the notion that the decisions that shape the lives of Africans should be shaped by Africans. </p>
<p>The people affected by climate change should decide when and how to transition to net-zero emissions. Autonomy and partnerships should characterise international cooperation.</p>
<h2>Energy solutions</h2>
<p>Renewable energy – such as solar, wind and hydro power – is an attractive option. In Africa, women and children <a href="https://cleancooking.org/the-issues/health/">die from</a> household air pollution due to the reliance on wood, charcoal, or coal as energy sources. Citizens are <a href="https://www.sciencedirect.com/science/article/abs/pii/S2214629620302140">further affected</a> by forced displacements that occur to accommodate large fossil-based energy infrastructure, like power stations. </p>
<p>A shift away from these practices would allow for a more people-centred clean energy future. There’s an opportunity to bypass a centralised energy system based on fossil fuel. It could be based on renewable energy instead, distributed through mini grids. If done right, this could provide full electrification without the cost of creating coal or natural gas power plants. Some of these power stations will be stranded anyway in the move away from fossil fuels.</p>
<h2>The path to just electrification</h2>
<p>Working together to balance clean energy and electrification in Africa will be a gradual process. The key enabling factor in this process is financing. Financing is needed for new technologies, resilient infrastructure and building people’s capacity. </p>
<p>COP27 is Africa’s turn to map this path.</p><img src="https://counter.theconversation.com/content/193316/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bethel Tarekegne does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A key issue for African countries is: how to contribute towards averting a climate disaster without compromising economic growth and development.Bethel Tarekegne, Research Engineer, Pacific Northwest National LaboratoryLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1913712022-10-03T15:03:04Z2022-10-03T15:03:04ZGhana’s petroleum sector management is a mess: what’s gone wrong?<figure><img src="https://images.theconversation.com/files/487323/original/file-20220929-1555-l04azq.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ghana has considerable oil deposits</span> <span class="attribution"><span class="source">Wikimedia Commons</span></span></figcaption></figure><p>After three decades of prospecting Ghana discovered commercially viable quantities of petroleum in 2007. Within 3.5 years, it exported its <a href="https://www.bbc.com/news/world-africa-11996983">first barrels</a> of crude oil. The progression from discovery to extraction and export was twice as rapid as the global average of <a href="https://www.graphic.com.gh/features/opinion/oil-and-gas-activities-in-ghana.html%3E">six to seven years</a>. </p>
<p>The record speed is indicative of the significant political interest in the sector relative to others such as agriculture and healthcare.</p>
<p>In the intervening years, oil has contributed in many different ways to Ghana’s economy. Directly it has <a href="https://www.statista.com/statistics/1235708/gdp-of-the-oil-and-gas-industry-in-ghana/#:%7E:text=In%202021%2C%20the%20oil%20and,billion%20U.S.%20dollars">contributed over US$1bn</a> annually to the gross domestic product of the country. This includes the royalties paid by multinational oil companies. Indirect benefits have included gas infrastructure, an expanded petrochemical industry and increased skilled employment.</p>
<p>The <a href="https://theconversation.com/is-the-resource-curse-hard-baked-into-african-economies-chinas-approach-hints-that-it-may-not-be-167397">natural resource literature</a> on resource rich developing countries equate such resources to a ‘curse’. This is because the benefits are, in most cases on the continent, not enjoyed by citizens.</p>
<p>Does Ghana exemplify this?</p>
<p>In a <a href="https://protect-au.mimecast.com/s/aNB6Cr8DKRUOjZnpc4rGVY?domain=authors.elsevier.com">recent paper</a>, I investigated the political behaviour and institutional arrangements in the petroleum sector over three decades. </p>
<p>My view, based on my analysis, is that two factors – political disagreements and political considerations – supersede any predictable and clearly stated objectives in petroleum governance. This is despite enhanced checks and balances that civil society introduced after the discovery of oil in 2007. </p>
<p>The arbitrary and uncensored decision making have consistently cost the country – and particularly ordinary Ghanaian dearly. This continues to be the case today.</p>
<h2>A history of mistakes</h2>
<p>I identified three phases of petroleum governance. </p>
<p>The first – 1983 to 2001 – was the period when personal relationships determined who had power in petroleum governance. This period predates oil discovery and production. </p>
<p>The second – 2001 to 2008 – saw the sector change dramatically as clientelist political manoeuvres took over to attract foreign investments. </p>
<p>The third phase – from 2009 to the present – was the active involvement of civil society following the discovery and production. This offered some degree of checks-and-balances.</p>
<p>In 1983 the Ghana National Petroleum Corporation was set up as a national oil company. It was responsible for the sector emerging as a rent-seeking venture. This was because it hedged anticipated future petroleum revenues in the form of loans receivables to meet the country’s petroleum import needs and to fund exploration activities. </p>
<p>This action was termed <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/15047/282450Natural0resources0violent0conflict.pdf?sequence=1&isAllowed=y">‘booty futures’</a> – a situation where revenues from petroleum are collected several years before discovery and production. </p>
<p>The corporation had the mandate for petroleum exploration as well as imports of petroleum products for domestic consumption. Fiscal space was constrained at the time. One of the corporation’s strategies was therefore to use anticipated proceeds from future oil production from some fields to hedge oil price hikes. It also used proceeds from the sale of cocoa on the world market to <a href="https://www.youtube.com/watch?v=VuQTMbdgfqo">directly pay for imported crude oil</a> without having to look for foreign exchange to cover the cost. </p>
<p>These kinds of derivative transactions cost Ghana millions of dollars due to ill-informed advice from its financial advisers.</p>
<p>In addition, the government demanded 65% of the profits. This was a high share for a nascent industry without certainty of discovery. This made Ghana unattractive to investors. The state continued to pump resources into exploration and incurred further financial losses.</p>
<p>Investors began to show interest in 2001 when a new government revised the profit-sharing terms to between 10% and 15%. </p>
<p>The petroleum sector continues to be manipulated by politicians. This is done through the indiscriminate removal and appointment of technocrats and executives. The Ghana National Petroleum Corporation has become notorious for being embroiled in several petroleum agreement scandals. Potentially these are costing the tax payer billions of dollars. Some misappropriation has been averted due to the vigilance of civil society groups. But there’s still a lack of transparency and inadequate political will to propose and implement laws to the letter.</p>
<h2>Petroleum itself is not the problem</h2>
<p>The primary determinants of the quality of Ghana’s petroleum governance are the political environment and the degree of engagement of civil society in governance. </p>
<p>Petroleum is not a problem, neither is any natural resource per se. </p>
<p>Instead, petroleum arrived at a time in which the country was beset by three fundamental structural problems.</p>
<p>First, political arrangement was characterised by political power influencing the disbursement of benefits to the elites. This arrangement was aggravated by the excessive power of decision making, appointment and resource disbursement at the hands of national level political actors. </p>
<p>In this context, there was subjectivity, secrecy, and lack of consideration for alternative and grassroot perspectives in governance in general. </p>
<p>These factors have cost Ghana several billion dollars. And continue to do so.</p>
<p><a href="https://www.myjoyonline.com/bright-simons-gnpc-risks-1-5b-financial-loss-to-ghana/">Recent revelations</a> show that Ghana risks losing about US$1.5 billion annually due to a 2020/21 gas supply agreement. The agreement has seen Ghana selling gas at a needlessly discounted rate of 77% to a private entity.</p>
<p>Second, internal and external party-political disputes have shaped institutional quality and outcomes. For instance, the dismissal or reassignment of up to 90% of Ghana National Petroleum Corporation staff in 2001 due to a change in government created room for the government to pay an avoidable judgement debt of US$19.5 million to Société General. The lack of coordination between the then Kufour government and the corporation due to competing political interests between the two main political parties in Ghana left room for Societe General to <a href="https://searchworks.stanford.edu/view/11921376">get away with</a> a higher rather than lower negotiated judgement debt amount.</p>
<p>Similarly, tensions in 2014 between two leading members of the then ruling party – Tsatsu Tsikata and Kwesi Botchwey – derailed efforts to set up the necessary infrastructure, contributing to the flaring (burning) of gas in the initial stages of petroleum extraction. This disagreement had roots in the mid-1990s when Botchwey was the Finance Minister under Rawlings and vehemently opposed the indiscriminate infusion of public funds into petroleum exploration.</p>
<p>Third, all Ghanaian governments have shown a lack of political will to formulate and implement laws and other legal frameworks. Even where laws exist, they have shown an appetite to bypass them. </p>
<h2>Options for strengthening petroleum governance</h2>
<p>To ensure sustained confidence in Ghana’s petroleum sector, I propose the following.</p>
<p>First, future legislation – or amendments to existing laws – must provide guidelines for dealing with sweat equity. Sweat equity is the equity that one gets in return for one’s efforts in bringing petroleum investors to Ghana.</p>
<p>The EO Group and the AGM Petroleum Ghana Ltd are examples of Ghanaian entities that have benefited from this. Without any legislation governing this phenomenon, political actors have exploited it by allowing their cronies to bring preferred investors into the sector without going through competitive procurement processes. </p>
<p>Dealing with this loophole would ensure that profit sharing in petroleum agreements were discussed with the country’s national interest in mind, not personal interests.</p>
<p>Second, Parliament must ensure that regulations are drafted and gazetted within stipulated periods after passage of laws. This will get rid of excessive political discretion in the implementation of laws.</p>
<p>Third, civil society groups, such as the media, should up the ante by making it politically unattractive for politicians to exploit petroleum governance. They can do this by vigorously informing electorates about how the sector is being run.</p>
<p>Fourth, political parties should build consensus to develop a long-term bi-partisan strategy to establish stability of staffing and appointments in the petroleum sector.</p><img src="https://counter.theconversation.com/content/191371/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Clement Sefa-Nyarko does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Disagreements and political considerations override the common good in managing Ghana’s petroleum sectorClement Sefa-Nyarko, Lecturer in Security, Development and Leadership in Africa, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1911992022-09-24T04:32:27Z2022-09-24T04:32:27ZNigeria is producing less and less oil. Here’s why<figure><img src="https://images.theconversation.com/files/486249/original/file-20220923-26-ux1ea3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Members of the Petroleum and Natural Gas Senior Staff Association of Nigeria protest over crude oil theft.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/members-of-the-petroleum-and-natural-gas-senior-staff-news-photo/1243049836?adppopup=true">Olukayode Jaiyeola/NurPhoto via Getty Images</a></span></figcaption></figure><p><em>Nigeria’s oil output was at the lowest since 1990 as <a href="https://www.reuters.com/business/energy/nigerias-oil-output-drops-below-1-mln-bpd-2022-09-09/">its crude oil production fell below 1 million barrels per day</a> (bpd) in August 2022. And data from the Organisation of the Petroleum Exporting Countries in early September <a href="https://www.vanguardngr.com/2022/09/crude-oil-production-angola-libya-overtake-nigeria-opec-report/">showed</a> that Angola and Libya have overtaken Nigeria as Africa’s highest crude oil producers. The Conversation Africa’s Wale Fatade asked Omowumi Iledare, professor emeritus in petroleum economics and policy research to explain what’s happening.</em> </p>
<hr>
<h2>What are the drivers of the decline in oil production?</h2>
<p>Production has been <a href="https://thedocs.worldbank.org/en/doc/fd5b55e045a373821f2e67d81e2c53b1-0400072022/related/Global-Flaring-and-Venting-Regulations-28-Case-Studies-from-Around-the-World.pdf">declining since 2012</a>. It’s a combination of a lot of factors.</p>
<p>I think insecurity of assets is top on the list – and insecurity of life. Secondly, the maturity of the fields. Thirdly, moving away from onshore to deep water. </p>
<p>There is also a declining capacity to produce from a technical production point of view and from a market production point of view because of the COVID-19 pandemic.</p>
<p>Technical production is what is actually coming out of the wells and fields. This is obviously affected by the number of wells that are put into production and the less producing wells in a field at its peak, less the aggregate field output.</p>
<p>Market production is what the country is able to put into the international market and the domestic market. </p>
<p>Both of them are related, but the market fundamentals of supply and demand affect both of them differently depending on the inventory level. Inventory levels are what’s kept in the tank farms where crude oil is stored while waiting for exports and pipeline movement to the refineries.</p>
<h2>What are the constraints on what’s coming out of the wells?</h2>
<p>Increasing technical production requires drilling more wells, finding more reserves and installing more infrastructure. When you have infrastructure decay, and field productivity decline, the technical production will decline.</p>
<p><a href="https://www.thisdaylive.com/index.php/2022/02/28/tracking-marginal-fields-bid-round-conclusion/">Since 2003</a> Nigeria has not put any bidding processes in place to meet exploration and development of fields. And it takes a lot of years before you can tie them up for production.</p>
<p>There have also not been <a href="https://www.thisdaylive.com/index.php/2022/02/28/tracking-marginal-fields-bid-round-conclusion/">any new leases</a>. The last one was 2007 apart from the bidding for marginal fields <a href="https://www.thisdaylive.com/index.php/2022/02/28/tracking-marginal-fields-bid-round-conclusion/">in 2003</a>. As a result we see the maturity of the basins. Playing and production capacity has remained static at about 2.5 million barrels per day.</p>
<p>In the Niger Delta, an investment of about $19 billion is needed to keep the level of production capacity stable, based on my own estimates. </p>
<p>We’ve not done <a href="https://www.ceicdata.com/en/indicator/nigeria/crude-oil-production">beyond 2.5 million barrels per day</a> production capacity since 2002. </p>
<p>Nigeria is fortunate that the deep water wells have been able to cover the decline in production from shallow water and the diminishing onshore production. This brought production in Nigeria <a href="https://www.statista.com/statistics/265195/oil-production-in-nigeria-in-barrels-per-day/">up to 1.8 million barrels in 2016</a>. </p>
<p>But now we have theft and vandalism that’s affecting the market production – what Nigeria is able to export, what it’s able to transfer to the refineries.</p>
<h2>How does insecurity affect crude oil production?</h2>
<p>There’s asset insecurity. Almost 20% of the capacity of Nigeria is being stolen, <a href="https://www.africanews.com/2022/09/08/437000-barrels-of-oil-stolen-on-daily-basis-by-criminals-in-nigeria//">about 400 to 500,000 barrels per day</a>. But this isn’t happening through pipelines. So there must be some type of conniving, because it is just unbelievable that you can move that much crude oil under the watchful eyes of the security agents – either the navy or the army, or whatever. Because there’s no way someone can be stealing 500,000 barrels per day by tapping the pipes in the entire Niger Delta. </p>
<p>So that’s what I mean by asset insecurity. </p>
<h2>What would it take for Nigeria to reduce its heavy reliance on oil?</h2>
<p>The engine that will accelerate diversification of Nigeria’s economy is oil revenue, and perhaps gas revenue in the future. This is what you can use to diversify the economy, if properly used. Unfortunately, that has not been so. Spending approximately a trillion Naira per year over the last 10 - 20 year, to subsidise petroleum product consumption, is not the best way to spend oil money. </p>
<p>The diversification of the Nigerian economy requires the federal government letting go of its hold on some sectors in the economy. They have their hands in so many things. One is power. It is not the responsibility of the federal government to generate power for the nation. It is the responsibility of the federal government to just develop policies that will allow investors to invest in the power sector value chain. </p>
<p>The responsibility of the central government is to create an enabling environment. They are not doing that well because of provincialism.</p>
<p>Second, the diversification of the economy requires the removal of energy subsidies at the consumption end of the energy value chain with zero value addition. The government is spending so much money on the petrol subsidy it is unable to do what really matters. This includes spending money on infrastructure so that goods and services can be moved from the source to the market. </p>
<p>The physical infrastructure that is supposed to be the responsibility of the government is bad because it is not doing what it’s supposed to do with its oil money. </p>
<p>The government too should not cloud out domestic investors. The government is borrowing too much money. It should think more about manpower development. It’s the government’s responsibility to make skill workers available for the industry. But Nigeria’s universities have been <a href="https://theconversation.com/17-strikes-in-23-years-a-unionist-explains-why-nigerias-university-lecturers-wont-back-down-190170">closed for seven months</a>. </p>
<p>So the economy has not been diversified at all. Oil is contributing a lot to government revenues but not to the economy as a whole. <a href="https://punchng.com/oil-exports-account-for-80-total-national-revenue/">Nearly 80% of exports</a> is accounted for by oil. That’s why the economy is not growing. <a href="https://www.premiumtimesng.com/business/business-news/550850-nigerias-economy-grew-3-54-in-second-quarter-of-2022.html">Nigeria’s economy grew by 3.54%</a> in real terms in the second quarter of 2022. If you have infrastructure deficiency, skilled manpower deficiency, and road infrastructure deficiency, you won’t get economic growth.</p>
<p>The government must begin to think in terms of decentralising so many things that they take on.</p>
<h2>What could the government do to reverse the trend?</h2>
<p>You need to make more leases available quickly so that people can begin to get the rights to produce and export. </p>
<p>The biggest challenge right now is attacks on pipelines and criminality. The government must have the courage to prosecute those stealing crude oil and those vandalising the pipelines. If it continues to reward criminality, crime will continue to expand and the oil and gas industry may collapse.</p>
<p>In the process, it must also remove the cloud of uncertainty in oil and gas in Nigeria where energy transition is putting a dampener on investment. Also, the government should put more effort into the use of natural gas for domestic expansion. I don’t subscribe to this emphasis on exports of natural gas from Nigeria. I’m a believer that using gas for domestic economic growth is the way to go. </p>
<p>That’s why the <a href="https://www.pwc.com/ng/en/publications/nigeria-petroleum-industry-act.html">Petroleum Industry Act</a> is so good. It is very supportive of domestic gas development for local economy. </p>
<p>I want to emphasise also the need for Nigeria to have a transformation leadership mindset. Transformation leadership is not transactional. Such leadership mindset encourages the heart, inspires shared vision, and motivates others in the management team to act. </p>
<p>It is a leadership style that is authoritative but not authoritarian in modelling the way to go. It is not averse to challenging traditional management processes that are not optimal.</p><img src="https://counter.theconversation.com/content/191199/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Omowumi Iledare does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Insecurity of assets and life with declining capacity for technical and market production are responsible for Nigeria’s low crude oil production.Omowumi Iledare, Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil and Gas Economics and Management, University of Cape CoastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1900882022-09-11T16:13:05Z2022-09-11T16:13:05ZAfter oil: what Malaysia and Iran may look like in a post-fossil-fuel future<p>As the <a href="https://theconversation.com/five-key-points-in-the-ipcc-report-on-climate-change-impacts-and-adaptation-178195">devastation of climate change</a> makes the need to decarbonise clearer by the day, countries face the question of what to do with their old fossil fuel infrastructure. While some <a href="https://theconversation.com/climate-activism-has-so-far-been-fairly-peaceful-heres-why-that-might-change-185625">environmental activists</a> have taken to <a href="https://edition.cnn.com/2017/03/21/us/dakota-access-pipeline-vandalism/index.html">sabotaging</a> the carbon economy on the back of its emissions in the Global North, the picture is different in oil-producing countries of the Global South, where energy infrastructure has fed communities for decades. There, the emphasis is placed on memory and institutionalisation.</p>
<h2>Oil’s conquest of Iran and Malaysia</h2>
<p>The cases of Malaysia and Iran, where oil has significantly contributed to economic growth, give us a glimpse into how authorities are currently reckoning with their fossil fuel heritage. In the 20th century, the arrival of international oil companies in the major port cities on the Persian Gulf in Iran and the South China Sea in Malaysia transformed the built environment, accelerated urbanisation and impacted peoples’ everyday lives. Even today, the dynamics and actors of oil in Iran and Malaysia continue to reshape industry, society, culture, and politics while leaving their mark on the built environment and urban spaces.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/483306/original/file-20220907-9232-ap277n.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/483306/original/file-20220907-9232-ap277n.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=467&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483306/original/file-20220907-9232-ap277n.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=467&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483306/original/file-20220907-9232-ap277n.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=467&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483306/original/file-20220907-9232-ap277n.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=587&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483306/original/file-20220907-9232-ap277n.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=587&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483306/original/file-20220907-9232-ap277n.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=587&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The first oil rig in Miri, a city in Sarawak, northeastern Malaysia, located near the border of Brunei.</span>
<span class="attribution"><a class="source" href="https://commons.m.wikimedia.org/wiki/File:The_first_oil_rig_in_Miri_(Grand_Old_Lady).JPG">Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Founded in 1978, the <a href="https://ticcih.org/">International Committee for the Conservation of the Industrial Heritage</a> (TICCIH) is an international organisation established to explore, protect, conserve and explain the remains of industrialisation. In 2020, it published the <a href="https://ticcih.org/wp-content/uploads/2020/05/Oil-industry-thematic-report.pdf">first global assessment of the heritage of petroleum production</a>, the oil industry and the places, structures, sites, and landscapes that might be chosen to conserve for their historical, technical, social, or architectural attributes. <a href="https://ticcih.org/wp-content/uploads/2020/05/Oil-industry-thematic-report.pdf">In a 2020 report</a>, the organisation defined the heritage of the petroleum industry as </p>
<blockquote>
<p>“the most significant fixed, tangible evidence for the discovery, exploitation, production, and consumption of petroleum products and their impact on human and natural landscapes”.</p>
</blockquote>
<h2>Iran’s petroleum museums</h2>
<p>Less than a decade ago, Iran’s Ministry of Petroleum began to consider establishing <a href="http://www.petromuseum.ir/content/32/Editorial/695/Iran-Petroleum-Museum-Introduction-and-Goals">museums</a> with a view to preserving the country’s industrial heritage. Those in the <a href="https://philpapers.org/archive/MEHPIM.pdf">port city of Adaban</a> in the country’s southwest, include an old refinery, gas station, and the oldest oil-related technical training school. In sections of the old ports, passersby can appreciate cranes and heavy machinery, such as the <a href="http://www.petromuseum.ir/content/30/Treasury-of-Objects/713/Akwan-Crane"><em>Akwan</em></a> and <a href="http://www.petromuseum.ir/content/30/Treasury-of-Objects/722/Sulfur-Crane"><em>Sulfur</em></a> cranes, as well as an exhibition about the reconstruction of the refineries following the Iran-Iraq war (1980-1988).</p>
<p>The country is projecting to open other <a href="https://www.tehrantimes.com/news/457071/Petroleum-museum-to-be-established-in-southwest-Iran">oil museums in major oil port cities</a>. One of them is Masjed Suleiman, a city in the southwestern province of Khuzestan widely recognised as the birthplace of the oil industry in the Middle East. Its museum hosts the oldest oil recovery site in the region. In Tehran, the <a href="https://en.shana.ir/news/316106/5-Petro-Museums-across-Iran">Museum of Oil Industry Technology</a> will detail the nature and importance of oil, gas, and petrochemicals since 1901. It was in that year that the British speculator <a href="https://en.wikipedia.org/wiki/William_Knox_D%27Arcy">William D’Arcy</a> received a concession to explore and develop southern Iran’s oil resources.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/483297/original/file-20220907-18-i50gah.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/483297/original/file-20220907-18-i50gah.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=598&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483297/original/file-20220907-18-i50gah.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=598&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483297/original/file-20220907-18-i50gah.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=598&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483297/original/file-20220907-18-i50gah.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=752&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483297/original/file-20220907-18-i50gah.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=752&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483297/original/file-20220907-18-i50gah.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=752&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Museums of the Iranian oil industry.</span>
<span class="attribution"><span class="source">Iran Petroleum Museums and Documents</span></span>
</figcaption>
</figure>
<h2>When the oil industry refuses to die</h2>
<p>In Malaysia, the oil industry is omnipresent in everyday life, which raises challenges to global decarbonisation efforts. The national oil company Petronas is visible everywhere, from the dissemination of scholarships, the establishment of a university, and the iconic Petronas Twin Towers to the <a href="https://theses.gla.ac.uk/337/1/2008ishakphd.pdf">transformation of sleepy towns into sprawling industrial complexes</a>. The industry goes back to the early 1900s, when oil was struck in the jungles of Miri, Sarawak, under British rule.</p>
<p>The conservation of Malaysia’s oil legacy has proven somewhat challenging, as most rigs are located offshore and sites still very much in use. Efforts have also been limited and lack a centralised plan. In a federal nation, each state dictates its own policies, which extends to museums. Under the Sarawak Tourism Board, the <a href="https://sarawaktourism.com/attraction/canada-hill/">oil rig in Miri</a> has been transformed into a museum and tourist site but remains the only one of its kind.</p>
<p>Conservation efforts have mainly focused on education with an emphasis on science and technology. Most attractions, such as the <a href="https://petrosains.com.my">Petrosains Discovery Centre</a> and the <a href="https://www.utp.edu.my/Pages/Home.aspx">Petronas University of Technology</a>, prioritise public awareness and learning. Malaysia’s national narrative is consistently upbeat – that the oil industry has improved society, transformed of remote villages, advanced educational opportunities, and led to dramatic changes in landscapes and cityscapes.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/483302/original/file-20220907-23-hg03kz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/483302/original/file-20220907-23-hg03kz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483302/original/file-20220907-23-hg03kz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483302/original/file-20220907-23-hg03kz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483302/original/file-20220907-23-hg03kz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483302/original/file-20220907-23-hg03kz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483302/original/file-20220907-23-hg03kz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An oil rig off the coast of Malaysia.</span>
<span class="attribution"><span class="source">Author provided/Getty</span>, <span class="license">Fourni par l'auteur</span></span>
</figcaption>
</figure>
<h2>Toward post-pandemic and post-oil futures</h2>
<p>Malaysia and Iran have taken different approaches when preserving the oil industry as part of their <a href="https://philpapers.org/rec/MEHTFL">tangible and intangible cultural heritage</a>. Nonetheless, a common element of is to separate the oil industry from its imperial pasts by preserving historical sites and narrating them as part of the national narrative.</p>
<p>For Malaysia, Petronas and the oil industry is promoted as a <a href="https://www.petronas.com/our-brand/festive-ad/tv-commercials">success story</a>, intertwining petrol and nationalism. The preservation of the Miri oil rig as a tourist site serves the dual purpose of an attempt to safeguard the historical value of the location and to integrate it as a part of Sarawak’s story. </p>
<p>However, rising concerns about climate change, the environment, and corporate responsibility are increasing pressure on oil companies to reduce their carbon footprint by supporting clean and renewable energy, but these efforts appear to lag behind companies such as <a href="https://www.reuters.com/business/energy/bp-car-chargers-overtake-pumps-profitability-race-2022-01-14/">British Petroleum, which has moved into electric charging and renewable energy</a>. Furthermore, the Covid-19 pandemic caused consumer demand for oil to plummet, which will likely continue to depress Iranian and Malaysian exports for the months to come.</p>
<h2>The impact of the Covid-19 and climate crises</h2>
<p>In the case of Iran, the <a href="https://www.iai.it/en/pubblicazioni/Covid-19-and-oil-price-crash-twin-crises-impacting-saudi-iran-relations">Covid-19 crisis</a> and the <a href="https://oilprice.com/Latest-Energy-News/World-News/Iran-Considers-Allowing-People-To-Invest-In-Oil-On-Local-Exchange.html">fluctuations in oil prices</a> coincide with intensified sanctions by the United States against Iran, also known as the <a href="https://www.tandfonline.com/doi/abs/10.1080/09700161.2020.1841099?journalCode=rsan20">“maximum pressure campaign”</a>. Despite its rich oil and gas resources, the country needs new technology investments and development plans to prepare for the post-fossil-fuel future. However, that will be hard to achieve without resolving <a href="https://theconversation.com/us-is-more-relaxed-about-oil-spike-than-europe-which-helps-explain-differences-over-iran-129476">US-Iran tensions</a> and easing sanctions. To balance future economic growth with social development and environmental protection, Iran needs to invest more in plans for sustainable development and transition to <a href="https://theconversation.com/oil-why-higher-prices-will-complicate-the-energy-transition-157199">less environmentally harmful energy sources</a>.</p>
<p>Malaysia’s response acknowledges of the twin effects of Covid-19 and global warming: <a href="https://www.reuters.com/markets/commodities/malaysias-petronas-sees-oil-demand-fragile-uncertain-2021-12-28/">change in weather patterns and a decrease in demand for oil</a>. Since the 2010s, there has been some movement in the energy sector to prepare for the post oil future. Over nearly a decade, Petronas has focused on <a href="https://www.reuters.com/markets/commodities/malaysias-petronas-launches-clean-energy-firm-lead-carbon-free-push-2022-06-16/">solar power, wind energy and clean hydrogen</a>, pledging to <a href="https://www.petronas.com/our-business/clean-energy-solutions">achieve net zero carbon emissions by 2050</a>.</p>
<p>[<em>More than 80,000 readers look to The Conversation France’s newsletter for expert insights into the world’s most pressing issues</em>. <a href="https://theconversation.com/fr/newsletters/la-newsletter-quotidienne-5?utm_source=inline-70ksignup">Sign up now</a>]</p>
<p>But it took until 2020 amid the Covid-19 crisis and growing international awareness over the climate emergency for momentum to pick up. In 2021, the Ministry of Energy and Natural Resources set targets to <a href="https://www.seda.gov.my/reportal/myrer/">decarbonise the country by 45% by 2030</a>. While these efforts have been applauded, <a href="https://www.frontiersin.org/articles/10.3389/fbuil.2020.00021/full">some hindrances</a> remain, such as financial constraints and a lack of engagement with nongovernmental organisations.</p>
<h2>Lessons from Malaysia’s palm oil heritage</h2>
<p>Given changing global attitudes toward the oil industry, the question arises how the industrial heritage of Malaysia and Iran can be envisioned. Will oil rigs become relics of human greed instead of human advancement? And how will the national narrative reconcile this new reality with the importance of oil in the countries’ decolonisation process?</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=874&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=874&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=874&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1099&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1099&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483292/original/file-20220907-18-ouj692.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1099&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A 1950s British newspaper describes Abadan as ‘a monument of British enterprise and industry’ (September 8, 1951).</span>
<span class="attribution"><span class="source">Illustrated London News</span></span>
</figcaption>
</figure>
<p>For Malaysia, it’s a question that has already been asked regarding <a href="https://theconversation.com/palm-oil-boycott-could-actually-increase-deforestation-sustainable-products-are-the-solution-106733">palm oil and deforestation</a>. Environmental activists in the country and abroad have highlighted their negative impact, which resulted in poor publicity for the country. However, through government engagement with youth and activists, there has been some improvement with how palm oil is viewed especially with regards <a href="https://www.theparliamentmagazine.eu/news/article/mspo-sustainable-palm-oil-redefined">to sustainability efforts</a>.</p>
<p>Oil heritage perhaps needs to walk a similar path, encouraging honest conversations between policymakers, NGOs, industry stakeholders and historical organisations. The Covid-19 pandemic has also provided vital lessons and introduced new practices emphasising corporate responsibility toward workers. Improved governmental cooperation has also shown that it is possible to work toward common goals, which can be expanded to issues such as heritage. If implemented appropriately, such approaches may spell a bright future for how we view oil as part of a national narrative.</p>
<hr>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/485372/original/file-20220919-20-pguqfq.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/485372/original/file-20220919-20-pguqfq.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=305&fit=crop&dpr=1 600w, https://images.theconversation.com/files/485372/original/file-20220919-20-pguqfq.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=305&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/485372/original/file-20220919-20-pguqfq.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=305&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/485372/original/file-20220919-20-pguqfq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=383&fit=crop&dpr=1 754w, https://images.theconversation.com/files/485372/original/file-20220919-20-pguqfq.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=383&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/485372/original/file-20220919-20-pguqfq.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=383&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p><em><a href="https://whc.unesco.org/en/next50/">50th anniversary of the World Heritage Convention</a> (16 November 2022): World Heritage as a source of resilience, humanity and innovation.</em></p><img src="https://counter.theconversation.com/content/190088/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>With accelerating climate change making the need to decarbonise clearer by the day, two oil-dependent countries weigh how to preserve and present their historical fossil fuel infrastructure.Rowena Abdul Razak, Guest Teacher in International History, London School of Economics and Political ScienceAsma Mehan, Assistant Professor in Architecture and Urban History, Texas Tech UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1798092022-03-28T12:36:22Z2022-03-28T12:36:22ZSoaring crude prices make the cost of pretty much everything else go up too because we almost literally eat oil<figure><img src="https://images.theconversation.com/files/454417/original/file-20220325-21-bbs2ud.jpg?ixlib=rb-1.1.0&rect=168%2C25%2C5439%2C3707&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Hopefully, we aren't actually what we eat.</span> <span class="attribution"><a class="source" href="https://media.gettyimages.com/photos/man-drinking-gasoline-picture-id182459958?k=20&m=182459958&s=612x612&w=0&h=9SD6-sBRvJQSgzo0ra_AWt0FZEuzM9TEHnUfTiKYTQY=">ozgurdonmaz/iStock via Getty Images</a></span></figcaption></figure><p>The price of oil has been spiking in recent weeks <a href="https://www.nytimes.com/2022/02/02/business/economy/oil-price.html">in response to concerns</a> that the war in Ukraine will significantly reduce supply. But what happens in oil markets never stays in oil markets. </p>
<p>The price of U.S. crude oil <a href="https://www.cnbc.com/2022/03/06/us-crude-oil-jumps-to-125-a-barrel-a-13-year-high-on-possible-western-ban-of-russian-oil.html">jumped to a 13-year high</a> of US$130 on March 6, 2022. It has come down but <a href="https://www.bloomberg.com/quote/CL1:COM?sref=Hjm5biAW">has been trading above $110 since March 17</a>. That’s over 60% higher than it was in mid-December, before fears of a Russian invasion began to mount. </p>
<p>Of course, this has pushed up the cost of gasoline, which hit an <a href="https://fred.stlouisfed.org/series/GASREGW">average of $4.32 per gallon in the U.S. on March 14</a>. But it’s less well understood how rising energy prices leak into the prices consumers pay for toys, electronics, food and almost every other product you could think of. </p>
<p>Energy is becoming one of the <a href="https://www.bbc.com/news/business-60833361">main causes of inflation</a>, by which I mean a sustained, generalized increase in the prices of goods and services in an economy. The latest data shows prices are rising at an <a href="https://www.bls.gov/news.release/cpi.nr0.htm">annualized pace of 7.9%</a>, the highest in 40 years.</p>
<p>In <a href="https://scholar.google.com/citations?hl=en&user=GyTN5PYAAAAJ">my economics classes</a>, I like to joke to my students that we eat petroleum. Students have a hard time imagining drinking crude oil or gasoline, but in fact it’s both figuratively and almost literally true – and I’m not even referring to how humans ingest about a <a href="https://news.trust.org/item/20201208090301-obmrm">credit card’s worth of oil-based plastic</a> every week. </p>
<p>Let me explain.</p>
<p><iframe id="7CX08" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/7CX08/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Planes, packages and polyester</h2>
<p>Oil prices affect the prices of other goods and services in a few significant ways. </p>
<p>The most obvious is that <a href="https://www.eia.gov/energyexplained/gasoline/use-of-gasoline.php">petroleum powers the vast majority</a> of cars, planes and other vehicles that move stuff around. About <a href="https://www.eia.gov/tools/faqs/faq.php?id=41&t=6">71% of the 6.6 billion barrels of petroleum the U.S. consumed in 2020</a> was used for various types of fuels, such as gas, diesel and jet fuel. </p>
<p>This pushes up <a href="https://totalreliancelogistics.com/how-changing-fuel-costs-impact-shipping-rates/">transportation costs and makes shipping</a> everything from refrigerator components to everyday items like toothpaste more expensive. Businesses can choose to absorb the cost – for example, if their market is highly competitive – <a href="https://www.whitehouse.gov/cea/written-materials/2021/07/09/the-importance-of-competition-for-the-american-economy/">but usually pass it on to customers</a>.</p>
<p>But oil is also a key ingredient in much of the stuff people buy, both in the packaging and in the products themselves, especially food. That’s where most of the <a href="https://www.eia.gov/tools/faqs/faq.php?id=41&t=6">other 29% of the oil Americans use comes in</a>.</p>
<p>Petrochemicals derived from petroleum are used to manufacture clothes, computers and more. For example, the quantity of oil-based polyester in clothing <a href="https://cfda.com/resources/materials/detail/polyester">has doubled since 2000</a>. Over half of all <a href="https://www.forbes.com/sites/amynguyen/2021/07/11/time-to-go-cold-turkey--new-report-explores-fashions-harmful-addiction-to-fossil-fuel-based-fabrics-and-greenwashing/?sh=5860c7a4146e">fibers produced around the world are</a> now made from petroleum, requiring over 1% of all oil consumed.</p>
<p>In addition, the <a href="https://www.exxonmobil.com/en/whiteoil/industry-solutions/pharmaceutical-and-cosmetics">cosmetic industry is heavily dependent on petroleum</a> since items such as hand cream, shampoo and most makeup are made out of petrochemicals. And like with many products, all those creams and beauty liquids are put in single-use <a href="https://www.plasticpollutioncoalition.org/blog/the-cosmetics-industrys-plastic-packaging-problem">plastic containers</a> made from oil.</p>
<p>Similarly, the <a href="https://www.ecobirdy.com/blogs/news/plastic-toys">vast majority of toys</a> produced today are made out of plastic.</p>
<h2>Crude in our cookies</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A green tractor pulls a fertilizer attachment in a green field containing red winter wheat" src="https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/454419/original/file-20220325-25-1dfutk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Fertilizer is the biggest use of oil in industrial farming.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AlaPlanting/38b933236c574e3a891132367f096a50/photo?Query=field%20fertilizer%20tractor&mediaType=photo&sortBy=creationdatetime:desc&dateRange=Anytime&totalCount=2&currentItemNo=0">AP Photo/John David Mercer</a></span>
</figcaption>
</figure>
<p>The food industry is especially sensitive to the price of energy, <a href="https://wedocs.unep.org/bitstream/handle/20.500.11822/25302/Valuing_Plastic_ES.pdf">more so than any other sector</a> because <a href="https://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/nrcs141p2_023113.pdf">petroleum is such a key component</a> of its supply chain at every step of the way, from planting and harvesting through processing and packaging. </p>
<p>Interestingly, the biggest usage of petroleum in industrial farming is not transportation or fueling machinery but rather the <a href="https://sustainability.emory.edu/wp-content/uploads/2018/02/InfoSheet-Energy26FoodProduction.pdf">use of fertilizers</a>. <a href="https://www.resilience.org/stories/2005-04-01/why-our-food-so-dependent-oil">Vast amounts of oil and natural gas</a> go into fertilizers and pesticides that are used to produce and protect grains, vegetables and fruits. </p>
<p>That’s one of the reasons <a href="https://www.nationalgeographic.com/environment/article/end-cheap-oil">it takes 283 gallons of oil</a> to raise one 1,250-pound steer. And it’s why even a loaf of bread <a href="http://lcafood.dk/lca_conf/contrib/g_reinhardt.pdf">requires an unusually high amount of energy</a>.</p>
<p>Oil is also an ingredient in the food we consume. The main food product that comes from petroleum is known as <a href="https://www.petro-online.com/news/fuel-for-thought/13/breaking-news/what-foods-contain-petroleum/37415">mineral oil</a>. It’s commonly used to make foods last longer because petroleum doesn’t go rancid. Packaged baked goods like <a href="https://bakerpedia.com/ingredients/mineral-oil/">cookies and pizza</a> often contain mineral oil as a way of preserving their shelf life. </p>
<p><a href="https://www.mcgill.ca/oss/article/food-health-news/food-dyes-science">Petrochemicals are also used</a> to make food dyes, which can be found in <a href="https://jwww.doi.org/10.1177/0009922814530803">cereals and candy</a>.</p>
<p><a href="https://www.britannica.com/science/paraffin-wax">Paraffin wax</a>, a colorless or white wax made from petroleum, is used in the <a href="https://www.thespruceeats.com/what-is-paraffin-wax-1807043">production of some chocolates and sprayed onto fruits</a> to slow down spoilage and give them a glossy finish. It also helps chocolates stay solid at room temperature. </p>
<p>And plastic is a vital part of food packaging because it is relatively cheap, <a href="https://www.chemicalsafetyfacts.org/plastics/">durable and lightweight, it provides protection</a> and is sanitary. </p>
<figure class="align-center ">
<img alt="Red strawberries are packed in clear plastic packages and stacked on a shelf" src="https://images.theconversation.com/files/454420/original/file-20220325-19-195yhec.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/454420/original/file-20220325-19-195yhec.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/454420/original/file-20220325-19-195yhec.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/454420/original/file-20220325-19-195yhec.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/454420/original/file-20220325-19-195yhec.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=551&fit=crop&dpr=1 754w, https://images.theconversation.com/files/454420/original/file-20220325-19-195yhec.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=551&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/454420/original/file-20220325-19-195yhec.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=551&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Fruit and other foods commonly come in plastic containers made from oil.</span>
<span class="attribution"><a class="source" href="https://media.gettyimages.com/photos/strawberry-on-supermarket-shelf-picture-id186854067?k=20&m=186854067&s=612x612&w=0&h=4FHOZfN8puc8YYsgM9gdnx54M24JlRF1g7oVefAADwk=">nycshooter/E+ via Getty Images</a></span>
</figcaption>
</figure>
<h2>Oil inflation and the Fed</h2>
<p>The importance of oil to the U.S. economy has been a <a href="https://www.routledge.com/Eating-Oil-Energy-Use-In-Food-Production/Green/p/book/9780367167646">big concern</a> since the oil crisis of 1973, when prices spiked, prompting calls to conserve energy. </p>
<p>Since then, the amount of oil consumed for every dollar of economic output <a href="https://www.energypolicy.columbia.edu/research/report/oil-intensity-curiously-steady-decline-oil-gdp">has declined about 40%</a>. In 1973, for example, it took just under one barrel of oil to produce $1,000 worth of economic output. Today, it takes less than half a barrel. That’s the good news. </p>
<p>The bad is that, because the U.S. economy <a href="https://fred.stlouisfed.org/series/GDP">is now 18 times bigger than it was in 1973</a>, it requires a lot more oil to function. </p>
<p>That’s why the surging price of oil is <a href="https://www.bbc.com/news/business-60833361">now the main driver</a> of inflation – and why the Federal Reserve is <a href="https://www.bloomberg.com/news/articles/2022-03-21/powell-says-fed-ready-to-hike-faster-go-restrictive-if-needed">preparing for some big increases</a> in <a href="https://theconversation.com/why-the-fed-cant-stop-prices-from-going-up-anytime-soon-but-may-have-more-luck-over-the-long-term-179339">interest rates to fight it</a>. </p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://memberservices.theconversation.com/newsletters/?nl=weekly&source=inline-weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/179809/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Veronika Dolar does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Oil is used throughout the US economy. It goes into packaging, toys, clothing and especially the food we eat.Veronika Dolar, Assistant Professor of Economics, SUNY Old WestburyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1780432022-03-07T14:58:55Z2022-03-07T14:58:55ZNigeria’s fuel crisis: smaller, more flexible refineries aren’t the full answer<figure><img src="https://images.theconversation.com/files/449177/original/file-20220301-23-19pxg9v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Fuel scarcity in Nigeria causes untold hardship to people and negatively impacts the economy</span> <span class="attribution"><span class="source">Pius Utomi Ekpei/AFP via Getty Images</span></span></figcaption></figure><p>Nigeria’s growing population of over <a href="https://www.voanews.com/a/nigeria-population-projected-to-double-by-2050/4874956.html">200 million</a> people is facing an <a href="https://guardian.ng/news/harder-times-loom-as-fuel-crisis-lingers/">ever-growing</a> fuel crisis despite its <a href="https://oxfordbusinessgroup.com/overview/vast-energy-reserves-waiting-be-unlocked-nigeria">vast oil reserves</a>. </p>
<p>The shortage of refining capacity at existing oil refineries is the main driver of Nigeria’s fuel crisis, which hampers the socio-economic development of the country. It places a <a href="https://guardian.ng/news/fg-sets-aside-pia-to-pay-n4-6tr-on-fuel-subsidy/">high subsidy burden</a> on the government and has long made Nigeria <a href="https://punchng.com/nigerias-petroleum-imports-exceeded-exports-by-43-56bn-opec/">dependent</a> on imported petroleum products. The country uses little renewable energy. </p>
<p>The fuel crisis has also led to the proliferation of artisanal refineries in the oil-producing Niger Delta region, with <a href="https://punchng.com/soot-stakeholders-call-for-integration-of-artisanal-refineries/">huge environmental and health challenges</a>.</p>
<p>The recently signed <a href="http://www.petroleumindustrybill.com/wp-content/uploads/2021/09/Official-Gazette-of-the-Petroleum-Industry-Act-2021.pdf">Petroleum Industry Act</a> (PIA) 2021 aims to pave the way for increased investment in Nigeria’s crude oil refining capacity. </p>
<p>It also seeks to address the grievances of oil-producing communities: unemployment, lack of socio-economic development and environmental pollution. The Act made a provision for a less cumbersome process for granting operational licenses to investors in the downstream oil operation, which could increase investment interest in modular refineries. </p>
<p>Recently, there has been increased interest from the Nigerian government’s <a href="https://energycapitalpower.com/market-report-nigerias-modular-refinery-program-on-course/#:%7E:text=Chief%20Timipre%20Sylva%20disclosed%20that,over%2023%20refineries%20undergoing%20rehabilitation">petroleum ministry</a> in modular refineries as a means of addressing the deficit of petroleum products. </p>
<p><a href="https://www.vanguardngr.com/2011/10/petroleum-refining-modular-versus-conventional-refineries/">Modular refineries</a> are simplified crude oil refineries with capacities ranging from 1,000 to 30,000 barrels per day. They are well-suited for remote areas. </p>
<p>Over <a href="https://allafrica.com/stories/202104140024.html">30 licences</a> for modular refineries were issued in 2015 by the Department of Petroleum Resources (now Nigerian Upstream Petroleum Regulatory Commission). </p>
<p>But <a href="https://energycapitalpower.com/market-report-nigerias-modular-refinery-program-on-course/#:%7E:text=Chief%20Timipre%20Sylva%20disclosed%20that,over%2023%20refineries%20undergoing%20rehabilitation">very few operate effectively</a>, because of inconsistencies surrounding policy and regulations in <a href="https://brickstone.africa/modular-refinery-developments/">Nigeria’s investment space</a>. There is however no clarity in the petroleum industry Act to remedy these inconsistencies.</p>
<p>Currently, modular refineries are considered useful to help meet energy demand in the country. But in view of the global call for the reduction of greenhouse gas emissions, they are a short term solution. </p>
<p>At the 2021 climate change conference in Glasgow, Nigeria’s President Muhammadu Buhari pledged to achieve <a href="https://www.channelstv.com/2021/11/02/cop26-nigeria-to-reach-net-zero-emissions-by-2060-says-buhari/">net zero emissions by 2060</a>. This would mean de-carbonising the <a href="https://climatechange.gov.ng/national-determined-contributions/">oil and gas sector</a>.</p>
<h2>Modular refineries as a solution</h2>
<p>The modular refinery technology has appeal on several fronts. It is simple and easy to replicate.</p>
<p><a href="https://www.pwc.com/ng/en/assets/pdf/the-bottom-up-refining-revolution-part1.pdf">These refineries</a> can be constructed within 12 to 20 months. They can be built in phases at a low cost and provide flexibility for upgrades based on an investor’s preference.</p>
<p>They can pay for themselves in one to five years, depending on the type of refined products.</p>
<p>Nigeria refines almost none of its own crude oil. The cost of importing refined petroleum products exceeded petroleum exports by <a href="https://punchng.com/nigerias-petroleum-imports-exceeded-exports-by-43-56bn-opec/">US$43.56 billion in 2020</a>. If modular refineries reduced or eliminated fuel importation, they would save money spent on importation and subsidies and reduce pressure on foreign exchange.</p>
<p>The refineries are normally sited close to oil production facilities. This creates opportunities for more Nigerian firms, which are the main players in the onshore marginal oil fields. </p>
<p>Local people could be engaged in making, installing and operating the refineries. This would provide employment, which is much needed in the oil-bearing communities. The low technology requirement allows local engineers and technicians to participate. </p>
<p>The <a href="https://ncdmb.gov.ng/">Nigerian Content Development and Monitoring Board</a>, promotes local content in the oil and gas industries, has envisaged <a href="https://www.ncdmb.gov.ng/lcdm/LocalContentDigestQ318.pdf">70% of the fabrication</a> activities within the modular refinery space will be done locally.</p>
<p>The reduced pipeline network requirement has the potential to increase direct jobs in the form of truck drivers, sales support and other support services, which will be required to deliver the refined products to the last mile. </p>
<p>The sector could also drive petrochemicals research and development in the local universities.</p>
<h2>Challenges</h2>
<p>Although modular refineries may help in meeting Nigeria’s growing demand for petroleum products and have a number of other potential benefits, they bring challenges too. </p>
<p><em>Policy and regulations:</em> There is a lot of uncertainty and inconsistency surrounding policy and regulations in Nigeria’s investment space. This has been blamed for a <a href="https://brickstone.africa/modular-refinery-developments/">US$15 billion loss</a> annually in foreign investments.</p>
<p>This experience could discourage investors and may be the reason <a href="https://businessday.ng/energy/oilandgas/article/licenses-for-private-refineries-expire-2020-only-a-handful-will-reach-commissioning/">many modular refinery licences have expired</a>. </p>
<p><em>Social challenges:</em> Lack of integration of the existing illegal artisan refineries into the mainstream of the modular refineries could create tension and result in oil theft and armed conflict. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-young-people-in-the-niger-delta-are-being-left-out-of-development-143642">How young people in the Niger Delta are being left out of development</a>
</strong>
</em>
</p>
<hr>
<p><em>Carbon emissions:</em> Oil refining contributes about <a href="https://www.carbonclean.com/blog/co2-emissions-from-oil-refineries">5% to 10%</a> to global total emissions. It could increase with the proliferation of modular refineries, which are <a href="https://www.sciencedirect.com/science/article/pii/S0360544211001526">less efficient</a> than conventional refineries. Nigeria’s emissions commitments might require the modular refinery operators to introduce greening technologies.</p>
<p><em>Technical challenges:</em> Premium motor spirit, or petrol, is the product in greatest demand in Nigeria. Making it in a modular refinery requires catalytic reformers and <a href="https://inspectioneering.com/tag/fccu">fluid catalytic cracking unit</a> or hydro-cracker units. These units present most of the technical challenges in existing refineries in Nigeria. </p>
<h2>Solutions</h2>
<p>Some of the identified challenges could be addressed as a short term solution to the energy crisis. </p>
<p>Steps might include:</p>
<ul>
<li>coordinating regulations to build investors’ confidence</li>
<li>incorporating existing local technologies – artisanal refineries – into the mainstream</li>
<li>collaboration between the modular refinery operators and institutions of higher learning in the country to develop better catalysts. </li>
</ul>
<p>But the long term solution to the energy crisis would be to incorporate <a href="https://www.bloomberg.com/news/articles/2021-08-20/locked-in-emissions-from-oil-refineries-endanger-climate-goals">green technologies</a> into modular refinery operations. </p>
<p>This is important so as not to undermine Nigeria’s efforts to de-carbonise the country. Another solution could be the use of renewable energy in the transport sector to reduce the demand for refined petroleum products.</p><img src="https://counter.theconversation.com/content/178043/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chukwumerije Okereke receives funding from the French Development Agency (AFD), European Climate Foundation (ECF), Global Challenges Research Fund, UK, and World Resources Institute (WRI). </span></em></p><p class="fine-print"><em><span>Ogheneruona E. Diemuodeke receives funding from the DFID 9UK Government; GCFR (UK Government); Horizon (European Commission), and TetFund (Nigerian Government). </span></em></p><p class="fine-print"><em><span>Nnaemeka Vincent Emodi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As a short term measure, modular refineries may help Nigeria with its fuel crisis. It is however not likely to be a long term solution.Nnaemeka Vincent Emodi, Research Fellow, The University of QueenslandChukwumerije Okereke, Professor of Environment and Development, University of ReadingOgheneruona E. Diemuodeke, Senior Lecturer, University of Port Harcourt Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1706422021-10-28T06:39:16Z2021-10-28T06:39:16ZWhat Big Oil knew about climate change, in its own words<figure><img src="https://images.theconversation.com/files/428991/original/file-20211028-25-frti3a.jpg?ixlib=rb-1.1.0&rect=0%2C7%2C5178%2C3426&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The oil industry was aware of the risks of climate change decades ago.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/oil-refinery-owned-by-exxon-mobil-is-the-second-largest-in-news-photo/1225711980?adppopup=true">Barry Lewis/InPictures via Getty Images</a></span></figcaption></figure><p><em><a href="https://theconversation.com/lo-que-las-grandes-petroleras-sabian-sobre-el-cambio-climatico-en-sus-propias-palabras-181588">Leer en español</a>.</em></p>
<p>Four years ago, I traveled around America, visiting historical archives. I was looking for documents that might reveal the hidden history of climate change – and in particular, when the major coal, oil and gas companies became aware of the problem, and what they knew about it.</p>
<p>I pored over boxes of papers, thousands of pages. I began to recognize typewriter fonts from the 1960s and ‘70s and marveled at the legibility of past penmanship, and got used to squinting when it wasn’t so clear. </p>
<p>What those papers revealed is now changing our understanding of how climate change became a crisis. The industry’s own words, as my <a href="https://www.nature.com/articles/s41558-018-0349-9">research found</a>, show companies knew about the risk long before most of the rest of the world.</p>
<h2>Surprising discoveries</h2>
<p>At an old gunpowder factory in Delaware – now a museum and archive – I found a transcript of a petroleum conference from 1959 called the <a href="https://archive.org/details/energymansymposi0000unse/page/n3/mode/2up">“Energy and Man” symposium</a>, held at Columbia University in New York. As I flipped through, I saw a speech from a famous scientist, <a href="https://www.atomicheritage.org/profile/edward-teller">Edward Teller</a> (who helped invent the hydrogen bomb), warning the industry executives and others assembled of global warming.</p>
<p>“Whenever you burn conventional fuel,” Teller <a href="https://www.theguardian.com/environment/climate-consensus-97-per-cent/2018/jan/01/on-its-hundredth-birthday-in-1959-edward-teller-warned-the-oil-industry-about-global-warming">explained</a>, “you create carbon dioxide. … Its presence in the atmosphere causes a greenhouse effect.” If the world kept using fossil fuels, the ice caps would begin to melt, raising sea levels. Eventually, “all the coastal cities would be covered,” he warned.</p>
<p>1959 was before the moon landing, before the Beatles’ first single, before Martin Luther King’s “I Have a Dream” speech, before the first modern aluminum can was ever made. It was decades before I was born. What else was out there?</p>
<p>In Wyoming, I found another speech at the university archives in Laramie – this one from 1965, and from an oil executive himself. That year, at the annual meeting of the American Petroleum Institute, the main organization for the U.S. oil industry, the group’s president, Frank Ikard, mentioning a report called “<a href="https://www.climatefiles.com/climate-change-evidence/presidents-report-atmospher-carbon-dioxide/">Restoring the Quality of Our Environment</a>” that had been published just a few days before by President Lyndon Johnson’s team of scientific advisers.</p>
<p>“The substance of the report,” Ikard <a href="https://www.nature.com/articles/s41558-018-0349-9">told the industry audience</a>, “is that there is still time to save the world’s peoples from the catastrophic consequences of pollution, but time is running out.” He continued that “One of the most important predictions of the report is that carbon dioxide is being added to the earth’s atmosphere by the burning of coal, oil, and natural gas at such a rate that by the year 2000 the heat balance will be so modified as possibly to cause marked changes in climate.”</p>
<p>Ikard noted that the report had found that a “nonpolluting means of powering automobiles, buses, and trucks is likely to become a national necessity.”</p>
<figure class="align-center ">
<img alt="Traffic lights up the evening on a Boston bridge" src="https://images.theconversation.com/files/428930/original/file-20211027-25-i5aazh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/428930/original/file-20211027-25-i5aazh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=366&fit=crop&dpr=1 600w, https://images.theconversation.com/files/428930/original/file-20211027-25-i5aazh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=366&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/428930/original/file-20211027-25-i5aazh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=366&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/428930/original/file-20211027-25-i5aazh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=460&fit=crop&dpr=1 754w, https://images.theconversation.com/files/428930/original/file-20211027-25-i5aazh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=460&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/428930/original/file-20211027-25-i5aazh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=460&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Transportation is now the leading source of carbon dioxide emissions in the U.S., followed by electricity.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/evening-rush-hour-traffic-heads-north-and-south-over-the-news-photo/1187429915?adppopup=true">David L. Ryan/The Boston Globe via Getty Images</a></span>
</figcaption>
</figure>
<p>As I reviewed my findings back in California, I realized that before San Francisco’s Summer of Love, before Woodstock, the peak of the '60s counterculture and all that stuff that seemed ancient history to me, the heads of the oil industry had been privately informed by their own leaders that their products would eventually alter the climate of the entire planet, with dangerous consequences.</p>
<h2>Secret research revealed the risks ahead</h2>
<p>While I traveled the country, other researchers were hard at work too. And the documents they found were in some ways even more shocking.</p>
<p>By the late 1970s, the American Petroleum Institute had formed a secret committee called the “<a href="https://insideclimatenews.org/news/22122015/exxon-mobil-oil-industry-peers-knew-about-climate-change-dangers-1970s-american-petroleum-institute-api-shell-chevron-texaco/">CO2 and Climate Task Force</a>,” which included representatives of many of the major oil companies, to privately monitor and discuss the latest developments in climate science.</p>
<p>In 1980, the task force invited a scientist from Stanford University, John Laurmann, to brief them on the state of climate science. Today, we have a <a href="https://www.documentcloud.org/documents/3483045-AQ-9-Task-Force-Meeting-1980.html">copy of Laurmann’s presentation</a>, which warned that if fossil fuels continued to be used, global warming would be “barely noticeable” by 2005, but by the 2060s would have “globally catastrophic effects.” That same year, the American Petroleum Institute called on governments to triple coal production worldwide, <a href="https://www.tandfonline.com/doi/full/10.1080/09644016.2020.1863703">insisting there would be no negative consequences</a> despite what it knew internally.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/428682/original/file-20211027-21-1a8q46y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/428682/original/file-20211027-21-1a8q46y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=147&fit=crop&dpr=1 600w, https://images.theconversation.com/files/428682/original/file-20211027-21-1a8q46y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=147&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/428682/original/file-20211027-21-1a8q46y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=147&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/428682/original/file-20211027-21-1a8q46y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=185&fit=crop&dpr=1 754w, https://images.theconversation.com/files/428682/original/file-20211027-21-1a8q46y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=185&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/428682/original/file-20211027-21-1a8q46y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=185&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A slide from John Laurmann’s presentation to the American Petroleum Institute’s climate change task force in 1980, warning of globally catastrophic effects from continued fossil fuel use.</span>
</figcaption>
</figure>
<p>Exxon had a secretive research program too. In 1981, one of its managers, Roger Cohen, sent an <a href="https://www.climatefiles.com/exxonmobil/1981-exxon-memo-on-possible-emission-consequences-of-fossil-fuel-consumption/">internal memo</a> observing that the company’s long-term business plans could “produce effects which will indeed be catastrophic (at least for a substantial fraction of the earth’s population).” </p>
<p>The next year, Exxon completed a comprehensive, 40-page <a href="https://www.climatefiles.com/exxonmobil/1982-memo-to-exxon-management-about-co2-greenhouse-effect/">internal report</a> on climate change, which predicted almost exactly the amount of global warming we’ve seen, as well as sea level rise, drought and more. According to the front page of the report, it was “given wide circulation to Exxon management” but was “not to be distributed externally.”</p>
<p>And Exxon did keep it secret: We know of the report’s existence only because <a href="https://www.youtube.com/watch?v=tLIRQoJ1i4c">investigative journalists</a> at Inside Climate News <a href="https://insideclimatenews.org/news/22092015/exxon-confirmed-global-warming-consensus-in-1982-with-in-house-climate-models/">uncovered</a> it in 2015.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/428977/original/file-20211028-15-15dr7q2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/428977/original/file-20211028-15-15dr7q2.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=765&fit=crop&dpr=1 600w, https://images.theconversation.com/files/428977/original/file-20211028-15-15dr7q2.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=765&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/428977/original/file-20211028-15-15dr7q2.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=765&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/428977/original/file-20211028-15-15dr7q2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=961&fit=crop&dpr=1 754w, https://images.theconversation.com/files/428977/original/file-20211028-15-15dr7q2.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=961&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/428977/original/file-20211028-15-15dr7q2.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=961&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A figure from Exxon’s internal climate change report from 1982, predicting how much carbon dioxide would build up from fossil fuels and how much global warming that would cause through the 21st century unless action was taken. Exxon’s projection has been remarkably accurate.</span>
</figcaption>
</figure>
<p>Other oil companies knew the effects their products were having on the planet too. In 1986, the Dutch oil company Shell finished an <a href="https://www.climatefiles.com/shell/1988-shell-report-greenhouse/">internal report</a> nearly 100 pages long, predicting that global warming from fossil fuels would cause changes that would be “the greatest in recorded history,” including “destructive floods,” abandonment of entire countries and even forced migration around the world. That report was stamped “CONFIDENTIAL” and only <a href="https://climateinvestigations.org/shell-oil-climate-documents-revealed/">brought to light</a> in 2018 by Jelmer Mommers, a Dutch journalist. </p>
<p>In October 2021, I and two French colleagues published another study showing through company documents and interviews how the Paris-based oil major <a href="https://www.sciencedirect.com/science/article/pii/S0959378021001655">Total was also aware</a> of global warming’s catastrophic potential as early as the 1970s. Despite this awareness, we found that Total then worked with Exxon to spread doubt about climate change.</p>
<h2>Big Oil’s PR pivot</h2>
<p>These companies had a choice. </p>
<p>Back in 1979, <a href="https://www.climatefiles.com/exxonmobil/1979-exxon-memo-on-potential-impact-of-fossil-fuel-combustion/">Exxon had privately studied options</a> for avoiding global warming. It found that with immediate action, if the industry moved away from fossil fuels and instead focused on renewable energy, fossil fuel pollution could start to decline in the 1990s and a major climate crisis could be avoided.</p>
<p>But the industry didn’t pursue that path. Instead, colleagues and I recently found that in the late 1980s, Exxon and other <a href="https://www.sciencedirect.com/science/article/pii/S0959378021001655">oil companies coordinated a global effort</a> to dispute climate science, block fossil fuel controls and keep their products flowing. </p>
<p>We know about it through internal documents and the words of industry insiders, who are now beginning to share what they saw with the public. We also know that in 1989, the fossil fuel industry created something called the <a href="https://www.climatefiles.com/denial-groups/global-climate-coalition-collection/1989-membership/">Global Climate Coalition</a> – but it wasn’t an environmental group like the name suggests; instead, it <a href="https://www.climatefiles.com/denial-groups/global-climate-coalition-collection/1997-anti-kyoto-ads/">worked to sow doubt</a> about climate change and lobbied lawmakers to block clean energy legislation and climate treaties throughout the 1990s. </p>
<p>For example, in 1997, the Global Climate Coalition’s chairman, William O'Keefe, who was also an executive vice president for the American Petroleum Institute, <a href="https://www.tandfonline.com/doi/full/10.1080/09644016.2021.1947636">wrote</a> in the Washington Post that “Climate scientists don’t say that burning oil, gas and coal is steadily warming the earth,” contradicting <a href="https://www.nytimes.com/2009/04/24/science/earth/24deny.html">what the industry had known for decades</a>. The fossil fuel industry also <a href="https://www.washingtonpost.com/outlook/2019/01/10/how-fossil-fuel-industry-got-media-think-climate-change-was-debatable/">funded think tanks</a> and <a href="https://www.tandfonline.com/doi/full/10.1080/09644016.2021.1947636">biased studies</a> that helped slow progress to a crawl.</p>
<p><iframe id="sk55V" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/sk55V/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Today, most oil companies shy away from denying climate science outright, but they continue to <a href="https://unearthed.greenpeace.org/2021/06/30/exxon-climate-change-undercover/">fight fossil fuel controls</a> and promote themselves as clean energy leaders even though they <a href="https://www.ft.com/content/9421ea96-01e1-11e9-9d01-cd4d49afbbe3">still put the vast majority</a> of their investments into fossil fuels. </p>
<p>A Congressional subcommittee on Oct. 28, 2021, <a href="https://oversight.house.gov/legislation/hearings/fueling-the-climate-crisis-exposing-big-oil-s-disinformation-campaign-to">questioned executives</a> from Exxon, BP, Chevron, Shell and the American Petroleum Institute about industry efforts to downplay the role of fossil fuels in climate change. Exxon CEO Darren Woods told lawmakers that his company’s public statements “are and have always been truthful” and that the company “does not spread disinformation regarding climate change.”</p>
<p>As I write this, climate legislation is <a href="https://www.nytimes.com/2021/10/17/climate/manchin-west-virginia-flooding.html">again being blocked</a> in Congress by a lawmaker with <a href="https://www.motherjones.com/politics/2021/10/a-closer-look-at-joe-manchins-ties-to-the-fossil-fuel-industy/">close ties to the fossil fuel industry</a>. </p>
<p>People around the world, meanwhile, are experiencing the effects of global warming: <a href="https://www.worldweatherattribution.org/analysis/rainfall/">weird weather</a>, <a href="https://theconversation.com/climate-change-is-muting-fall-colors-but-its-just-the-latest-way-that-humans-have-altered-us-forests-170069">shifting seasons</a>, <a href="https://www.worldweatherattribution.org/analysis/heatwave/">extreme heat waves</a> and even <a href="https://theconversation.com/western-fires-are-burning-higher-in-the-mountains-and-at-unprecedented-rates-as-the-climate-warms-167706">wildfires</a> like they’ve never seen before.</p>
<p>Will the world experience the global catastrophe that the oil companies predicted years before I was born? That depends on what we do now, with our slice of history.</p>
<p><em>This article was updated Oct. 28, 2021, with details from a Congressional hearing.</em></p><img src="https://counter.theconversation.com/content/170642/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Benjamin Franta has served as a consulting expert for climate change lawsuits in the US and internationally. His work has been supported by the Stanford University Interdisciplinary Graduate Fellowship, the Climate Social Science Network, and the Center for Climate Integrity.</span></em></p>Transcripts and internal documents show how the industry shifted from leading research into fossil fuels’ effect on the climate to sowing doubt about science.Benjamin Franta, Ph.D. Candidate in History, Stanford UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1668602021-09-03T07:45:53Z2021-09-03T07:45:53ZNew law will make Nigeria’s petroleum industry attractive to investors<figure><img src="https://images.theconversation.com/files/418735/original/file-20210831-19-lngfxj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Nigeria has a new law to regulate its oil industry </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/oil-and-petrochemical-refinery-kaduna-nigeria-news-photo/976043700?adppopup=true">Andrew Holt/Construction Photography/Avalon/Getty Images</a></span></figcaption></figure><p><em>Nigeria’s journey to the Petroleum Industry Act started in 2000 under President Olusegun Obasanjo, who <a href="https://independent.ng/still-on-petroleum-industry-bill-pib/">inaugurated</a> an oil and gas sector reform implementation committee. The committee’s report formed the basis of the first Petroleum Industry Bill eight years later. It was <a href="https://tribuneonlineng.com/the-politics-history-of-petroleum-industry-bill/">submitted</a> to the National Assembly but not passed. Nor was it passed under the next president, Goodluck Jonathan. President Muhammadu Buhari also <a href="https://punchng.com/why-buhari-declined-assent-to-petroleum-industry-bill-enang/">declined</a> assent to it in 2018 because of some provisions. It was finally <a href="https://dailytrust.com/finally-reps-pass-petroleum-industry-bill">passed</a> by the National Assembly on 1 July 2021 and <a href="https://www.thecable.ng/breaking-buhari-signs-petroleum-industry-bill-into-law">signed</a> into law by Buhari. Omowumi Iledare explains the significance.</em></p>
<p><strong>Why is the act important?</strong></p>
<p>The main objectives of the <a href="http://www.petroleumindustrybill.com/2021/08/17/petroleum-industry-act-2021-2/?utm_source=rss&utm_medium=rss&utm_campaign=petroleum-industry-act-2021-2#.YSeobhQzbIU">Petroleum Industry Act</a> are to:</p>
<ul>
<li><p>define the relationship between the society and investors</p></li>
<li><p>determine how costs are recovered and profits shared among stakeholders</p></li>
<li><p>establish an innovative mechanism to fund petroleum host communities directly through trust funds</p></li>
<li><p>improve transparency and accountability in the oil and gas business and reduce overlapping in the roles of governance </p></li>
<li><p>create regulatory and policy institutions </p></li>
<li><p>create a conducive environment to enhance the mutual benefit of petroleum operations in Nigeria. </p></li>
</ul>
<p>The act is key to expanding the fortunes of Nigeria’s petroleum industry. It stands to remove the uncertainty that has led to a significant reduction in investment in exploration and production.</p>
<p><strong>What improvements should Nigeria expect?</strong></p>
<p>If properly implemented, the state-owned <a href="https://www.nnpcgroup.com/Pages/Home.aspx">Nigerian National Petroleum Corporation</a> will be purely commercial with the intention of maximising its return on investment. At the moment the national oil company is encumbered with having the role of an agency and less focus on making money for stakeholders. Hence it has not <a href="https://guardian.ng/news/nnpc-posts-first-profit-of-n287-billion-after-44-years-of-existence/">declared any profits</a> since inception in 1977. </p>
<p>The act also attempts to address the development of host communities. It sets out how a new fund will be created and defines precisely how it will be managed and used. This is quite unlike previous federal interventions such as the <a href="https://dawodu.com/dafin1.htm">Derivation Fund</a> and the <a href="https://www.nddc.gov.ng/">Niger Delta Development Commission</a>. All failed to make an impact on host communities.</p>
<p>The act isn’t perfect. But if implemented well, with apolitical and competent board members, it will make Nigeria’s petroleum industry as competitive and attractive to investors as its peers. </p>
<p><strong>There have been objections to two major provisions of the act. Why?</strong> </p>
<p>There has been a lot of angry debate about the provision that a <a href="https://www.thecable.ng/pib-southern-governors-reject-30-share-of-nnpc-profit-for-frontier-basins-exploration">30% share</a> of Nigerian National Petroleum Commission profit should be set aside for frontier exploration and <a href="https://thenationonlineng.net/pib-niger-delta-groups-reject-3-fund-for-host-communities/">3% contributed to trust funds</a> for host communities.</p>
<p>The fund for host communities is to mitigate the impact of oil exploration while the 30% share is for frontier exploration in the inland basins. The inland basins <a href="https://www.thecable.ng/explainer-whats-the-big-deal-about-this-frontier-basin-exploration">consist</a> of the Anambra basin, the lower, middle, and upper Benue trough, the southeastern sector of the Chad basin, the mid-Niger (Bida) basin, and the Sokoto basin. </p>
<p>It is very disappointing that people are misrepresenting these two provisions as a North versus South transfer payment. This is misinformation peddling. </p>
<p>The debate has become heated because the 3% is being compared to the 30% even though they have no bearing on one another. The two provisions are basically apples and oranges and no meaning can be derived by comparing them. Each must be evaluated on its own merit without making reference to the other. Neither is dependent on the other. </p>
<p>I agree with <a href="https://www.vanguardngr.com/2021/07/pib-niger-delta-youths-reject-3-for-host-communities/">critics</a> who argue that the 3% isn’t enough for the sustainable development of petroleum host communities. And alternative sources of funding should be identified. </p>
<p>There are plausible reasons to change this provision. </p>
<p>I also agree that the legitimacy of allocating the 30% to a liability company is debatable. Only the court can establish that, based on the law governing federation account allocation. </p>
<p>Other legitimate questions remain. </p>
<p>First, would a risk averse investor use their limited fund if confronted with unlimited expectations and wants by its stakeholder? Government is a risk averse investor. Exploration of frontier basins is a risk seeker investor’s domain. The other tiers of government have legitimate reasons to be concerned with the likelihood of dedicating a chunk of federation fund to invest in highly uncertain business ventures. Frontier exploration outcomes are classic examples of such ventures.</p>
<p>The followup question is, assuming this 30% allocation is lawful, is it beneficial or expedient enough to overcome the cost to the federation? The answer is conjectural.</p>
<p><strong>Will the price of fuel go up? What about the subsidy regime?</strong></p>
<p>The fear is real. But society will not be worse off. The price system protects consumers and sellers equitably. </p>
<p>The role of the price system is to balance supply and demand in a way that consumer and producer surpluses are optimised. It also allocates resources efficiently, if government intervention is limited. Think about this for a moment. There is no <a href="https://www.channelstv.com/2020/09/07/nigerias-increased-petrol-price-cheapest-in-west-africa-angry-reactions-unnecessary-lai-mohammed/">country in West Africa</a> with a lower price for petrol than Nigeria. In Ghana it is $1.09 per litre and in Nigeria $0.41. Nigeria is the <a href="https://statisticstimes.com/economy/countries-by-petrol-prices-and-gdp-per-capita.php">sixth cheapest</a> in the world. Even prices in Saudi Arabia, capped at <a href="https://statisticstimes.com/economy/countries-by-petrol-prices-and-gdp-per-capita.php">$0.62 per litre</a>, are higher and yet they have functioning refineries. </p>
<p>There’s another way of looking at this that invites a rethink. Is the proportion of Nigeria’s budget that is spent annually on subsidising petroleum really a transfer payment to the poor per se, or to a segment of the society trading in petroleum products?</p>
<p>Over the last 10 years, the Nigerian government <a href="https://www.bloomberg.com/news/articles/2021-03-01/nigeria-s-nnpc-won-t-increase-fuel-prices-in-march#:%7E:text=Nigerian%20spent%2010.7%20trillion%20naira,supporters%20of%20deregulation%20have%20argued.">spent</a> N10.7 trillion (US$26 billion) on fuel subsidies. It spent N750 billion (US$1.82 billion) in 2019. </p>
<p>These price controls have created significant social welfare losses – poor schools, poor road infrastructure, poor health infrastructure. Price controls of petroleum products shut out investors in the downstream and on and on over the years. The society is better off with an optimal price strategy for a scarce resource like petroleum. </p>
<p>The new act will decontrol product prices in the downstream and eliminate subsidy payment to traders. It has also disavowed a guaranteed margin to short term traders in the downstream oil and gas sector. It creates efficacy, market efficiency and inter-generational equity in the sector by optimising consumer surplus and producer surplus with minimal if not zero welfare losses.</p>
<p><strong>Shouldn’t Nigeria be preparing for a post-petroleum world?</strong> </p>
<p>To a large extent the act is in sync with that in the sense that it sets out goals for natural gas developments. Natural gas is a legitimate transition fuel and the act’s fiscals are favourable to domestic gas use. Such a framework is well disposed to developing the huge proved and natural gas reserves discovered, accidentally, while looking for liquid petroleum.</p>
<p>However, there is certainly a need for a technical committee to lay out the optimal response strategy to energy transition dynamics. Nigeria must continue to talk the energy transiting talk and I remain convinced that it must walk its talk strategically at a pace that supports its access to affordable energy goals.</p><img src="https://counter.theconversation.com/content/166860/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Omowumi Iledare is affiliated with Emmanuel Egbogah Foundation, Abuja and University of Cape Coast Oil and Gad Institute Ghana</span></em></p>Nigeria’s new petroleum law will make its petroleum industry as competitive and attractive to investors as its peers.Omowumi Iledare, Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil and Gas Economics and Management, University of Cape CoastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1617292021-07-20T12:15:12Z2021-07-20T12:15:12ZEnergy pipelines are controversial now, but one of the first big ones helped win World War II<figure><img src="https://images.theconversation.com/files/411565/original/file-20210715-23-j920co.jpg?ixlib=rb-1.1.0&rect=0%2C3%2C2568%2C1902&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The "Big Inch" oil pipeline at Phoenixville, Pennsylvania, around 1943. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/phoenixville-pa-a-congressional-committee-was-told-that-news-photo/515185136">Betttman via Getty Images</a></span></figcaption></figure><p>Oil and gas pipelines have become flashpoints in discussions of climate change. From the <a href="https://atlanticcoastpipeline.com/">Atlantic coast</a> to the <a href="https://www.daplpipelinefacts.com/">Dakotas</a>, pipelines that would deliver fossil fuels to customers have sparked protests and legal challenges. The <a href="https://www.npr.org/2021/06/09/1004908006/developer-abandons-keystone-xl-pipeline-project-ending-decade-long-battle">Keystone XL pipeline</a>, which was designed to carry oil from Alberta tar sands to refineries on the U.S. Gulf Coast, <a href="https://www.bbc.com/news/world-us-canada-55773243">roiled U.S.-Canadian relations for a decade</a> before it was finally canceled in 2021. </p>
<p>Amid these debates, it’s easy to forget how heavily the U.S. economy relies on existing energy pipelines. In 2020 some 84,000 miles (135,000 kilometers) of <a href="https://www.phmsa.dot.gov/data-and-statistics/pipeline/annual-report-mileage-hazardous-liquid-or-carbon-dioxide-systems">long-distance pipelines</a> carried crude oil, while another 64,000 miles (103,000 kilometers) of pipe moved refined products, including gasoline and jet fuel. </p>
<p>These systems typically draw attention only when they <a href="https://www.bloomberg.com/news/articles/2016-11-30/30-years-of-oil-and-gas-pipeline-spills-mapped?sref=Hjm5biAW">leak</a> or are damaged. For example, in May 2021 <a href="https://www.vox.com/recode/22428774/ransomeware-pipeline-colonial-darkside-gas-prices">the Colonial Pipeline</a> made headlines when a cyberattack shut it down, interrupting gasoline supplies along the East Coast.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="vintage poster depicts World War II fighter pilots and urges Americans to conserve fuel." src="https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=794&fit=crop&dpr=1 600w, https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=794&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=794&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=998&fit=crop&dpr=1 754w, https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=998&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/411566/original/file-20210715-32735-1jwuuf1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=998&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">World War II poster produced by the Petroleum Industry War Council.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/world-war-ii-era-poster-features-a-bomber-crew-in-flight-news-photo/120207965">Photo Quest via Getty Images</a></span>
</figcaption>
</figure>
<p>Ironically, this network originated as the solution to a pressing energy problem and was initiated over objections from the oil industry. In 1942 Germany’s U-boats <a href="https://www.basicbooks.com/titles/ed-offley/the-burning-shore/9780465029617/">brought World War II to the U.S. Atlantic and Gulf coasts</a>, sinking dozens of merchant ships, including oil tankers. That damage spurred construction of the first large U.S. pipelines, which fueled the Allied war effort.</p>
<h2>Tankers at risk</h2>
<p>Petroleum currently supplies <a href="https://www.eia.gov/energyexplained/us-energy-facts/">about one-third of U.S. energy consumption</a>. Much of it is delivered by pipeline. It would take at least <a href="https://www.phmsa.dot.gov/faqs/general-pipeline-faqs">750 tanker trucks per day</a>, loading up and moving out every two minutes, working 24 hours a day, seven days a week, to carry as much oil as even a modest pipeline. </p>
<p>In the 1800s much U.S.-produced oil came from wells in Pennsylvania and Ohio. However, when prospectors struck oil in <a href="https://www.lamar.edu/spindletop-gladys-city/spindletop-history.html">Spindletop, Texas, in 1901</a>, the industry shifted to the Lone Star State. </p>
<p>These fields produced much of the gasoline that fueled the automobile revolution, using <a href="https://www.kunc.org/business/2014-08-05/the-strange-history-of-the-american-pipeline">narrow-bore</a> pipes to move crude over distances of a few miles from wells to refineries or railroads. To get oil to big refineries in the Northeast, Texas companies relied on tankers that sailed through the Gulf of Mexico and up the Atlantic coast. By the late 1930s these ships transported <a href="https://www.nist.gov/blogs/taking-measure/big-inch-fueling-americas-wwii-war-effort">95% of American petroleum products</a>. </p>
<p>Nazi strategists knew that sinking ships directly off the coast would terrify many Americans. Immediately after the U.S. entered World War II in December 1941, U-boats launched attacks on American coastal shipping. In February 1942 alone, <a href="https://www.nist.gov/blogs/taking-measure/big-inch-fueling-americas-wwii-war-effort">Nazi subs sank 12 tankers off the East Coast</a>.</p>
<p>To avoid the U-boats, oil companies tried moving crude by rail and barge. This limited delivery to 140,000 barrels a day, less than half of the 300,000 barrels needed to meet wartime demand at East coast refineries.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/m0fyIvLhe54?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">German submarines sank more than 50 U.S. ships in the Gulf of Mexico during World War II, seeking to disrupt shipments to Allied nations in Europe.</span></figcaption>
</figure>
<h2>Piping replaces shipping</h2>
<p>In the spring of 1942, Interior Secretary Harold Ickes proposed <a href="http://lcweb2.loc.gov/master/pnp/habshaer/tx/tx0900/tx0944/data/tx0944data.pdf">constructing a large-diameter war emergency pipeline</a>. The oil industry balked: It cost 16 cents a barrel to send oil by sea from Texas to New York, and executives argued that building pipelines would <a href="https://www.nytimes.com/1941/07/23/archives/oil-pipeline-now-is-urged-by-ickes-70000000-system-to-bring-250000.html?searchResultPosition=1">double the cost</a>. When industrial and military needs for petroleum grew desperate, the companies relented, partnering with the government to build the new pipeline.</p>
<p>Engineers designed a giant conduit capable of supplying oil needed for the war effort, far larger than existing 8-inch lines. Workers dubbed the 24-inch-diameter pipeline the “<a href="https://en.wikipedia.org/wiki/Big_Inch#cite_note-Klein_2013_499-25">Big Inch</a>.” </p>
<p>Construction began in June 1942. Government officials chose an inland route, avoiding coastal states that might be vulnerable to enemy air attacks. The Big Inch was constructed in two sections: one north from Texas to Illinois and another from Indiana eastward. A second, 20-inch-diameter line, the “Little Big Inch,” was added in 1943.</p>
<p>These became the world’s longest pipelines, snaking across 1,340 miles (2,150 kilometers). The US$146 million project was <a href="http://content.time.com/time/subscriber/article/0,33009,779839,00.html">one of the most expensive initiatives</a> underwritten by the federal government during World War II. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=473&fit=crop&dpr=1 600w, https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=473&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=473&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=594&fit=crop&dpr=1 754w, https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=594&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/411336/original/file-20210714-15-a6k834.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=594&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Ralph K. Davies, George Hull, W. Alton Jones and Burt Hull at the Big Inch opening, Feb. 19, 1943. All four men were oil industry executives who took on roles with the federal government during World War II.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:“Big_Inch”_opening.jpg#/media/File:“Big_Inch”_opening.jpg">Petroleum Administration for War</a></span>
</figcaption>
</figure>
<p>Oil began flowing in August 1943. Over the next two years, these two lines delivered 300,000 gallons of oil per day to refineries in New Jersey and Philadelphia, which was then shipped overseas. The U.S. ultimately supplied <a href="http://historynewsnetwork.org/article/339">6 billion of the 7 billion barrels of oil</a> used by Allied forces during the war. In 1945 Ickes called the Big Inch one of the country’s “<a href="https://www.nytimes.com/1945/01/27/archives/little-big-inch-one-year-old.html?searchResultPosition=1">most potent weapons of war</a>.”</p>
<p>The Big Inch was featured in <a href="http://lcweb2.loc.gov/master/pnp/habshaer/tx/tx0900/tx0944/data/tx0944data.pdf">newsreel shorts</a> with titles such as “Pipe Dream Comes True – Oil!” and “Oil is Blood.” But although it demonstrated that large volumes of oil could be moved cross-country, it didn’t capture the public imagination like the atomic bomb, radar or penicillin. </p>
<p>In 1947 the federal government sold the pipeline to the Texas Eastern Transmission Corporation. It <a href="https://www.kunc.org/business/2014-08-05/the-strange-history-of-the-american-pipeline">still carries natural gas</a> from Texas to the Northeast.</p>
<p>Long-distance pipeline construction <a href="https://www.api.org/%7E/media/files/oil-and-natural-gas/ppts/other-files/decadefinal.pdf?la=en">accelerated in the 1950s and 1960s</a> as the technology improved and oil demand grew. More than half the existing U.S. fuel pipeline network was <a href="https://www.wsj.com/articles/aging-pipelines-raise-concerns-1478128942">built before 1970</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Map showing pipelines from Texas to mid-Atlantic coast." src="https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=492&fit=crop&dpr=1 600w, https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=492&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=492&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=618&fit=crop&dpr=1 754w, https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=618&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/411337/original/file-20210714-19-oq39nb.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=618&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Big Inch and Little Inch pipelines.</span>
<span class="attribution"><a class="source" href="http://lcweb2.loc.gov/master/pnp/habshaer/tx/tx0900/tx0944/data/tx0944data.pdf">Historic American Engineering Record/National Park Service</a></span>
</figcaption>
</figure>
<h2>Climate change, the next target</h2>
<p>Today the enemy is climate change, and pipelines are in the crosshairs as part of the fossil fuel production and delivery system. Pipeline projects also are more controversial because they now are subject to <a href="https://theconversation.com/trump-proposal-to-weaken-project-reviews-threatens-the-magna-carta-of-environmental-law-93258">environmental impact assessments</a>. These reviews analyze how building the pipelines could affect local water supplies, wildlife, nearby historic sites nearby and other facets of the communities they pass through. </p>
<p>Debate over the Keystone XL pipeline shows how the framework for considering pipeline projects has expanded. <a href="https://www.npr.org/2021/06/09/1004908006/developer-abandons-keystone-xl-pipeline-project-ending-decade-long-battle">Opposition</a> to the $8 billion, 1,200-mile pipeline focused on safety concerns, its route across Indigenous lands, destruction of boreal forest and the large carbon footprint of oil from tar sands. </p>
<p>The latest controversial project is the <a href="https://www.enbridge.com/projects-and-infrastructure/public-awareness/minnesota-projects/line-3-replacement-project">Enbridge Pipeline 3 replacement</a>, which would replace 337 miles of an existing pipeline running through Minnesota. Opponents argue that the project, which would double the old line’s capacity to carry tar sands oil from Alberta to the U.S., threatens Minnesota wetlands, violates the treaty rights of Indigenous people in its path and will help <a href="https://www.stopline3.org/#intro">perpetuate tar sand extraction.</a></p>
<p>The Big Inch and its successors were 20th-century technological accomplishments, but addressing climate change means turning America’s engineering talents to equally ambitious renewable energy projects. As a <a href="https://engineering.virginia.edu/faculty/w-bernard-carlson">historian of technology</a>, I look forward to seeing new solutions emerge. What equivalents of the Big Inch will help win the war against climate change?</p>
<p>[<em>Understand new developments in science, health and technology, each week.</em> <a href="https://theconversation.com/us/newsletters/science-editors-picks-71/?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=science-understand">Subscribe to The Conversation’s science newsletter</a>.]</p><img src="https://counter.theconversation.com/content/161729/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>W. Bernard Carlson does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Proposals for new oil and gas pipelines can generate intense debate today, but during World War II the US built an oil pipeline more than 1,300 miles long in less than a year.W. Bernard Carlson, Professor of Humanities and Chair of the Department of Engineering and Society, University of VirginiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1625062021-06-10T20:08:33Z2021-06-10T20:08:33ZTracking the transition: the ‘forgotten’ emissions undoing the work of Australia’s renewable energy boom<figure><img src="https://images.theconversation.com/files/405586/original/file-20210610-16-1velgp6.jpg?ixlib=rb-1.1.0&rect=0%2C5%2C4000%2C2988&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>World leaders including Prime Minister Scott Morrison will gather in the UK this weekend for the <a href="https://www.bbc.com/news/world-49434667">G7 summit</a>. In <a href="https://www.pm.gov.au/media/qa-perth-usasia-centre-perth-wa">a speech</a> on Wednesday ahead of the meeting, Morrison said Australia recognises the need to reach net-zero emissions in order to tackle climate change, and expects to achieve the goal by 2050. </p>
<p>So has Australia started the journey towards deep cuts in greenhouse gas emissions?</p>
<p>In the electricity supply system, the answer is yes, as renewables form an ever-greater share of the electricity mix. But elsewhere in the energy sector – in transport, industry and buildings – there has been little or no progress.</p>
<p>This situation needs to change. These other parts of the energy system contribute nearly 40% of all national greenhouse gas emissions – and the share is growing. In a <a href="https://ccep.crawford.anu.edu.au/publication/ccep-working-paper/18914/australian-energy-transition-indicators">new working paper</a> out today, we propose a way to track the low-carbon transition across the energy sector and check progress over the last decade.</p>
<figure class="align-center ">
<img alt="woman cooks in kitchen with gas stove" src="https://images.theconversation.com/files/405587/original/file-20210610-26-xknlsq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/405587/original/file-20210610-26-xknlsq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/405587/original/file-20210610-26-xknlsq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/405587/original/file-20210610-26-xknlsq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/405587/original/file-20210610-26-xknlsq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=506&fit=crop&dpr=1 754w, https://images.theconversation.com/files/405587/original/file-20210610-26-xknlsq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=506&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/405587/original/file-20210610-26-xknlsq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=506&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Energy emissions from buildings, such as from gas cooktops, have largely escaped scrutiny.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>A stark contrast</h2>
<p>The <a href="https://ccep.crawford.anu.edu.au/public_policy_community/workshops/rio20_towards_sustainable_development/S3P3_Saddler_Energy.pdf">energy sector</a> can be separated into three major types of energy use in Australia:</p>
<ul>
<li>electricity generation</li>
<li>transport and mobile equipment used in mining, farming, and construction</li>
<li>all other segments, mainly fossil fuel combustion to provide heat in industry and buildings. </li>
</ul>
<p>In 2018-19, energy sector emissions accounted for 72% of Australia’s <a href="https://ageis.climatechange.gov.au/">national total</a>. Transition from fossil fuels to zero-emissions sources is at the heart of any strategy to cut emissions deeply.</p>
<p>The transition is already happening in electricity generation, as wind and solar supplies increase and coal-fired power stations close or operate less.</p>
<p>But in stark contrast, elsewhere in the sector there is no evidence of a meaningful low-emissions transition or acceleration in energy efficiency improvement.</p>
<p>This matters greatly because in 2019, these other segments contributed 53% of total energy combustion emissions and 38% of national greenhouse gas emissions. Total energy sector emissions increased between 2005 (the reference year for Australia’s Paris target) and 2019. </p>
<p>As the below graphic shows, while the renewables transition often gets the credit for Australia’s emissions reductions, falls since 2005 are largely down to changes in land use and forestry. </p>
<hr>
<iframe src="https://flo.uri.sh/visualisation/6392389/embed" title="Interactive or visual content" class="flourish-embed-iframe" frameborder="0" scrolling="no" style="width:100%;height:700px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/6392389/?utm_source=embed&utm_campaign=visualisation/6392389" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<hr>
<p>Let’s take a closer look at the areas where Australia could do far better in future.</p>
<h2>1. Transport and mobile equipment</h2>
<p>Transport includes road and rail transport, domestic aviation and coastal shipping. Mobile equipment includes machinery such as excavators and dump trucks used in mining, as well as tractors, bulldozers and other equipment used in farming and construction. Petroleum supplies almost 99% of the energy consumed by these machines.</p>
<p>Road transport is responsible for more than <a href="https://www.energy.gov.au/government-priorities/energy-data/australian-energy-statistics">two-thirds</a> of all the energy consumed by transport and mobile equipment. </p>
<p>What’s more, prior to COVID, energy use by transport and mobile equipment was steadily growing – <a href="https://www.industry.gov.au/sites/default/files/2021-05/nggi-quarterly-update-december-2020.pdf">as were emissions</a>. The absence of fuel efficiency standards in Australia, and a trend towards larger cars, has contributed to the problem. </p>
<p>Electric vehicles offer great hope for cutting emissions from the transport sector. As Australia’s electricity grid continues to decarbonise, emissions associated with electric vehicles charged from the grid will keep falling.</p>
<figure class="align-center ">
<img alt="cars on freeway from rear" src="https://images.theconversation.com/files/405588/original/file-20210610-13-1wd2mtg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/405588/original/file-20210610-13-1wd2mtg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/405588/original/file-20210610-13-1wd2mtg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/405588/original/file-20210610-13-1wd2mtg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/405588/original/file-20210610-13-1wd2mtg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=489&fit=crop&dpr=1 754w, https://images.theconversation.com/files/405588/original/file-20210610-13-1wd2mtg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=489&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/405588/original/file-20210610-13-1wd2mtg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=489&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Electric vehicles would slash road transport emissions.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>2. Other energy emissions</h2>
<p>Emissions from all other parts of the energy system arise mainly from burning:</p>
<ul>
<li>gas to provide heat for buildings and manufacturing, and for the power needed to liquefy gas to make LNG</li>
<li>coal, for a limited range of heavy manufacturing activities, such as steel and cement production </li>
<li>petroleum products (mainly LPG) in much smaller quantities, where natural gas is unavailable or otherwise unsuitable.</li>
</ul>
<p>Emissions from these sources, as a share of national emissions, <a href="https://ageis.climatechange.gov.au/">rose</a> from 13% in 2005 to 19% in 2019.</p>
<p>These types of emissions can be reduced through electrification – that is, using low- or zero-carbon electricity in industry and buildings. This might include using induction cooktops, and electric heat pumps to heat buildings and water.</p>
<p>However the data offer no evidence of such a shift. Fossil fuel use in this segment has declined, but mainly due to less manufacturing activity rather than cleaner energy supply. </p>
<p>And in 2018 and 2019, the expanding LNG industry <a href="https://www.industry.gov.au/sites/default/files/2021-05/nggi-quarterly-update-december-2020.pdf">drove further emissions</a> growth, offsetting the decline in use of gas and coal in manufacturing. </p>
<iframe src="https://flo.uri.sh/visualisation/6392660/embed" title="Interactive or visual content" class="flourish-embed-iframe" frameborder="0" scrolling="no" style="width:100%;height:600px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/6392660/?utm_source=embed&utm_campaign=visualisation/6392660" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<h2>How to track progress</h2>
<p>Over the past decade or so, Australia’s emissions reduction policies – such as they are – have focused on an increasingly narrow range of emission sources and reduction opportunities, in particular electricity generation. </p>
<p>Only now are electric vehicles beginning to be taken seriously, while energy efficiency – a huge opportunity to cut emissions and costs – is typically <a href="https://theconversation.com/australia-has-failed-miserably-on-energy-efficiency-and-government-figures-hide-the-truth-123176">ignored</a>. </p>
<p>Our <a href="https://ccep.crawford.anu.edu.au/publication/ccep-working-paper/18914/australian-energy-transition-indicators">paper</a> proposes a large set of new indicators, designed to show what’s happening (and not happening) across the energy sector. </p>
<p>The indicators fall into four groups: </p>
<ul>
<li><p>greenhouse gas emissions from energy use</p></li>
<li><p>primary fuel mix including for electricity generation</p></li>
<li><p>final energy consumption including energy use efficiency</p></li>
<li><p>the fuel/technology mix used to deliver energy services to consumers. </p></li>
</ul>
<p>Our datasets excludes the effects of 2020 COVID-19 lockdowns. They’re based on data contained in established government publications: <a href="https://www.energy.gov.au/government-priorities/energy-data/australian-energy-statistics">The Australian Energy Statistics</a>, the <a href="https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-quarterly-updates">National Greenhouse Gas Inventory</a> and the Australian Bureau of Statistics’ <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">national accounts</a> and <a href="https://www.abs.gov.au/statistics/people/population/national-state-and-territory-population/latest-release">population estimates</a>. </p>
<p>By systematically tracking and analysing these indicators, and combining them with others, Australia’s energy transition can be monitored on an ongoing basis. This would complement the great level of detail already available for <a href="https://opennem.org.au/energy/nem/?range=1y&interval=1d">electricity generation</a>. It would also create better public understanding and focus policy attention on areas that need it. </p>
<p>In some countries, government agencies monitor the energy transition in great detail. In some cases, such as <a href="https://www.bmwi.de/Redaktion/EN/Artikel/Energy/monitoring-implementation-of-the-energy-reforms.html">Germany</a>, independent experts also conduct systematic and substantial analysis as part of an annual process.</p>
<h2>The road ahead</h2>
<p>Australia has begun the journey to a zero-emissions energy sector. But we must get a move-on in transport, industry and buildings. </p>
<p>The technical opportunities are there. What’s now needed is government regulation and policy to encourage investment in zero-emissions technologies for both supplying and using all forms of energy. </p>
<p>And once available, the technology should be deployed now and in coming years, not in the distant future.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/check-your-mirrors-3-things-rooftop-solar-can-teach-us-about-australias-electric-car-rollout-162085">Check your mirrors: 3 things rooftop solar can teach us about Australia's electric car rollout</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/162506/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Jotzo leads externally funded research projects and has received Australian government funding. There are no conflicts of interest regarding this article.</span></em></p><p class="fine-print"><em><span>Hugh Saddler does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Renewables form an ever-greater share of the electricity mix. But elsewhere in the energy sector – in transport, industry and buildings – emissions reduction is very slow.Hugh Saddler, Honorary Associate Professor, Centre for Climate Economics and Policy, Australian National UniversityFrank Jotzo, Director, Centre for Climate and Energy Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1455872020-10-05T11:38:18Z2020-10-05T11:38:18ZWhy we should leave old oil rigs in the sea – and why we don’t<figure><img src="https://images.theconversation.com/files/361595/original/file-20201005-16-18454wb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/image-oil-platform-while-cloudless-day-124714042">Dabarti CGI/Shutterstock</a></span></figcaption></figure><p>Decommissioning the UK’s offshore oil and gas infrastructure will cost the taxpayer £24 billion, according to <a href="https://www.nao.org.uk/wp-content/uploads/2019/01/Oil-and-gas-in-the-UK-offshore-decommissioning.pdf">estimates from HMRC</a>. So why can’t we leave man-made structures in the sea and thereby save the cost of removal and recycling? That would be a big win for the public purse. However, to do that, we would have to test the pillars of sustainability: the economy, environment and society.</p>
<p>Decommissioning an oil rig is a big job. Offshore installations consist of the equipment for oil and gas processing and drilling (the topsides), and the supporting seabed-to-surface structure. This is most often a steel frame, piled to the seabed (the jacket). The largest steel jacket in UK waters is that of the Magnus oil platform, which weighs 30,000 tonnes – around the weight of 20,000 family cars.</p>
<p>Removal is typically undertaken in two stages. First, the topsides equipment is cleaned and broken into sections for lifting onto crane barges or, for heavier topsides structures, a double-hulled tanker. Once the topsides has been removed, the jacket is cut, lifted onto a barge and both topsides and jacket are taken onshore for dismantling and recycling.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/nWsl-6P09eM?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<p>The oil and gas wells always need to be plugged to prevent the contents of the abandoned hydrocarbon reservoir leaking into the surrounding environment. But there is <a href="https://esajournals.onlinelibrary.wiley.com/doi/abs/10.1002/fee.1827">ever-growing evidence</a> that leaving the jacket and topside structures in the sea are an environmental positive.</p>
<p>In the Gulf of Mexico, the US programme <a href="https://www.bsee.gov/what-we-do/environmental-focuses/rigs-to-reefs">Rigs to Reefs</a> has turned 532 oil and gas platforms into artificial reefs. After several years in the water, each structure <a href="https://www.outdooralabama.com/saltwater-fishing/artificial-reefs">becomes covered</a> by epifaunal organisms such as oysters, mussels, barnacles, tunicates, sponges and corals. These create an increasingly complex surface that provides thousands of nooks and crannies for organisms such as crabs, worms, sea urchins and blennies to use. These animals then provide food for larger fishes and the structure becomes a true reef ecosystem.</p>
<p>The <a href="https://scottishwildlifetrust.org.uk/our-work/our-projects/living-seas/decommissioning/">Scottish Wildlife Trust</a> is also proposing that architecture removal may not be the best environmental option. Similar to the Gulf of Mexico, structures off the coast of Scotland provide hard surfaces that are colonised by anemones, hydroids, bryozoans, sponges, mussels, barnacles, and soft and hard corals. They have also become breeding grounds and shelter for commercially important fish and they attract predatory marine mammals.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/retired-oil-rigs-off-the-california-coast-could-find-new-lives-as-artificial-reefs-111892">Retired oil rigs off the California coast could find new lives as artificial reefs</a>
</strong>
</em>
</p>
<hr>
<p>Decommissioning, on the other hand, destroys thriving marine ecosystems that have built up over decades. It also results in increased harmful air emissions, including greenhouse gas emissions, from the marine traffic required to conduct the removal works.</p>
<p>Decommissioning offers few social or economic benefits either. It creates few jobs, particularly for the onshore dismantling and recycling parts of the process. For example, removing the Buchan floating production facility provided <a href="https://www.energyvoice.com/oilandgas/decom/140997/north-sea-decommissioning-contract-creates-35-jobs-on-shetland/">just 35 jobs</a>. And at the end of the process, nothing is left. Ultimately, decommissioning is a drain on taxpayer funds.</p>
<h2>It’s the law</h2>
<p>Despite the lack of benefits, the UK continues to remove offshore architecture at <a href="https://www.energyvoice.com/oilandgas/north-sea/241343/uk-north-sea-to-dominate-global-decommissioning-spend-over-next-five-years/">the rate of</a> around 70,000 tonnes to 100,000 tonnes a year. The reason for this is that marine law says we have to.</p>
<p>The international OSPAR convention’s <a href="https://www.ospar.org/documents?v=6875">Decision on the Disposal of Disused Offshore Installations</a> prohibits signatory countries (including the UK) from leaving offshore architecture in the sea, either wholly or in part. It mandates that all topsides installations are returned to shore and that subsea structures weighing less than 10,000 tonnes be completely removed. Due to the difficulty associated with removing larger structures, some can have their bases left in place.</p>
<p>It is also interesting to note that OSPAR is at odds with the UK’s <a href="https://www.gov.uk/guidance/oil-and-gas-offshore-environmental-legislation#conservation-of-offshore-marine-habitats-and-species-regulations-2017O">Conservation of Offshore Marine Habitats and Species Regulations 2017</a>. OSPAR says we should remove structures irrespective of harm to marine life, whereas the UK regulations are focused on preventing activities that could kill or injure protected marine species.</p>
<figure class="align-center ">
<img alt="Scuba diver swims between two columns covered in sea creatures." src="https://images.theconversation.com/files/361602/original/file-20201005-22-1dwc4ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361602/original/file-20201005-22-1dwc4ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361602/original/file-20201005-22-1dwc4ly.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361602/original/file-20201005-22-1dwc4ly.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361602/original/file-20201005-22-1dwc4ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361602/original/file-20201005-22-1dwc4ly.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361602/original/file-20201005-22-1dwc4ly.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Rigs can become reefs.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/diver-lisa-navigates-oil-rig-structure-1247103925">Kirk Wester/Shutterstock</a></span>
</figcaption>
</figure>
<p>A case in point is the cold water coral <em>Lophelia pertusa</em>. These corals have been <a href="https://www.sciencedirect.com/science/article/pii/S0025326X05004534">recorded at</a> depths of between 50m and 130m on oil and gas structures. Cold-water coral reefs support a high diversity and abundance of associated invertebrates and fishes. The fact that OSPAR would take no recognition of their presence is simply wrong. </p>
<p>Since the public purse has so much to gain from leaving man-made structures in the sea as a benefit to marine ecosystems, the UK government should base its case for removal on economic, societal and environmental evidence. If the evidence can’t support removal – which I don’t believe it can – then the UK should challenge the fitness of current international marine legislation.</p>
<p>Finally, a frequent counterargument is that if we left offshore architecture in place we would end up with a public furore similar to the one that forced Shell to abandon its plans to dispose of the <a href="https://www.shell.co.uk/sustainability/decommissioning/brent-spar-dossier.html">Brent Spar</a> tanker loading buoy at sea in the 1990s. But if we used the savings from leaving offshore installations in place to support climate management investment, I believe environmental groups and the broader public might see things very differently.</p><img src="https://counter.theconversation.com/content/145587/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Baxter does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Decommissioning offshore structures is expensive and environmentally damaging – so why is it illegal to leave them where they are?Tom Baxter, Honorary Senior Lecturer in Chemical Engineering, University of AberdeenLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1368872020-05-28T13:47:07Z2020-05-28T13:47:07ZGhana has tried to be responsible with its oil wealth. This is how<figure><img src="https://images.theconversation.com/files/337234/original/file-20200524-124840-1ul2c3r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ghana is still finding ways of maximising its oil wealth</span> <span class="attribution"><span class="source">Wikimedia Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>After Ghana discovered oil and gas in 2007, the government and civil society aspired to avoid the “resource curse”. This is when countries have an abundance of non-renewable natural resources but no economic growth. </p>
<p>Nigeria, Sudan, Angola, Cameroon, Equatorial Guinea and Chad are among the oil producers that have <a href="https://www.ifpri.org/publication/natural-resource-curse-africa-dutch-disease-and-institutional-explanations">failed</a> to channel their resources into the material improvement of their countries and people. </p>
<p>To avoid a similar fate, Ghana enacted a Petroleum Revenue Management Act in 2011. The law created the Public Interest and Accountability Committee, with a mandate to ensure accountability and transparency in the management and use of oil and gas revenue. </p>
<p>Although there are several published <a href="https://www.researchgate.net/publication/321184435_A_STUDY_OF_GHANA'S_OIL_AND_GAS_INDUSTRY_LOCAL_GHANAIAN_CONTENT_POLICY_PROCESS">studies</a> on Ghana’s oil and gas sector, very few have looked at this committee. Our <a href="https://www.tandfonline.com/doi/full/10.1080/02589001.2020.1715929">study</a> provides a nuanced understanding of the successes and failures of this institutional arrangement.</p>
<p>We also came up with some recommendations for ways to strengthen the committee to deliver effectively on its mandate.</p>
<h2>The big wins</h2>
<p>Since its inauguration in 2011, the Public Interest and Accountability Committee has recorded some success. </p>
<p>A major achievement is its role in legitimising government’s commitment to good governance in Ghana’s oil and gas sector. Indeed, the <a href="https://static1.squarespace.com/static/5728c7b18259b5e0087689a6/t/57ab29519de4bb90f53f9fff/1470835029000/2013_African+Progress+Panel+APR_Equity_in_Extractives_25062013_ENG_HR.pdf">Africa Progress Report</a> describes the committee as an “independent regulatory body” and a pioneer in achieving rigorous rules for reporting and greater accountability in the natural resources sector. </p>
<p>The two major political parties, the New Patriotic Party and the National Democratic Congress, and some state officials use the existence of the committee as indicative of their commitment to good governance. <a href="https://resourcegovernance.org/sites/default/files/nrgi_Resource-Curse.pdf">Scholars</a> of the resource curse consider good governance to be an important factor in whether natural resources benefit a country.</p>
<p>Citizen participation has also been encouraged. For example between 2017 and 2019, the committee held regional workshops with citizens to discuss areas of investment from oil revenue. The choices made by government in its expenditure of oil revenue aligned with suggestions made by citizens.</p>
<p>In eight years, the committee has produced 16 <a href="https://www.piacghana.org/portal/5/25/piac-reports">reports</a> on the activities of the oil and gas sector, as required by legislation. All of these reports have set out findings and recommendations, with a view to enhancing transparency and accountability. In 2011, for instance, the <a href="https://www.piacghana.org/portal/5/25/piac-reports">report</a> noted that not all payments that were expected to go into the Ghana Petroleum Holding Fund had been reported as required.</p>
<h2>Weaknesses</h2>
<p>But the committee also has challenges that have undermined the full realisation of its potential.</p>
<p>First of all, there is the conflict of genuine buy-in by donors on the one hand and the “unswerving support” by the government of Ghana on the other hand.
As pointed out by another <a href="https://www.herald.co.zw/africas-natural-resources-and-underdevelopment/">author</a>: </p>
<blockquote>
<p>… the Petroleum Revenue Management Act 2011 was mostly motivated by donors’ concerns about the alleged corrupt and the “inept” Ghanaian/ African state’s abuse of finances, it was designed to safeguard revenues after they have been paid into government coffers.</p>
</blockquote>
<p>The committee’s 13 members are drawn from civil society, academia and trade bodies. This makeup was heavily influenced by foreign donors like the German Technical Cooperation and Oxfam America in exchange for financial support during its first six years of operation. The potential danger is that the committee could seek the interest of these international donor agencies rather than the interest of Ghana.</p>
<p>Furthermore, there appears to be lack of clarity in some provisions of the law that set up the committee. It’s not clear which committee of parliament must receive and act on reports. </p>
<p>Finally, there are no regulations to accompany the petroleum revenue management act. Regulations are needed to interpret the act and make it work in practice.</p>
<h2>Conclusions</h2>
<p>Having a progressive institution like Ghana’s public interest and accountability committee is, on its own, no guarantee that oil and gas wealth will be used to benefit the country.</p>
<p>We believe there are a few ways to enable the committee to perform its duties more effectively. First, its recommendations should be debated and implemented by Parliament and the Attorney General. </p>
<p>It should have a permanent relationship with the attorney general’s department to investigate and prosecute public and private officials who may be causing loss to the state. This is a significant problem due to perceived bias in the justice system. </p>
<p>Secondly, we recommend that the committee submit its budget to a select committee in parliament to assess and approve. It should then be sent to the finance committee for consideration before approval by parliament.</p>
<p>Finally, the committee should find innovative ways of compelling the government to adhere to its recommendations. This can be done using various social media platforms for public education and advocacy. In this way ordinary Ghanaians and civil society groups will be informed and be able to exert pressure.</p><img src="https://counter.theconversation.com/content/136887/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Oversight over how Ghana’s oil wealth is spent has become more important than ever.E Graham, Teaching Assistant and PhD student (Department of Politics), York University, CanadaIsmael Ackah, Lecturer, Institute for Oil and Gas Studies, University of Cape CoastNathan Andrews, Assistant Professor, Department of Global & International Studies, University of Northern British ColumbiaRansford Edward Gyampo, Associate Professor,Political Science, University of GhanaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1302582020-01-22T17:28:57Z2020-01-22T17:28:57ZThe consequences of Qasem Suleimani’s death on the global energy market<p>UOn January 3, 2020, the decades-long conflict between the United States and Iran almost turned into a full-scale confrontation when a US drone <a href="https://theconversation.com/qassem-soleimani-air-strike-why-this-is-a-dangerous-escalation-of-us-assassination-policy-129300">assassinated Iranian major general Qasem Suleimani</a> as well as Commander Abu Mahdi al-Muhandis. </p>
<p>Iran and its allies vowed revenge and global markets, fearing a military escalation, anxiously awaited their reprisals. On January 8, however, Iran’s military chose to target two American military bases located in Iraq with missiles that caused material damage rather than human losses. With the United States’ answer limited to imposing new sanctions rather that resorting to the military option, the <a href="https://theconversation.com/iran-and-us-step-back-from-all-out-war-giving-trump-a-win-for-now-129615">situation cooled down</a> despite the continued exchange of fiery words.</p>
<p>In this article, we analyse the impact of this conflict on energy markets, especially should a military confrontation result in the closing of Hormuz strait. Who would be the economic winners and losers? What are Iran’s pressure options?</p>
<h2>The immediate effects of January’s skirmishes</h2>
<p>Up to 21% of the world’s oil flows through the Strait of Hormuz, making it a <a href="https://www.csis.org/analysis/oil-markets-oil-attacks-and-strategic-straits">strategic chokepoint</a> – over the course of 2018, an average of 20.7 million barrels of oil passed through it per day. The strait is also crucial for liquefied natural gas (LNG) exports, as more than 25% of the world’s supply, mostly from Qatar, passes through it annually.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/310915/original/file-20200120-69531-ecqydm.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/310915/original/file-20200120-69531-ecqydm.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=374&fit=crop&dpr=1 600w, https://images.theconversation.com/files/310915/original/file-20200120-69531-ecqydm.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=374&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/310915/original/file-20200120-69531-ecqydm.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=374&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/310915/original/file-20200120-69531-ecqydm.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=470&fit=crop&dpr=1 754w, https://images.theconversation.com/files/310915/original/file-20200120-69531-ecqydm.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=470&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/310915/original/file-20200120-69531-ecqydm.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=470&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">CSIS</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>The short-term effect of January 3 strike was a rise in the price of oil, which was expected. Brent crude hit US$70.73 per barrel, its highest level since September 14, 2019, when it was US$72.</p>
<p>Goldman Sachs and UBS analysts <a href="https://www.theguardian.com/business/2020/jan/06/oil-prices-70-a-barrel-suleimani-retaliation-petrol-price">doubt whether oil prices will keep rallying beyond US$70</a> because of strong production from outside the Middle East – primarily the United States and Norway – which would prevent prices from surpassing US$70.</p>
<p>Following Iran’s strikes and US decision not to hit back, tensions eased, which resulted in a further drop in oil prices and by January 10, when fell to around US$65.</p>
<h2>Possible winners and losers</h2>
<p>According to <a href="https://www.independent.co.uk/news/business/news/oil-price-latest-iran-us-war-trump-middle-east-a9272651.html">Capital Economics</a>, a war would lead to oil prices more than doubling.</p>
<blockquote>
<p>“While the price of Brent could soar to as much as $150 per barrel, the rally may prove short-lived as supply networks adjust and demand falters in the wake of higher prices.”</p>
</blockquote>
<p>Defining the winners and losers from this conflict is directly based on their status as oil importers or exporters.</p>
<p><strong>Persian Gulf</strong>: Iran, Kuwait, Qatar and Bahrain oil exports pass entirely through Strait of Hormuz, and Qatar also uses it to export LNG. Were the strait closed, they would be hit hard. As for Iraq, 90% of its oil transits through it. The UAE can send part of its production (1.5 million b/d) via a pipeline to the port of Fujairah on the Gulf of Oman. Saudi Arabia has the greatest ability to divert flows, by using a mega-pipeline to an export terminal on the Red Sea. Saudi Aramco said the capacity of that line would be increased to 6.2 million barrels per day by the end of 2019.</p>
<p><strong>Asia</strong>: China, India, Japan and South Korea rely heavily on Middle Eastern oil, as shown in the graph below and their economic performance would suffer in the short term.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/310922/original/file-20200120-69563-12t7wd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/310922/original/file-20200120-69563-12t7wd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=329&fit=crop&dpr=1 600w, https://images.theconversation.com/files/310922/original/file-20200120-69563-12t7wd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=329&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/310922/original/file-20200120-69563-12t7wd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=329&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/310922/original/file-20200120-69563-12t7wd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=413&fit=crop&dpr=1 754w, https://images.theconversation.com/files/310922/original/file-20200120-69563-12t7wd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=413&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/310922/original/file-20200120-69563-12t7wd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=413&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">US Energy Information Administration</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>However, since the United States re-imposed sanctions on Iran, and the waivers the US administration provided to certain countries to continue importing Iranian oil ended in May 2019, Asian nations have been <a href="https://blogs.platts.com/2019/12/10/asia-crude-oil-buyers-pivot-us/">pivoting to US imports</a>. The graph below shows a spectacular increase.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/310923/original/file-20200120-69555-q7qkwa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/310923/original/file-20200120-69555-q7qkwa.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=372&fit=crop&dpr=1 600w, https://images.theconversation.com/files/310923/original/file-20200120-69555-q7qkwa.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=372&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/310923/original/file-20200120-69555-q7qkwa.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=372&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/310923/original/file-20200120-69555-q7qkwa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=468&fit=crop&dpr=1 754w, https://images.theconversation.com/files/310923/original/file-20200120-69555-q7qkwa.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=468&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/310923/original/file-20200120-69555-q7qkwa.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=468&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">US Energy Information Administration</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p><strong>European Union</strong>: Oil accounts for 35% of the EU’s energy mix. It imports only 20% of its oil needs from the Middle East and therefore its dependence on this source is limited. However, Qatar is Europe’s largest LNG exporter (35%), and any disruption of supplies could leave <a href="https://www.politico.eu/article/eu-oil-market-buffer-iran-crisis/">important consequences</a> for the EU.</p>
<p><strong>United States</strong>: According to <a href="https://moneyweek.com/520428/us-vs-iran-threat-of-war-shakes-the-world/">MoneyWeek Review</a>: </p>
<blockquote>
<p>“The fracking revolution means that finding hydrocarbons and getting them out of the ground has never been easier, particularly in North America. When prices jump the frackers are happy to start pumping.”</p>
</blockquote>
<p>This being the case, the United States would be an obvious winner of such a crisis.</p>
<p><strong>Russia</strong>: The country’s commitment to the OPEC+ deal has allowed it to gain huge amounts of additional revenue. However, that deal resulted in Russia having a spare production capacity of up to half a million barrels per day. Should prices jump, Russia could be tempted to use such an opportunity to fill in its coffers and boost its GDP performance to match President Putin’s desired GDP growth rates.</p>
<h2>Iran’s options</h2>
<p>Tehran’s economic woes can still make its behaviour unpredictable especially if the harsh sanctions continue. So far, it seems to have used a fraction of the means at its disposal. A measured military response saved face and halted a potential escalation had they incurred human losses on the US military.</p>
<p>Iran still has the following ways that it can strengthen its position, among others:</p>
<ul>
<li><p>Encouraging its allies to attack US interests, allowing Iran to avoid the blame. Attacks could spread to US allies such as Israel.</p></li>
<li><p><a href="https://theconversation.com/how-real-is-the-threat-of-cyberwar-between-iran-and-the-us-129573">Cyber-attacks</a> against US and allied companies and administrations.</p></li>
<li><p>Attacks on or seizure of oil tankers (such as in 2019) or the use of drones against neighbours’ energy facilities.</p></li>
<li><p>Iran’s fleet can pursue commercial shipments in the Gulf of Oman, Indian Ocean and elsewhere.</p></li>
<li><p>The country’s Houthi allies can target ships in the Red Sea, thus threatening the Suez Canal’s economic viability.</p></li>
</ul>
<p>Despite significant loses since the waivers were terminated, Iran chose to not close the Hormuz strait. Why? Because Tehran noticed that relying on “precise, quick and short” actions, especially through allies, proved more profitable. It does not have the capacity for a full-scale war with the United States and finally it does not wish to be seen as an unreliable partner in the post-sanction times.</p>
<p>With the US presidential elections approaching, Iran’s internal troubles mean that both countries need the current “ceasefire”. Perhaps following the short-lived skirmishes, both sides could go back to the negotiation tables and find the necessary compromises to reinstate the nuclear deal. Only time will tell.</p>
<hr>
<p><em>This article was written with Ahmad Ismail, an Abu Dhabi–based research consultant specialising in political-economy analysis and geopolitics.</em></p><img src="https://counter.theconversation.com/content/130258/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hassan Obeid is a member of Ebs-Paris / INSEEC U Research Center. He's a professor of Finance at European Business School- Paris.</span></em></p>The assassination of the Iranian general could have lasting effects on energy markets. Which countries could benefit from it and which could be negatively affected?Hassan Obeid, Professor of Finance, European Business School, EBS Paris Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1158522019-04-23T16:14:18Z2019-04-23T16:14:18ZTrump’s crackdown on Iran’s oil exports could backfire badly – with serious risks to global economy<p>The US has unnerved the world oil market by ramping up the pressure in its long-running dispute with Iran. It has <a href="https://www.reuters.com/article/us-usa-iran-oil/u-s-to-announce-end-to-iran-sanctions-waivers-oil-prices-spike-idUSKCN1RX0R1?il=0">announced</a> that, after May 1, it won’t renew the exemptions given to eight countries that enable them to buy Iranian oil. Those affected, which include China, India, Japan, Italy and South Korea, will face sanctions from Washington if they don’t comply. The move will likely squeeze global oil supply at a time when it is already struggling from disruptions in <a href="https://www.reuters.com/article/us-venezuela-oil-exports-exclusive/exclusive-venezuela-oil-exports-stable-in-march-despite-sanctions-blackouts-idUSKCN1RE24K">Venezuela</a>, <a href="https://www.bloomberg.com/news/articles/2019-04-07/libya-fighting-erupts-again-here-s-the-oil-impact-quicktake">Libya</a> and <a href="https://oilprice.com/Latest-Energy-News/World-News/Key-Nigerian-Oil-Export-Pipeline-Under-Force-Majeure-After-Fire-Breaks-Out.html">Nigeria</a>. Indeed, the Brent crude price has already <a href="https://oilprice.com/">risen</a> on the back of the announcement to US$74 (£57) per barrel, the highest since last November. </p>
<p>President Donald Trump <a href="https://www.wsj.com/articles/u-s-ends-waivers-for-countries-to-import-iranian-oil-11555937349">has said</a> he is confident that a supply crunch can be avoided thanks to extra output from Saudi Arabia and the United Arab Emirates, but traders and Asian petrochemical firms are sceptical that these countries will fully comply. In recent months, Saudi Arabia and other OPEC members have cut supply dramatically to <a href="https://www.bloomberg.com/news/articles/2019-04-01/opec-output-slides-as-saudis-deepen-cut-venezuela-crisis-grows">redress</a> their fears that hefty US shale oil output and declining global energy demand could cause a supply glut that would batter prices. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=694&fit=crop&dpr=1 600w, https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=694&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=694&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=873&fit=crop&dpr=1 754w, https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=873&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/270466/original/file-20190423-175524-lyinit.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=873&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Arab gulf?</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/october-13-2017-illustration-showing-flag-733592455?src=Gz_KwxL68VZ0Gn8O5EwxJg-1-2">Wael Khalil Alfuzai</a></span>
</figcaption>
</figure>
<p>In December the oil cartel, along with Russia and other allies, <a href="http://www.tradearabia.com/news/OGN_348466.html">agreed to</a> reduce output by 1.2m barrels per day (bpd), cutting the <a href="https://www.eia.gov/tools/faqs/faq.php?id=709&t=6">global total volume</a> by more than 1%. They have since exceeded those benchmarks, with Saudi Arabia alone reducing supply by 800,000 bpd in total. In March the kingdom <a href="https://www.bloomberg.com/news/articles/2019-04-01/opec-output-slides-as-saudis-deepen-cut-venezuela-crisis-grows">slashed production</a> to a four-year low of 9.82m bpd, making up the majority of OPEC’s reduction of 295,000 daily barrels for the month to 30.3m bpd. </p>
<h2>Oil politics</h2>
<p>Trump has <a href="https://www.cnbc.com/2019/03/28/trump-says-its-very-important-that-opec-increase-the-flow-of-oil-because-prices-are-too-high.html">already been</a> calling on OPEC to raise production, with little success. The Saudis may be close allies of the Americans, but they will only act in concert with their OPEC counterparts and many around the table will be wary of risking reducing prices at an unpredictable time for the global economy. </p>
<p>No one ever forgets when the Saudis famously went against Western interests in the <a href="https://www.thebalance.com/opec-oil-embargo-causes-and-effects-of-the-crisis-3305806">Arab Oil Embargo</a> of 1973, in response to US policies with similarly global consequences: president Richard Nixon had scrapped the gold standard, heavily devaluing the US dollar, and then backed the Israelis in the Yom Kippur war against Egypt. Inflation-adjusted oil prices nearly doubled during the embargo from around US$26 per barrel in 1973 to over US$46 per barrel the following year, sending <a href="https://www.opendemocracy.net/en/opendemocracyuk/forty-years-on-effects-of-1973-74-oil-crisis-still-shape-british-foreign-po/">economic shockwaves</a> around the world. </p>
<p>America’s latest move against Iran is making things worse for the global economy at a time when it has already been under pressure from <a href="https://www.goldrepublic.com/news/fed-paves-the-way-for-worldwide-loose-monetary-policy">rising interest rates</a> and <a href="https://www.cnbc.com/2019/04/23/anthony-gardner-on-us-eu-relations-trump-tariffs-on-europe.html">trade wars</a>. If Iran’s entire output were removed – a <a href="https://www.jpost.com/Middle-East/Iran-shrugs-off-US-oil-threats-We-will-surpass-a-million-barrels-a-day-587655">big if</a> since it is far from certain that all countries will comply with the Americans – it <a href="https://uk.reuters.com/article/uk-global-oil/oil-near-2019-highs-after-u-s-ends-all-iran-sanction-exemptions-idUKKCN1RZ01S">would wipe</a> another 1m bpd or so off the world supply. </p>
<p><strong>Brent crude price, daily chart</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=363&fit=crop&dpr=1 600w, https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=363&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=363&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=456&fit=crop&dpr=1 754w, https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=456&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/270467/original/file-20190423-175539-zkupuz.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=456&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.macrotrends.net/2480/brent-crude-oil-prices-10-year-daily-chart">Macrotrends</a></span>
</figcaption>
</figure>
<p>Any resulting rise in oil prices would spread to other commodity prices, leading to inflationary pressure – particularly in countries affected by the end of waiver such as India, where inflation <a href="https://in.reuters.com/article/india-markets/expert-views-indias-march-inflation-picks-up-slightly-idINKCN1RO1IQ">has already</a> started picking up. Such countries would also see direct effects on their import bill and hence their balance of trade. For every dollar increase in oil rates in India, for instance, the import bill <a href="https://www.thehindubusinessline.com/economy/budget/excise-duty-tweaked-on-petrol-diesel-keeps-tax-unchanged/article22623780.ece">will rise</a> by R110 billion (£1.2 billion) at a time when the country’s trade deficit <a href="https://tradingeconomics.com/india/balance-of-trade">already stands</a> at over £8 billion. </p>
<p>In many cases, such economic effects are all too capable of being exported. Take South Korea, which is the second biggest oil importer from Iran after China. South Korea mainly imports condensate, an ultra-light form of crude oil used for petrochemical products like naptha which it exports to neighbouring countries. If these petrochemical exports fall because Korean prices are no longer competitive, its neighbours will have to look further afield, creating a trade imbalance in the region.</p>
<p>In the run-up to Trump’s campaign to be re-elected for a second presidential term next year – assuming he <a href="https://theconversation.com/did-trump-obstruct-justice-5-questions-congress-must-answer-115751">makes it</a> that far – there is therefore a great deal riding on this US gambit. If OPEC does not step up to the plate, and the oil price continues surging upwards, it could yet become the moment when the longstanding fears around the health of the world economy finally crystallise into a full-blown downturn.</p><img src="https://counter.theconversation.com/content/115852/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nafis Alam does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>From May 2, any countries buying oil from Iran can expect US sanctions.Nafis Alam, Associate Professor, University of ReadingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1129902019-03-06T11:25:39Z2019-03-06T11:25:39ZVenezuela’s economic collapse is laid bare when you look at how little energy the country is consuming<p>The country with the <a href="https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf">most oil reserves</a> on the planet is facing a total economic crash, with wildly conflicting inflation estimates – <a href="https://www.imf.org/external/datamapper/PCPIPCH@WEO/WEOWORLD/VEN">as high as 10,000,000%</a> if the IMF’s projections for this year are correct. There has been much discussion about the collapse in Venezuela’s oil exports, intensified by <a href="https://edition.cnn.com/2019/02/19/investing/venezuela-oil-sanctions-pdvsa/index.html">US sanctions</a> against <a href="https://www.bloomberg.com/news/articles/2019-02-25/half-billion-dollars-of-sanction-stained-oil-sits-off-venezuela">the state oil</a> company PDVSA, which substantially prevents any oil trading between the two countries and takes away a steady income stream for the country. To understand the scale of the crisis, however, it is vital to look at what has been happening to energy consumption inside the country itself. </p>
<p>Oil consumption in Venezuela <a href="https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html">fell 37%</a> in five years up to 2017, a reminder that the country was struggling under the Maduro administration long before the latest sanctions, which came after opposition leader Juan Guaidó <a href="https://theconversation.com/maduro-has-pushed-venezuela-to-the-brink-of-revolution-sanctions-and-aid-may-tip-it-over-the-edge-112324">announced himself</a> the country’s rightful president in January. Unfortunately, the oil decline is not an environmental achievement but a worrying symptom of Venezuela’s economic conditions – GDP is <a href="https://blogs.imf.org/2019/01/25/latin-america-and-the-caribbean-in-2019-a-moderate-expansion/">expected</a> to have fallen 50% between 2015 and 2019. </p>
<p>In a country where economic data is scarce, different oil products can be used as proxies for different kinds of economic activity. Venezuela’s oil and fuel oil export numbers give insights into the country’s incoming cash flow from abroad, for instance, while diesel consumption is a partial indicator for transport, industry and the power sector. Gasoline is a proxy for transport activity as well. </p>
<p>Diesel consumption declined by 11% on average each year in 2013-17, and gasoline shows a similar pattern with an average annual decline of 7% or by 27% over the same five-year period. Together, the two fuels account for approximately 70% of total oil demand in the country. From the graphic below, you can see that the collapse in oil consumption and GDP are staggeringly similar. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=548&fit=crop&dpr=1 754w, https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=548&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/262200/original/file-20190305-48426-2q6uku.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=548&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">ppp = purchasing power parity; MT = millions of tonnes; GDP from IMF.</span>
<span class="attribution"><span class="source">BP Statistical Review 2018</span></span>
</figcaption>
</figure>
<p>This is not to say that the oil consumption estimates from the likes of BP are anywhere near perfect. Multiple Venezuelan official energy statistics ceased to be published between 2012 and 2015, leaving experts to build the best possible estimates from multiple sources. </p>
<p>BP figures for total oil consumption have been consistently revised downwards every year in recent history, as reality always punches below expectations. You can see this in the following graph, where each coloured line represents a different year of the BP Statistical Review and the estimates included for Venezuelan oil consumption: the yellow line represents the 2018 edition, whose numbers are mostly lower than the estimates in previous years’ editions. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=548&fit=crop&dpr=1 754w, https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=548&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/262195/original/file-20190305-48438-jp936a.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=548&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">SR = BP Statistical Review of World Energy; MT = millions of tonnes.</span>
<span class="attribution"><span class="source">BP Statistical Reviews 2015-18</span></span>
</figcaption>
</figure>
<h2>The view from the ground</h2>
<p>People are not driving around anymore in Venezuela. To make things worse, 90% of buses were <a href="https://venezuelablog.org/venezuelas-public-transportation-crisis/">reportedly</a> out of action by mid-2018. This is a society that just doesn’t go out for work or travel. Businesses are also using less transportation, since they produce fewer goods than they used to – including food. The last implication is terrifying, and can easily be missed when solely looking at numbers. It is possible to survive without a car, but not without food. A litre of milk <a href="https://venezuelablog.org/venezuelas-public-transportation-crisis/">can now easily cost</a> a tenth of a monthly salary. </p>
<p>Energy prices have been severely distorted by a combination of explosive inflation and heavy fuel subsidies. By mid-2018, <a href="https://www.theguardian.com/world/2018/aug/10/venezuela-crisis-fuel-driving-census-maduro">you could buy</a> 3.5m litres of gasoline for a single US dollar, but could barely buy any basic food item. Yet even if you have enough money to fill up your tank, it is increasingly difficult to find fuel – and the cost of spare parts is exorbitant. </p>
<p>The future of oil output looks equally bleak. <a href="https://fas.org/sgp/crs/row/IF10715.pdf">Production</a> is quickly <a href="https://www.bloomberg.com/graphics/2018-venezuela-oil/">collapsing</a>, with refineries only running at an incredibly low 22% of capacity. The power system is actually taking a double hit: the part that depends on fossil fuels in the form of natural gas, diesel and some fuel oil is crumbling while the part driven by hydropower is being <a href="https://www.scientificamerican.com/article/where-climate-change-fits-into-venezuela-rsquo-s-ongoing-crisis/">undermined by</a> very low rainfall caused by changing climate patterns. The net result <a href="https://www.miamiherald.com/latest-news/article220464510.html">has been</a> thousands of power failures. A dry year could aggravate things further, requiring extra fossil fuels that the country is incapable of producing or affording. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/venezuela-us-sanctions-hurt-but-the-economic-crisis-is-home-grown-111280">Venezuela: US sanctions hurt, but the economic crisis is home grown</a>
</strong>
</em>
</p>
<hr>
<p>As the sanctions continue to bite and hyperinflation rages on, Venezuela’s oil consumption decline looks set to reach levels last seen in the 1990s. The country began <a href="https://www.spglobal.com/platts/en/market-insights/latest-news/oil/020419-venezuelas-pdvsa-begins-partial-rationing-of-gasoline-sources">rationing gasoline</a> in February, and is now in the awkward position of <a href="https://www.reuters.com/article/us-venezuela-politics-oil-supplies/venezuela-gets-fuel-from-russia-europe-but-the-bill-soars-idUSKCN1QA0H9">importing</a> refined fuels from Russia, India and Spain at “horrifying” premiums, according to an executive of PDVSA. One consequence of the sanctions is that they have affected Venezuela’s ability to transport heavy oil from its own oil fields, since this is made easier by adding diluting agents that are <a href="https://www.reuters.com/article/us-venezuela-politics-usa-sanctions-fact/factbox-u-s-sanctions-on-venezuelas-oil-industry-idUSKCN1PN34I">often imported</a> from the US. </p>
<p>The perfect storm of sanctions, inflation, production problems and <a href="https://www.scientificamerican.com/article/where-climate-change-fits-into-venezuela-rsquo-s-ongoing-crisis/">climate change risks</a> to power supply leaves us wondering how long it might take before the energy system comes to a total halt. As new oil statistics are published in the coming months, everyone from energy analysts to Washington policy hawks will be poring over them to try and understand where the country goes from here.</p><img src="https://counter.theconversation.com/content/112990/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>António Carvalho collaborates with BP for the Statistical Review of World Energy and Energy Outlook, but the views expressed here are his own. </span></em></p><p class="fine-print"><em><span>Jan Ditzen collaborates with BP for the Statistical Review of World Energy and Energy Outlook, but the views expressed here are his own. </span></em></p>The world’s most oil-abundant nation is heading for energy consumption levels not seen since the 1990s.António Carvalho, Research Associate (Centre for Energy Economics Research and Policy), Heriot-Watt UniversityJan Ditzen, Research Associate (Centre for Energy Economics Research and Policy), Heriot-Watt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1115032019-02-13T12:59:46Z2019-02-13T12:59:46ZWhat a major offshore gas find means for South Africa’s energy future<figure><img src="https://images.theconversation.com/files/258202/original/file-20190211-174873-flk6g5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><em>Many South African politicians, economists and specialists in the energy sector are celebrating the news that a promising show of <a href="https://www.iol.co.za/business-report/energy/total-discovers-net-gas-condensate-off-coast-of-sa-19175496">natural gas has been discovered</a> in deep water south of Mossel Bay. It was found in an offshore prospecting area called Brulpadda (Afrikaans for bullfrog), which is licensed to global energy giant Total.</em></p>
<p><em>The discovery, comes against the backdrop of <a href="https://www.businessinsider.co.za/how-the-petrol-increased-in-south-africa-the-last-10-years-2018-9">rising fuel prices</a> and an <a href="https://theconversation.com/explainer-why-south-africas-energy-generator-is-in-so-much-trouble-111510">electricity utility in crisis</a>, has raised hopes that it may be a game changer. The Conversation Africa’s Nontobeko Mtshali spoke to Robert Scholes and Rod Crompton about the significance of the find.</em></p>
<p><strong>Is this an energy “game-changer”?</strong></p>
<p>It’s not yet clear how big the find is. In a <a href="https://www.total.com/en/media/news/press-releases/total-makes-significant-discovery-and-opens-new-petroleum-province-offshore-south-africa">press release</a>, Total said it “could be around one billion barrels of global resources, gas and condensate light oil”. To put that in perspective, South Africa’s total refinery capacity is 700 000 barrels of oil <a href="http://www.sapia.org.za/overview/south-african-fuel-industry">per day</a>. </p>
<p>The gas is present over a relatively large vertical distance (57 metres), but it’s not clear how extensive the gas-rich area is. We simply won’t know until more holes are drilled, and <a href="https://library.seg.org/doi/10.1190/1.1440268">three-dimensional seismic surveys</a> are completed. </p>
<p>Gas can be converted into liquid fuels. There are only a few gas-to-liquids refineries around the world. PetroSA, South Africa’s national oil company, built one in Mossel Bay in 1989, which it still operates. It is the smallest refinery in the country.</p>
<p>The Brulpadda find contains condensates – a kind of light crude oil – which only PetroSA’s Mossel Bay refinery can process. </p>
<p>This means the biggest benefit will probably be to that refinery. It has a capacity of about 40 000 barrels <a href="http://www.sapia.org.za/overview/south-african-fuel-industry">a day</a>, and the Brulpadda find – given its proximity – could extend its life substantially.</p>
<p><strong>How does this change the national energy strategy?</strong></p>
<p>The government’s <a href="http://www.energy.gov.za/files/policies/whitepaper_energypolicy_1998.pdf">energy policy</a> and its <a href="https://www.ipp-gas.co.za/">Gas Utilisation Master Plan</a> agree that South Africa could usefully increase the amount of natural gas in the mix. It wants to diversify away from coal and imported crude oil.</p>
<p>Other reasons for increasing the use of gas are a bit counter-intuitive if your perception is that South Africa should be moving away from fossil fuels like gas and oil and into renewable energy sources, to reduce climate change and save money. </p>
<p>The problem is that solar energy and wind energy – the main forms of renewable energy available to South Africa – are both intermittent: the energy they supply fluctuates with the sunshine and the weather. </p>
<p>Currently the country fills the gaps between the variable supply and the consumer demand, which also fluctuates through the day and year, by turning on very expensive diesel-powered electricity generators. Switching them to natural gas could do this job more cheaply, more efficiently and with lower emissions, including of greenhouse gases. </p>
<p>So increasing the gas used increases the fraction of renewables which can be included in South Africa’s electricity mix, while still meeting a given electricity security and emissions target.</p>
<p><strong>Will this gas be used in South Africa, or exported into the global market?</strong></p>
<p>It’s too early for South Africa to be counting its chickens. It takes years to develop a gas-field to the point where it is producing gas. Many things can change in that period. The Brulpadda find is at great depth, both below the sea surface and below the sea floor. It will be challenging to develop in an area notorious for high winds and heavy seas. But the likelihood is that a modest-sized gas find on the South Coast would mostly be used in South Africa. </p>
<p>Compressing natural gas for long-distance export by sea is an expensive business. It needs major infrastructure, which South Africa currently doesn’t have. The country also doesn’t yet have a well-developed infrastructure for using gas, so the supply may initially be more than South Africa can consume. </p>
<p>But since there’s a captive market nearby, Total – an international, for profit company that will charge a market-related price for its gas – will almost certainly first try to sell it locally, rather than incur the cost of transporting it elsewhere. The most likely first candidates will be the PetroSA gas-to-liquids plant and the Gourikwa (diesel) power station near Mossel Bay.</p>
<p>The <a href="https://www.ogj.com/articles/print/volume-116/issue-4/exploration-development/south-africa-oil-and-gas-law-could-lead-to-further-exploration-in-2018-19.html">Mineral and Petroleum Resources Development Act amendment</a>, soon to be sent to the South African parliament after years of wrangling, is designed to protect national interests in this regard.</p><img src="https://counter.theconversation.com/content/111503/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Scholes is a Trustee of WWF-South Africa. He has been funded in the past to assess the pros and cons of shale gas in teh Karoo.</span></em></p><p class="fine-print"><em><span>Rod Crompton is the Director of the African Energy Leadership Centre at Wits Business School which receives some funding from the CHIETA. He is a non-executive director of Eskom and is affiliated with SANEA and the South African Association for Energy Economics.</span></em></p>It’s too soon for South Africa to start counting its chickens over the recent offshore gas find by global energy giant Total.Robert (Bob) Scholes, Systems Ecologist at the Global Change Institute (GCI), University of the Witwatersrand, University of the WitwatersrandRod Crompton, Adjunct professor African Energy Leadership Centre Wits Business School, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1084502018-12-12T11:41:48Z2018-12-12T11:41:48ZCheap oil is blocking progress on climate change<figure><img src="https://images.theconversation.com/files/250106/original/file-20181211-76986-72egl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ford's F-150 trucks are more popular when gas costs less.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Ford-Rouge-Factory/cc98222a8a2f46388f52a1793f56145a/45/0">AP Photo/Carlos Osorio</a></span></figcaption></figure><p>The relationship between <a href="https://www.investopedia.com/university/economics/economics3.asp">supply and demand</a>, a fundamental economic concept, holds that when the price of something rises, people use less of it. Similarly, when prices fall, they use more. </p>
<p>And <a href="https://www.businessinsider.com/economists-were-totally-wrong-about-cheap-oil-2015-5">it may seem logical</a> that <a href="https://www.bbc.com/news/business-34849384">low oil prices benefit</a> consumers, countries, even the world. When consumers save money on gas, they <a href="https://www.jpmorganchase.com/corporate/institute/what-do-gas-prices-tell-us-about-consumer-spending.htm">can spend it elsewhere</a>.</p>
<p>Yet, I argue that climate change makes this view obsolete.</p>
<p>That’s because cheap oil has two big downsides along with its short-term gains. It erodes the advantages of vehicles that get more miles to the gallon, making consumers less apt to do their share to reduce emissions by buying vehicles that use less fuel – or none at all. </p>
<p>It also makes the case for energy innovation seem less urgent to policymakers and the automotive industry.</p>
<h2>What’s not to like?</h2>
<p><a href="https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions">Burning fossil fuels</a>, the main source of manmade carbon dioxide, is the biggest cause of climate change. In the U.S. and other wealthy countries, <a href="https://www.eia.gov/energyexplained/index.php?page=environment_where_ghg_come_from">oil is the single largest source</a> of these emissions. </p>
<p>But relatively <a href="https://www.iea.org/oilmarketreport/omrpublic/">low prices are boosting petroleum sales worldwide</a>. Consumption is climbing particularly in Asia, where a sustained economic boom has <a href="https://ourworldindata.org/extreme-poverty">lifted billions out of poverty</a> and put millions <a href="https://www.statista.com/statistics/257657/passenger-car-sales-in-asia/">more people behind steering wheels</a>.</p>
<p>Those new middle-class and wealthy consumers and the industries
spawned by meteoric economic growth are burning millions of barrels of petroleum every day. This includes transport of goods by road, rail, water and air. But it is passenger vehicles that dominate global mobility, and they are consuming <a href="https://www.energy.gov/eere/vehicles/fact-834-august-18-2014-about-two-thirds-transportation-energy-use-gasoline-light">the greatest volume of fuel</a> in the U.S., China and everywhere else.</p>
<p>To be sure, petroleum is the raw material for a great many products besides gasoline, diesel and other fuels – <a href="https://www.businessinsider.com/things-that-can-be-made-with-one-barrel-of-oil-2016-9">from lipstick to asphalt</a>. The economic benefits of cheap oil can be widely distributed, <a href="https://www.economicshelp.org/blog/15601/oil/are-falling-oil-prices-good-for-the-economy/">bolstering growth and keeping inflation down</a>.</p>
<p><a href="https://twitter.com/realdonaldtrump/status/1065225779825598465?lang=en">President Donald Trump</a>, expressed this view when he likened low oil prices to “a big tax cut for America and the world” in a tweet.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1065225779825598465"}"></div></p>
<h2>Guzzling more gas</h2>
<p>But cheap oil has other effects as well. After improvements in fuel economy during the 1970s and early 80s, two decades of low gasoline prices reversed this trend, causing average miles per gallon to <a href="https://www.bts.gov/content/average-fuel-efficiency-us-light-duty-vehicles">actually decrease</a> a little in some years. Only in 2004, when prices rose, did fuel economy again become an issue.</p>
<p>After years of hovering around and even topping US$100 per barrel, aside from a brief peak during the Great Recession, <a href="https://www.macrotrends.net/2480/brent-crude-oil-prices-10-year-daily-chart">oil prices collapsed</a>. They fell to less than $50 by the end of 2014 and sank even lower in early 2015. </p>
<p>Oil prices are still <a href="https://www.cnbc.com/2018/12/10/citi-forecasts-60-brent-crude-in-2019-as-opec-policy-spurs-us-output.html">nowhere near $100 a barrel</a>.</p>
<p><iframe id="PskpC" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/PskpC/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Americans responded as economists would expect them to: <a href="https://www.energy.gov/eere/vehicles/articles/fotw-1024-april-9-2018-changes-vehicle-miles-travel-often-mirror-gasoline">by driving more</a>. The lower prices fell, the less it cost to fill their tanks. <a href="https://www.eia.gov/todayinenergy/detail.php?id=28612">Summertime gas consumption</a> hit an all-time high. </p>
<p>Unsurprisingly, U.S. emissions from transportation <a href="https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions">rose by 10 percent</a> between 2014 and 2017, even as they fell for electricity generation and other sectors.</p>
<p>In addition, drivers bought bigger vehicles. Sales of <a href="http://online.barrons.com/mdc/public/page/2_3022-autosales.html">SUVs, minivans and small pickups soared</a>, while <a href="https://www.calculatedriskblog.com/2018/09/annual-vehicle-sales-on-pace-to-decline.html">passenger car sales plummeted</a>.</p>
<p>By 2018, Americans were buying <a href="http://gerdaumarketupdate.com/2018/02/21/automotive-sales-6/">two SUVs or pickups for every sedan</a>. The trend, also present in Europe, is a core reason why emissions have risen from advanced nations <a href="https://www.iea.org/newsroom/news/2018/december/carbon-emissions-from-advanced-economies-set-to-rise-in-2018-for-first-time-in-fi.html">for the first time in five years</a>. </p>
<p>Automakers are responding by <a href="https://www.cnbc.com/2018/04/06/the-steadily-disappearing-american-car.html">phasing out passenger car production</a> and manufacturing more SUVs and trucks in a trend that reaches beyond U.S. borders. <a href="https://www.jato.com/global-domination-suvs-continues-2017/">SUV sales are surging around the world</a>.</p>
<p>Partly due to the extra miles driven and the size of the vehicles involved, <a href="https://www.iea.org/newsroom/news/2018/december/carbon-emissions-from-advanced-economies-set-to-rise-in-2018-for-first-time-in-fi.html">carbon dioxide emissions from wealthy nations rose</a> by 0.5 percent in 2018, following five years of decline. </p>
<h2>No one calls the shots</h2>
<p>But who controls oil prices? As an energy scholar and former <a href="https://scholar.google.com/citations?user=dCRySjIAAAAJ&hl=en">petroleum geoscientist</a>, I believe that it’s clear that no one does.</p>
<p>Governments can establish climate policies, such as <a href="https://theconversation.com/taxes-and-caps-on-carbon-work-differently-but-calibrating-them-poses-the-same-challenge-104898">carbon pricing</a>, stiff fuel taxes and other measures, that raise gasoline prices. But, as the recent <a href="https://theconversation.com/emmanuel-macrons-carbon-tax-sparked-gilets-jaunes-protests-but-popular-climate-policy-is-possible-108437">French protests</a> and two defeats in a row in <a href="https://theconversation.com/americans-got-to-vote-on-lots-of-energy-measures-in-2018-and-mostly-rejected-them-105783">Washington state for a carbon fee or tax</a> have shown, there are limits to how far or fast they can go, even in rich countries.</p>
<p>And low-income nations view such measures as damaging and intrusive. Raising fuel prices has inspired massive resistance, even riots, in nations as diverse as <a href="https://www.reuters.com/article/us-india-election-fuel/indian-opposition-calls-nationwide-protests-to-take-on-modi-over-fuel-prices-idUSKCN1LM28D">India</a>, <a href="https://www.reuters.com/article/us-iran-rallies-explainer/what-has-brought-iranian-protesters-to-the-streets-idUSKBN1EP0KP">Iran</a>, <a href="https://www.theguardian.com/world/2017/jan/06/mexico-gasoline-protests-four-dead-and-hundreds-arrested-during-mass-looting">Mexico</a> and <a href="https://www.aljazeera.com/news/2018/07/haiti-suspends-fuel-price-hike-deadly-protests-180708054947059.html">Haiti</a>.</p>
<p>The Organization of Petroleum Exporting Countries has teamed up with Russia to create an <a href="https://theconversation.com/saudi-arabia-is-allying-with-russia-to-shore-up-oil-prices-as-opecs-power-wanes-108310">oil-exporting alliance known as OPEC+</a>. Those countries can cut supplies to increase prices, as they agreed to do in December 2018. They can also increase output, should they wish to lower prices.</p>
<p>Yet that doesn’t mean that exporters have the power to call all the shots. For example, if China – the <a href="https://www.eia.gov/todayinenergy/detail.php?id=34812">world’s largest oil importer</a> – were to have a big recession, Saudi Arabia and Russia would probably have <a href="https://www.cnbc.com/2018/09/03/china-demand-for-oil-is-a-serious-concern-for-the-middle-east.html">trouble finding buyers</a> for all of the oil they want to export. Overproduction in that scenario would make oil prices sink.</p>
<p>There is another reason the group can’t dominate. They must compete against the world’s <a href="https://www.eia.gov/todayinenergy/detail.php?id=37053">largest oil producer</a> and most rapidly <a href="https://www.eia.gov/todayinenergy/detail.php?id=37092">growing crude exporter</a>: the U.S. </p>
<h2>Electrifying solutions</h2>
<p>Advances in drilling technology have made it <a href="https://www.brookings.edu/blog/order-from-chaos/2017/10/19/the-new-energy-abundance-what-happens-when-energy-prices-are-lower-for-longer/">easier than ever to produce petroleum</a> at a time when humanity should use less of it for the planet’s sake.</p>
<p>Until and unless <a href="https://theconversation.com/switching-to-electric-vehicles-could-save-the-us-billions-but-timing-is-everything-106227">electric vehicles</a> become dominant, it will prove extremely hard to wean the world off of oil.</p>
<p>I believe that governments and automakers should for this reason be working together for the long term. By providing strong incentives for consumers and industries to make the jump, they can stop letting cheap oil stymie climate action.</p>
<p>Otherwise, as hundreds of millions more people become drivers in coming decades, the laws governing supply and demand could steer all of us down a road to devastating degrees of global warming.</p><img src="https://counter.theconversation.com/content/108450/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Scott L. Montgomery does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Drivers buy less gas when filling the tank burns holes in their wallets.Scott L. Montgomery, Lecturer, Jackson School of International Studies, University of WashingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1083102018-12-07T22:24:56Z2018-12-07T22:24:56ZSaudi Arabia is allying with Russia to shore up oil prices as OPEC’s power wanes<figure><img src="https://images.theconversation.com/files/249490/original/file-20181207-128193-19dil0d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Saudi Minister of Energy, Industry and Mineral Resources Khalid Al-Falih</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Austria-OPEC-Meeting/493f49b4024b43fcb79df3a2cfd05178/2/0">AP Photo/Ronald Zak</a></span></figcaption></figure><p>The Organization of the Petroleum Exporting Countries likes to look united. </p>
<p>That’s evident when <a href="https://www.cnbc.com/2018/11/30/opec-meeting-may-end-with-confusion-and-lower-oil-prices.html">OPEC leaders meet in Vienna</a> at the end of each year to decide how much oil its members will aim to produce the next year. There is always a show of togetherness and the appearance of the quasi-cartel’s ability to move markets.</p>
<p>But the truth is, OPEC is in the midst of a major crisis made more evident by <a href="https://www.cnn.com/2018/12/03/business/qatar-opec-withdrawal/index.html">Qatar’s announcement that it would be leaving OPEC</a>, partly to protest Saudi dominance over the group.</p>
<p>My research has taken me through the <a href="http://www.e-ir.info/2016/01/19/the-oil-of-iran-past-and-present-in-perspective/">history of oil</a>, particularly the relationship between oil revenues, economic development and the geopolitical balance of power in the 1960s and 1970s. I believe that rather than the arbiter of global energy, OPEC has often been held back by division, disagreement and divergent interests.</p>
<p>This weakness helps explain why OPEC has struggled to move markets in effective ways since the 2014 collapse of oil prices. The latest <a href="https://www.bloomberg.com/news/articles/2018-12-07/opec-said-to-agree-larger-than-expected-output-cut-with-allies">production cuts</a>, which were bigger than expected but followed considerable acrimony, are further proof that OPEC’s disunity remains intact.</p>
<h2>Early days: Divided and powerless</h2>
<p>OPEC was formed from frustration. In the 1950s, the <a href="https://sites.google.com/site/globaloilproduction12/1950-s-oil-production">world was awash in oil</a> as small nations in the Middle East and Latin America discovered enormous deposits. </p>
<p>To gain access to those deposits, the major oil companies, known as the “<a href="http://www.americanforeignrelations.com/O-W/Oil-The-seven-sisters.html">Seven Sisters</a>,” signed concessionary agreements with local governments. This arrangement gave <a href="http://www.americanforeignrelations.com/O-W/Oil-Oil-and-world-power.html">the companies control over the oil</a> – they set production levels and prices – while governments simply collected a check. </p>
<p>In February 1959, amid an oil glut, the Seven Sisters decided that a <a href="http://www.opec.org/opec_web/static_files_project/media/downloads/publications/GenInfo.pdf">price correction</a> was necessary. Acting unilaterally, they <a href="https://www.quandl.com/data/BP/CRUDE_OIL_PRICES-Crude-Oil-Prices-from-1861">cut the price of oil</a>, from US$2.08 to $1.80 by August 1960.</p>
<p>That may sound odd today, but back then oil prices didn’t always follow market forces and were typically set by the companies. </p>
<p>The cuts meant a significant loss of revenue for the oil-producing states. In protest, the oil ministers of Iraq, Iran, Venezuela, Saudi Arabia and Kuwait <a href="https://www.opec.org/opec_web/en/50th_anniversary/1893.htm">met in Baghdad</a> that September and formed <a href="http://www.opec.org/opec_web/en/about_us/24.htm">OPEC</a> to achieve a more equitable arrangement with the Seven Sisters. Algeria, Qatar, Indonesia and Libya joined later.</p>
<p>But the big oil exporters like Iran and Saudi Arabia could do little to coerce the companies. Oil was abundant, and the companies could successfully exclude any country from the market, as <a href="http://www.iranchamber.com/history/oil_nationalization/oil_nationalization.php">they did with Iran in 1951</a>. OPEC did not possess enough market share or unity to pressure the companies into surrendering control over price. </p>
<h2>A new balance of power</h2>
<p>OPEC couldn’t agree on a consistent policy among its members. Saudi Arabia wanted to keep production levels low and prices consistent. Iran wanted prices pushed as high as possible in order to maximize revenue. </p>
<p>According to <a href="https://ci.nii.ac.jp/ncid/BA06571562?l=en">Ian Skeet</a>, a scholar and an oil consultant, the shah of Iran sought a separate agreement that sabotaged an attempt to extract more favorable terms from the Seven Sisters in 1963.</p>
<p>During the 1960s, OPEC failed to form a united front.</p>
<p>Nevertheless, things were changing. <a href="https://sites.google.com/site/globaloilproduction12/1960-s-oil-production">Demand for oil</a> shot up and U.S. production stagnated. The Seven Sisters’ power was undermined by international competitors drilling new fields in North Africa, where <a href="http://www.history.com/this-day-in-history/qaddafi-leads-coup-in-libya">Libya’s Muammar Qaddafi threatened</a> to shut off supply if he didn’t get higher prices. Oil giants faced <a href="http://www.ogj.com/articles/print/volume-103/issue-17/general-interest/the-1973-oil-embargo-its-history-motives-and-consequences.html">more pressure</a> to deliver better terms to producing governments.</p>
<p>These conditions, while not the result of OPEC’s actions, gave it an opportunity to upset the balance of power. </p>
<h2>Embargo, revolution and crisis</h2>
<p>This shift accelerated in the 1970s as <a href="http://acc.teachmideast.org/texts.php?module_id=4&reading_id=120&sequence=21">war broke out</a> between Israel and its Arab neighbors in October 1973.</p>
<p>To punish the U.S. for supporting the Jewish state, Arab oil producers (<a href="http://www.ogj.com/articles/print/volume-103/issue-17/general-interest/the-1973-oil-embargo-its-history-motives-and-consequences.html">not all OPEC members, as popularly believed</a>) cut production and declared <a href="http://www.npr.org/sections/parallels/2013/10/15/234771573/the-1973-arab-oil-embargo-the-old-rules-no-longer-apply">an embargo</a> against the United States.</p>
<p>OPEC also demanded a higher oil price. After rejecting a small gesture from the Seven Sisters, OPEC announced it would double the price to $5 – then hiked it again to $11.65. </p>
<p>How did the <a href="https://www.cambridge.org/core/journals/business-history-review/article/oil-price-revolution-by-steven-a-schneider-baltimore-johns-hopkins-university-press-1983-xv-630-pp-3500/70DD61D5E545B88473F55F30EA3C2EC8">balance of power seem to shift</a> so suddenly? Among other reasons, oil companies could not agree among themselves on a new oil price and they were tempted by the big profits that would result. OPEC seized control of the market largely due to circumstances <a href="http://vm136.lib.berkeley.edu/BANC/ROHO/projects/debt/oilcrisis.html">beyond its control</a>. </p>
<p>Despite its victory, OPEC had come no closer to resolving its internal divisions. This became evident when the next energy crisis hit, in 1979, when Iran’s revolution broke out.</p>
<p><a href="http://www.federalreservehistory.org/Events/DetailView/40">Global oil markets panicked</a>. Iranian production fell. And other OPEC members sold their own oil at costly premiums, <a href="http://www.history.com/this-day-in-history/opec-states-raise-oil-prices">sending the price even higher</a>.</p>
<p>Saudi Arabia tried to impose <a href="http://www.theoildrum.com/node/7363">a quota system</a>. Most members ignored their quotas or overproduced. </p>
<p>Meanwhile, oil-importing countries like the U.S. and the U.K. sought improve fuel efficiency and invested in domestic oil production in places like Alaska the North Sea. By 1985, OPEC’s share of the global market <a href="http://www.nytimes.com/1989/12/30/business/worrying-anew-over-oil-imports.html?pagewanted=all">had fallen below 30 percent</a>.</p>
<p>By 1986, Saudi Arabia had had enough. Without warning, its <a href="https://www.wrmea.org/1986-december/opec-saudi-arabia-gets-tough.html">production shot up by more than 2 million barrels per day</a>, flooding the market and pushing the average price down to $18 per barrel, about $39 today, <a href="https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html">according to oil company records.</a></p>
<p>This move indicated Saudi willingness to use its massive reserves to “correct” the market and push out high-cost producers, even at the cost of its OPEC allies.</p>
<p><iframe id="PskpC" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/PskpC/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Russia’s new role</h2>
<p>As OPEC’s fortunes have oscillated with increasing volatility since the 1986 shock, cooperation has remained elusive.</p>
<p>In 2014, oil prices began to decline, due to increasing U.S. production. To squeeze out American drillers, Saudi Arabia pumped more oil, <a href="https://www.weforum.org/agenda/2016/03/what-s-behind-the-drop-in-oil-prices/">sending prices to historic inflation-adjusted lows in early 2016.</a> </p>
<p>But the move backfired: U.S. producers held on, while OPEC members like Venezuela endured enormous economic pain.</p>
<p>To gain leverage, Saudi Arabia has partnered with Russia, a major oil exporter that doesn’t belong to OPEC, forming what some analysts have called <a href="https://www.reuters.com/article/us-oil-opec-saudi-russia-format/russia-saudi-arabia-agree-opec-format-should-be-extended-idUSKBN1JB2E7">OPEC+</a>. The two countries now coordinate their production cuts to stabilize prices.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1068535161568944130"}"></div></p>
<h2>OPEC+ minus one</h2>
<p>Not all OPEC members are happy about this arrangement, including Qatar, a small Persian Gulf state. It <a href="https://www.bbc.com/news/world-middle-east-40173757">has been at odds with Saudi Arabia since 2017</a>. In December 2018, Qatar announced it would be leaving OPEC to concentrate on <a href="https://www.eia.gov/beta/international/country.php?iso=QAT">liquefied natural gas</a> exports. </p>
<p>Meanwhile, President Donald Trump was <a href="https://www.bbc.com/news/business-46427240">imploring OPEC to pump more oil rather than less of it</a>, to keep gasoline prices low.</p>
<p>When OPEC+ met in Vienna it didn’t buckle. But the <a href="https://www.cnbc.com/2018/12/07/opec-meeting-saudi-arabia-and-russia-look-to-impose-production-cuts.html">deal it reached</a> followed <a href="https://www.cnbc.com/2018/12/06/opec-meeting-oil-prices-in-focus-as-saudi-arabia-russia-discuss-production.html">considerable disagreement, which laid bare divisions</a> within the group over how much oil output it should cut. In the end, Russia and Saudi Arabia agreed to do most of the cutting required to slash oil production by 1.2 million barrels per day. And Iran did not pledge any cuts at all.</p>
<p>The overall cut was <a href="https://www.bloomberg.com/news/articles/2018-12-07/opec-said-to-agree-larger-than-expected-output-cut-with-allies">bigger than expected</a>. But Iran’s defiance, Qatar’s departure and the fight over cuts underscores what has been true from the very beginning: OPEC projects unity, but behind the scenes the group struggles with division, disunity and differing interests. </p>
<p><em>Portions of this article appeared in a related article first published on <a href="https://theconversation.com/is-opecs-oil-era-over-59117">June 2, 2016.</a></em></p><img src="https://counter.theconversation.com/content/108310/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gregory Brew writes for Oilprice.com, where he analyzes energy and geopolitics.</span></em></p>The oil-exporting organization may have mustered the political will to cut production, but its disunity remains intact.Gregory Brew, Postdoctoral Fellow, Center for Presidential History, Southern Methodist UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1062092018-11-29T11:38:43Z2018-11-29T11:38:43ZThe surprising way plastics could actually help fight climate change<figure><img src="https://images.theconversation.com/files/247819/original/file-20181128-32180-3tqo68.jpg?ixlib=rb-1.1.0&rect=68%2C15%2C544%2C356&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Over 99 percent of today's plastics come from oil, but new bio-based options are becoming available.</span> <span class="attribution"><a class="source" href="https://www.flaticon.com">Icons by Vectors Market, Freepik and srip</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>What do your car, phone, soda bottle and shoes have in common? They’re all largely made from petroleum. This nonrenewable resource gets processed into a versatile set of chemicals called polymers – or more commonly, plastics. Over <a href="https://www.eia.gov/dnav/pet/PET_PNP_PCT_DC_NUS_PCT_A.htm">5 billion gallons of oil each year</a> are converted into plastics alone.</p>
<p>Polymers are behind many important inventions of the past several decades, like <a href="https://theconversation.com/3d-printers-a-revolutionary-frontier-for-medicine-83031">3D printing</a>. So-called “engineering plastics,” used in applications ranging from automotive to construction to furniture, have superior properties and can even help solve environmental problems. For instance, thanks to engineering plastics, <a href="https://www.chicagotribune.com/bp/chi-branded-aranet-automotive-improving-automobile-fuel-efficiency-with-plastics-story.html">vehicles are now lighter weight</a>, so they get better fuel mileage. But as the number of uses rises, <a href="https://www.springer.com/us/book/9783319165097">so does the demand for plastics</a>. The world already produces over 300 million tons of plastic every year. The number could be six times that by 2050.</p>
<p>Petro-plastics aren’t fundamentally all that bad, but they’re a missed opportunity. Fortunately, there is an alternative. Switching from petroleum-based polymers to polymers that are biologically based could decrease carbon emissions by hundreds of millions of tons every year. <a href="http://www.jbc.org/content/early/2018/01/16/jbc.TM117.000368.short">Bio-based polymers</a> are not only renewable and more environmentally friendly to produce, but they can actually have a net beneficial effect on climate change by acting as a carbon sink. But not all bio-polymers are created equal.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247863/original/file-20181129-170250-q1nrzz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Bioplastics don’t depend on drilling for oil since they get their carbon from CO₂ already in the atmosphere.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/oil-pump-458865643">QiuJu Song/Shutterstock.com</a></span>
</figcaption>
</figure>
<h2>Degradable bio-polymers</h2>
<p>You may have encountered “<a href="https://www.acs.org/content/dam/acsorg/education/resources/highschool/chemmatters/videos/chemmatters-april2010-bioplastics.pdf">bioplastics</a>” before, as disposable utensils in particular – these plastics are derived from plants instead of oil. Such bio-polymers are made by feeding sugars, most often from sugar cane, sugar beets, or corn, to microorganisms that produce precursor molecules that can be purified and chemically linked together to form polymers with various properties. </p>
<p>Plant-derived plastics are better for the environment for two reasons. First, there is a dramatic reduction in the energy required to manufacture plant-based plastics – <a href="https://doi.org/10.1021/es7032235">by as much as 80 percent</a>. While each ton of petroleum-derived plastic generates 2 to 3 tons of CO₂, this can be reduced to about 0.5 tons of CO₂ per ton of bio-polymer, and the processes are only getting better.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247820/original/file-20181128-32233-sytab0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">It’s one thing for a cup to easily disintegrate, quite another for your car’s components.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/sapphir3blu3/3390966069">Michelle Kinsey Bruns/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Second, plant-based plastics can be biodegradable, so they don’t accumulate in landfills.</p>
<p>While it’s great for disposables like plastic forks to biodegrade, sometimes a longer lifetime is important – you probably wouldn’t want the dashboard of your car to slowly turn into a pile of mushrooms over time. Many other applications require the same type of resilience, such as construction materials, medical devices and home appliances. Biodegradable bio-polymers are also not recyclable, meaning more plants need to be grown and processed continually to meet demand.</p>
<h2>Bio-polymers as carbon storage</h2>
<p><a href="https://www.nrel.gov/docs/fy16osti/65509.pdf">Plastics, no matter the source, are mainly made of carbon</a> – about 80 percent by weight. While petroleum-derived plastics don’t release CO₂ in the same way that burning fossil fuels does, they also don’t help sequester any of the excess of this gaseous pollutant – the carbon from liquid oil is simply converted into solid plastics.</p>
<p>Bio-polymers, on the other hand, are <a href="https://theconversation.com/how-plastics-made-from-plants-could-be-the-answer-to-the-worlds-waste-problem-89475">derived from plants</a>, which use photosynthesis to convert CO₂, water and sunlight to sugars. When these sugar molecules are converted into bio-polymers, the <a href="https://theconversation.com/us/topics/carbon-sequestration-5324">carbon is effectively locked away</a> from the atmosphere – as long as they’re not biodegraded or incinerated. Even if bio-polymers end up in a landfill, they will still serve this carbon storage role.</p>
<p>CO₂ is only about 28 percent carbon <a href="https://thinkprogress.org/the-biggest-source-of-mistakes-c-vs-co2-c0b077313b/">by weight</a>, so polymers comprise an enormous reservoir in which to store this greenhouse gas. If the current world annual supply of around 300 million tons of polymers were all non-biodegradable and bio-based, this would equate to a gigaton — a billion tons — of sequestered CO₂, about 2.8 percent of <a href="https://www.co2.earth/global-co2-emissions">current global emissions</a>. In a <a href="http://www.ipcc.ch/report/sr15/">recent report</a>, the Intergovernmental Panel on Climate Change outlined capturing, storing and reusing carbon as a key strategy for mitigating climate change; bio-based polymers could make a key contribution, up to 20 percent of the CO₂ removal required to limit global warming to 1.5 degrees Celsius.</p>
<h2>The non-degradable biopolymer market</h2>
<p>Current carbon sequestration strategies, including <a href="https://theconversation.com/carbon-capture-and-storage-a-vital-part-of-our-climate-change-response-3972">geological storage</a> that pumps CO₂ exhaust underground or <a href="https://www.nytimes.com/2018/04/18/magazine/dirt-save-earth-carbon-farming-climate-change.html">regenerative agriculture</a> that stores more carbon in the soil, lean heavily on policy to drive the desired outcomes.</p>
<p>While these are critical mechanisms for climate change mitigation, the sequestration of carbon in the form of bio-polymers has the potential to harness a different driver: money. </p>
<p>Competition based on price alone has been challenging for bio-polymers, but <a href="https://www.nrel.gov/docs/fy16osti/65509.pdf">early successes</a> show a path toward greater penetration. One exciting aspect is the ability to access new chemistries not currently found in petroleum-derived polymers.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247798/original/file-20181128-32236-1mq90mv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Petro-plastic bottles can only be recycled a couple times max.</span>
<span class="attribution"><a class="source" href="https://pixabay.com/en/plastic-bottles-bottles-recycling-115077/">hans/pixabay</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p><a href="https://theconversation.com/why-cant-all-plastic-waste-be-recycled-100857">Consider recyclability</a>. Few traditional polymers are <a href="https://mbdc.com/project/cradle-to-cradle-book/">truly recyclable</a>. These materials actually are most often downcycled, meaning they’re suitable only for low-value applications, such as construction materials. Thanks to the tools of genetic and enzyme engineering, however, properties like <a href="https://pubs.acs.org/doi/abs/10.1021/acs.iecr.6b02931">complete recyclability</a> – which allows the material to be used repeatedly for the same application – can be designed into bio-polymers from the beginning. </p>
<p><a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5151099/">Bio-polymers today</a> are based largely on natural fermentation products of certain species of bacteria, such as the production by Lactobacillus of lactic acid – the same product that provides the tartness in sour beers. While these constitute a good first step, emerging research suggests the true versatility of bio-polymers is set to be unleashed in the coming years. Thanks to the <a href="http://www.jbc.org/content/early/2018/01/16/jbc.TM117.000368.short">modern ability to engineer proteins and modify DNA</a>, custom design of bio-polymer precursors is now in reach. With it, a world of new polymers become possible – materials in which today’s CO₂ will reside in a more useful, more valuable form.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247821/original/file-20181128-32221-7qcsan.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Planes are starting to be made of polymers as well – bio-polymers are the next step.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:F-WWCF_A350_LBG_SIAE_2015_(18953559366).jpg">Eric Salard/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>For this dream to be realized, more research is needed. While early examples are here today – like the partially <a href="https://www.coca-colacompany.com/plantbottle-technology">bio-based Coca-Cola PlantBottle</a> – the bioengineering required to achieve many of the most promising new bio-polymers is still in the research stage – like a <a href="http://science.sciencemag.org/content/358/6368/1307">renewable alternative to carbon fiber</a> that could be used in everything from bicycles to wind turbine blades. </p>
<p>Government policies supporting carbon sequestration would also help drive adoption. With this kind of support in place, significant use of bio-polymers as carbon storage is possible as soon as the next five years – a timeline with the potential to make a significant contribution to helping solve the climate crisis.</p><img src="https://counter.theconversation.com/content/106209/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joseph Rollin receives funding from the National Renewable Energy Laboratory. </span></em></p><p class="fine-print"><em><span>Jenna E. Gallegos does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>One big problem with plastics is that they’re largely made of petroleum. Sourcing bio-polymers from plants and bacteria has some big benefits – and the technology is starting to take off.Joseph Rollin, Postdoctoral Researcher in Bioenergy, National Renewable Energy LaboratoryJenna E. Gallegos, Postdoctoral Researcher in Chemical and Biological Engineering, Colorado State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/962712018-05-08T20:12:02Z2018-05-08T20:12:02ZAustralia’s fuel stockpile is perilously low, and it may be too late for a refill<figure><img src="https://images.theconversation.com/files/218033/original/file-20180508-46335-1i3mq3t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia currently keeps only a fraction of the fuel it needs in reserve.</span> </figcaption></figure><p>Australia is an island nation that depends heavily on imported fuel – and our stockpile is critically low. According to <a href="http://www.news.com.au/finance/economy/australian-economy/government-launches-urgent-fuel-security-review-as-reserves-dip-below-50-days/news-story/90a4e47c776fb505b9e14408d243705d">recent reports</a>, we have just 22 days’ worth of crude oil, 59 days of liquefied petroleum gas (LPG), 20 days of petrol, 19 days of aviation fuel, and 21 days of diesel in reserve.</p>
<p>This is clearly in contravention of Australia’s <a href="https://www.energy.gov/sites/prod/files/2016/08/f33/IEA%20Emergency%20Response%%2020of%20IEA%20Countries_2014.pdf">obligation</a> as a member of the International Energy Agency (IEA) to hold at least 90 days of supply.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/running-on-empty-australias-risky-approach-to-oil-supplies-23619">Running on empty: Australia's risky approach to oil supplies</a>
</strong>
</em>
</p>
<hr>
<p>Australia is the only import-dependent country in the IEA that has not imposed any stockholding obligation and which has no current bilateral obligation to stockpile in another country. This makes us highly vulnerable to international disruptions. These might include political instability and air strikes in OPEC countries, or transit difficulties in established routes such as the Straits of Hormuz and the Strait of Malacca – the latter a <a href="https://ctc.usma.edu/assessing-the-recent-terrorist-threat-to-the-malacca-strait/">known target for offshore terrorism</a>.</p>
<p>In response, the federal energy minister, Josh Frydenberg, has <a href="http://www.abc.net.au/news/2018-05-%2007/australia-has-limited-emergency-%20fuel-stocks-%20left/9734164">ordered a liquid fuel security review</a>, to be completed by the end of 2018. It will examine how fuel is supplied and used in Australia, and assess our capacity to withstand international disruption. </p>
<p>The expectation is that once the review is completed, we will be in a position to comply with our IEA obligations by 2026. But that is eight years away. If there is disruption before that, our low stockpiles may rapidly diminish and the review will be too little, too late.</p>
<h2>What are our obligations?</h2>
<p>Australia is one of 29 IEA countries. Twenty of them (including Australia) have minimum stockholding obligations, as IEA members, which require at least 90 days of supply. Members that are also within the European Union are subject to an even more stringent stockholding directive, introduced in 2009. This requires them to cover either 90 days of net imports or 61 days of consumption, whichever is greater. </p>
<p>This effectively means that net exporting countries such as Denmark, which are excluded from the IEA stockpiling obligations, are nevertheless required to hold 61 days of consumption in reserve.</p>
<p>There are three types of fuel stockpile that countries can use to ensure they meet the minimum requirements: industry stock, government stock, and specialist agency stock.</p>
<p><strong>Industry stock</strong> is (as the name suggests) held by industry, whether for commercial purposes or to comply with legislative requirements. Ordinarily, the obligation imposed is set in proportion to the company’s oil import share, or its share of sales in the domestic market. Twenty of the 29 IEA countries meet their obligations through legislative obligations on industry stock. </p>
<p><strong>Government stock</strong> is held exclusively for emergency purposes. Legislative mandates for emergency government stock exist in New Zealand and the United States. But Australia has no legislation that requires the government to
maintain an emergency fuel stockpile. </p>
<p><strong>Agency stocks</strong> are held by a separate agency that has the responsibility to stockpile in accordance with legislative requirements. Such agencies may be administered either by industry or by government. Such agencies exist in Spain and Ireland – but, again, Australia has no equivalent agency.</p>
<p>Depending on differences in oil market structure, geography and national policy, IEA-compliant countries may impose mandates upon one or more category of stockholders. Australia imposes no legislative mandate upon any category. This effectively means it has no rules at all about maintaining a proper fuel stockpile. </p>
<h2>Why is Australia non-compliant?</h2>
<p>Australia has reached this critical point for several reasons. </p>
<p>The first is simply a product of inertia. Unlike the fuel shocks suffered by the United States in the 1970s, for instance, Australia has never experienced strong fuel disruption. Having been used to having huge surpluses of coal, gas and uranium, energy security has never been a strong concern.</p>
<p>This also reflects our tendency as a nation to be reactive rather than proactive when it comes to energy security. Added to this is the lingering free market complacency that underpins our refusal to impose extra regulations on private industry in response to global security issues.</p>
<p>The second reason is economic. The IEA stockholding obligation does not determine whether the reserve must be in the form of crude or refined oil. This is a significant issue because storing refined products is more expensive than storing crude oil. Australia, with limited domestic refining capacity following the <a href="https://theconversation.com/security-in-doubt-as-australias-aging-oil-refineries-%20shut-down-5553">closure of ageing oil refineries</a>, will need to bear a greater storage burden than other countries because we need to stockpile refined products.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/security-in-doubt-as-australias-aging-oil-refineries-shut-down-5553">Security in doubt as Australia's aging oil refineries shut down</a>
</strong>
</em>
</p>
<hr>
<h2>The future</h2>
<p>The liquid fuel security review is long overdue. We have been aware of our fuel
vulnerabilities for many years. </p>
<p>Singapore provides us with most our refined petroleum and, in turn, relies on the Middle East for <a href="https://theconversation.com/australias-growing-oil-imports-are-an-energy-security-issue-7749">more than 80% of its crude oil supply</a>. There is no doubt that political instability in the Strait of Hormuz could <a href="https://theconversation.com/running-on-empty-australias-risky-approach-to-oil-supplies-23619">seriously hurt our energy security</a>. </p>
<p>Petrol, diesel and jet fuel together account for <a href="http://www.environment.gov.au/minister/frydenberg/media-releases/mr20180507.html">98% of our transport needs</a>. If conflict did break out, or crucial transport routes were blocked or subject to significant terrorism threats, Australia would face the real possibility of running out of fuel. </p>
<p>This is an unacceptable risk. We urgently need legislation that will give us a much bigger buffer against global energy uncertainty.</p><img src="https://counter.theconversation.com/content/96271/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samantha Hepburn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia depends on imported fuel to keep running. We never got around to setting up an official reserve, and that means we’re already at risk.Samantha Hepburn, Director of the Centre for Energy and Natural Resources Law, Deakin Law School, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/883372017-12-01T16:31:44Z2017-12-01T16:31:44ZStoring carbon under the North Sea: are wrong sites being looked at?<figure><img src="https://images.theconversation.com/files/197347/original/file-20171201-17360-1b14j75.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">shutterstock</span> <span class="attribution"><span class="source">belfastlough via Shutterstock</span></span></figcaption></figure><p>One effective way of reducing greenhouse gas emissions driving climate change is to prevent carbon dioxide from reaching the atmosphere by capturing and storing it. There <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/651916/BEIS_The_Clean_Growth_online_12.10.17.pdf">are now</a> 21 large-scale carbon capture and storage (CCS) facilities either operating or being built around the world, including in the US, Australia, Canada and Saudi Arabia. </p>
<p>The UK looked like joining them until the government <a href="http://www.bbc.co.uk/news/uk-scotland-scotland-business-38687835">cancelled</a> its £1 billion competition in 2015 which had intended to lead to deployment of the technology. In October, however, a new £100m commitment was announced, potentially benefiting CCS projects in <a href="https://www.globalccsinstitute.com/projects/caledonia-clean-energy-project">Grangemouth</a>, <a href="http://www.teessidecollective.co.uk">Teesside</a> and <a href="http://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-41167176">Aberdeenshire</a>. </p>
<p>This includes a cost reduction drive aimed at having a fleet of CCS facilities by the 2030s. The UK government also recently published a new <a href="https://www.gov.uk/government/news/modern-industrial-strategy-to-boost-business-support-for-scotland">industrial strategy</a> placing clean energy systems including carbon capture at its heart; and the Scottish government has continually promoted and supported feasibility studies. </p>
<p>The three current UK proposals all seek to store the carbon dioxide (CO₂) offshore, probably still the simplest option for the country. But it comes with a major presumption – that the geology works and the gas won’t escape. </p>
<h2>Performing seals</h2>
<p>The offshore options on the table are depleted petroleum fields and saline aquifers – massive porous sedimentary rock formations saturated with salt water. The petroleum fields are closed-off “traps” that sit within these aquifers. Potentially this makes traps more secure for storage, but aquifers have vastly more storage capacity and may well be required to store CO₂ in substantial quantities. </p>
<p>The Grangemouth and Aberdeenshire projects are both looking at depleted fields in the Moray Firth in the north of Scotland, while Teesside is looking at the Triassic Bunter Sandstone saline aquifer off east England in the southern North Sea. The two leading proposals in the UK government’s previous competition had similar plans – a <a href="https://sequestration.mit.edu/tools/projects/peterhead.html">Shell/SSE Aberdeenshire project</a> would have used the Moray Firth while <a href="https://www.globalccsinstitute.com/projects/white-rose-ccs-project">White Rose</a> in Yorkshire would have used Triassic Bunter. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=437&fit=crop&dpr=1 600w, https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=437&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=437&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=549&fit=crop&dpr=1 754w, https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=549&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/196953/original/file-20171129-29134-1q36qd7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=549&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Electric dreams.</span>
<span class="attribution"><a class="source" href="https://ukccsrc.ac.uk/news-events/news/wales-and-ccs">Sitiardi21</a></span>
</figcaption>
</figure>
<p>Oil and gas is trapped in a field or saline aquifer by <a href="http://www.glossary.oilfield.slb.com/Terms/s/seal.aspx">a robust seal</a> – a layer of fairly impermeable rock surrounding the reservoir. To store CO₂ securely, it must not be able to leak or react with the seal either now or in future – or escape up faults that break the seal or leak along borehole walls. </p>
<p>It is essential to completely understand the physical properties and general integrity of seals in relation to CO₂. After all, it is a more mobile and smaller molecule (0.28nm) than gases more commonly trapped in petroleum reservoirs such as methane (0.38nm) or longer chained hydrocarbons. </p>
<p>Some gas accumulations do contain CO₂, which points to where storage will be viable. The Fizzy and Oak discoveries in the southern North Sea are examples, as are the North Morecambe and Rhyl gas fields in the East Irish Sea Basin off north-west England. </p>
<p>On the other hand, there was no CO₂ in the Goldeneye field in the Moray Firth that Shell/SSE considered. There are no indications that the adjacent Atlantic field proposed for the Grangemouth and Aberdeenshire projects contains CO₂ either. If not, was CO₂ once housed there and leaked? Or if it was never there, can we be confident CO₂ injection is safe?</p>
<p>Another potential issue is chemical reaction. Seals are unlikely to react with hydrocarbons because they are inert. But carbon dioxide reacts with water to produce carbonic acid, which may severely corrode the top seal and allow the gas an unwelcome return to the atmosphere. It all depends on what the seal is made of. The seal for Goldeneye and Atlantic, the Rodby Formation, is carbonate-rich so has reactive potential. </p>
<h2>Aquifer anxieties</h2>
<p>Aquifers are not traps but large migration pathways for oil and gas. Their vast storage potential has led some <a href="http://www.sccs.org.uk/images/expertise/reports/progressing-scotlands-co2/ProgressingScotlandCO2Opps.pdf">to champion</a> them as more attractive sites for carbon storage. The aquifer in which the Goldeneye and Atlantic fields sits is known as the Lower Cretaceous Captain Sandstone. Some <a href="https://www.onepetro.org/conference-paper/SPE-154539-MS">suggest</a> it could store 1,700m tonnes of CO₂ – <a href="http://www.independent.co.uk/environment/uk-carbon-emissions-fall-1894-first-petrol-powered-car-patent-greenhouse-gases-environment-climate-a7614066.html">around</a> five years of UK emissions. Goldeneye, in contrast, <a href="https://www.businessgreen.com/bg/news/2425884/goldeneye-north-sea-reservoir-suitable-for-ccs-project-says-independent-review">only had an estimated</a> capacity of about 20m tonnes.</p>
<p>Yet <a href="http://dx.doi.org/10.1190/INT-2017-0009.1">new mapping suggests</a> we should be cautious about the Captain Sandstone. The Moray Firth is riddled with faults reactivated by <a href="https://theconversation.com/there-may-be-a-huge-flaw-in-uk-fracking-hopes-the-geology-80591">the uplift and easterly tilt</a> that took place in Britain some 55m years ago. </p>
<p>These are evident in the seismic image of the Moray Firth below. The top of the picture shows the boreholes in the various oil drilling concessions. The coloured bands underneath are different rock formations – the yellow band with red lines on either side is the Captain Sandstone. The black lines cutting through the Captain Sandstone are fault lines that potentially allow CO₂ a route out. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=353&fit=crop&dpr=1 600w, https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=353&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=353&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=444&fit=crop&dpr=1 754w, https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=444&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/197298/original/file-20171201-10155-17jlqfo.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=444&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">John Underhill/Heriot Watt University</span></span>
</figcaption>
</figure>
<p>The next image shows the same area but east-west instead of north-south and shows that the Captain Sandstone rises up to the seabed. This raises more concerns about leakage. And like the depleted fields within it, the carbonate-rich formation sealing the entire aquifer is susceptible to corrosion from carbonic acid. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/197301/original/file-20171201-10155-pldwrk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">John Underhill/Heriot Watt University</span></span>
</figcaption>
</figure>
<p><a href="https://www.agr.com/Papers/Planning%20for%20Commercial%20Scale%20CO2%20Storage%20in%20North%20Sea%20Saline%20Aquifer.pdf">Enthusiasts</a> for the Triassic Bunter Sandstone aquifer in the southern North Sea face the same issue as it is affected by the same tilt as the Captain Sandstone – causing it to rise to the sea floor, a few kilometres off east England. </p>
<p>Plans to store CO₂ in either aquifer are therefore premature. It is better to look to use large traps containing CO₂ like Rhyl and North Morecambe in the East Irish Sea, where an active CO₂ gas processing plant already exists at Barrow. </p>
<p>When the country reaches the stage of a demonstrator project, it really needs to succeed. An early leakage could destroy national confidence in CCS. This means obtaining the best possible geological understanding of the sites and prioritising those fields that contain CO₂ already. </p>
<p>In some cases, these are places where drilling has found CO₂ ruling out commercial extraction of oil or gas. As such, the potential exists to turn an exploration failure into a storage opportunity and extend the life of the North Sea.</p><img src="https://counter.theconversation.com/content/88337/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Richard Underhill's research has been undertaken in collaboration with Gustavo Rojas, who is in receipt of a PhD studentship investigating the subsurface geology of the Moray Firth from the Scottish Overseas Research Scholarship Awards Scheme (SORSAS).
</span></em></p>It may be just as well the UK government scrapped its previous carbon capture competition.John Richard Underhill, Chief Scientist & Professor of Exploration Geoscience, Heriot-Watt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/745852017-04-04T00:44:38Z2017-04-04T00:44:38ZHow World War I ushered in the century of oil<figure><img src="https://images.theconversation.com/files/163681/original/image-20170403-21938-g2xqwd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Navy converted to oil from coal a few years before the U.S. entered World War I, helping to solidify petroleum's strategic status.</span> <span class="attribution"><a class="source" href="https://www.history.navy.mil/our-collections/photography/numerical-list-of-images/nhhc-series/nh-series/NH-121000/NH-121653.html">Naval History and Heritage Command</a></span></figcaption></figure><p>On July 7, 1919, a group of U.S. military members dedicated Zero Milestone – the point from which all road distances in the country would be measured – just south of the White House lawn in Washington, D.C. The next morning, they helped to define the future of the nation. </p>
<p>Instead of an exploratory rocket or deep-sea submarine, these explorers set out in 42 trucks, five passenger cars and an assortment of motorcycles, ambulances, tank trucks, mobile field kitchens, mobile repair shops and <a href="http://www.goarmy.com/soldier-life/becoming-a-soldier/advanced-individual-training/signal-corps.html">Signal Corps</a> searchlight trucks. During the first three days of driving, they managed just over five miles per hour. This was most troubling because their goal was to explore the condition of American roads by driving across the U.S.</p>
<p>Participating in this <a href="https://www.fhwa.dot.gov/infrastructure/zero.cfm">exploratory party</a> was U.S. Army Captain Dwight D. Eisenhower. Although he played a critical role in many portions of 20th-century U.S. history, his passion for roads may have carried the most significant impact on the domestic front. This trek, literally and figuratively, caught the nation and the young soldier at a crossroads. </p>
<p>Returning from World War I, Ike was entertaining the idea of leaving the military and accepting a civilian job. His decision to remain proved pivotal for the nation. By the end of the first half of the century, the roadscape – transformed with an <a href="https://www.fhwa.dot.gov/interstate/finalmap.cfm">interstate highway system</a> while he was president – helped remake the nation and the lives of its occupants. </p>
<p>For Ike, though, roadways represented not only domestic development but also national security. By the early 1900s it become clear to many administrators that petroleum was a strategic resource to the nation’s present and future. </p>
<p>At the start of World War I, the world had an oil glut since there were few practical uses for it <a href="https://danielyergin.com/publishing/the-first-war-to-run-on-oil/">beyond kerosene for lighting</a>. When the war was over, the developed world had little doubt that a nation’s future standing in the world was predicated on access to oil. “The Great War” introduced a 19th-century world to modern ideas and technologies, many of which required inexpensive crude. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/163669/original/image-20170403-21933-1uwmp8k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/163669/original/image-20170403-21933-1uwmp8k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=358&fit=crop&dpr=1 600w, https://images.theconversation.com/files/163669/original/image-20170403-21933-1uwmp8k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=358&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/163669/original/image-20170403-21933-1uwmp8k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=358&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/163669/original/image-20170403-21933-1uwmp8k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=450&fit=crop&dpr=1 754w, https://images.theconversation.com/files/163669/original/image-20170403-21933-1uwmp8k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=450&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/163669/original/image-20170403-21933-1uwmp8k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=450&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Oil drilling in Beaumont, Texas in 1901. The U.S. supplied crude to its allies in World War I and relied on domestic production after its entry.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-Associated-Press-Domestic-News-Finance-T-/ae5f2d8c75924b06965ef25e235314f4/2/0">AP Photo</a></span>
</figcaption>
</figure>
<h2>Prime movers and national security</h2>
<p>During and after World War I, there was a <a href="https://www.eia.gov/todayinenergy/detail.php?id=11951#">dramatic change in energy production</a>, shifting heavily away from wood and hydropower and toward fossil fuels – coal and, ultimately, petroleum. And in comparison to coal, when utilized in vehicles and ships, petroleum brought flexibility as it could be transported with ease and used in different types of vehicles. That in itself represented a new type of weapon and a basic strategic advantage. Within a few decades of this energy transition, petroleum’s acquisition took on the spirit of an international arms race. </p>
<iframe src="https://datawrapper.dwcdn.net/ejVtW/3/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" style="float:right; width:237px; height:400px" width="100%" height="400"></iframe>
<p>Even more significant, the international corporations that harvested oil throughout the world acquired a level of significance unknown to other industries, earning the encompassing name “<a href="https://en.wikipedia.org/wiki/Big_Oil">Big Oil</a>.” By the 1920s, Big Oil’s product – useless just decades prior – had become the lifeblood of national security to the U.S. and Great Britain. And from the start of this transition, the massive reserves held in the U.S. marked a strategic advantage with the potential to last generations. </p>
<p>As impressive as the U.S.’ domestic oil production was from <a href="https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus1&f=a">1900-1920</a>, however, the real revolution occurred on the international scene, as British, Dutch and French European powers used corporations such as Shell, British Petroleum and others to begin developing oil wherever it occurred. </p>
<p>During this era of colonialism, each nation applied its age-old method of economic development by securing petroleum in less developed portions of the world, including Mexico, the Black Sea area and, ultimately, the Middle East. Redrawing global geography based on resource supply (such as gold, rubber and even human labor or slavery) of course, was not new; doing so <a href="https://www.globalpolicy.org/component/content/article/185-general/40479-great-power-conflict-over-iraqi-oil-the-world-war-i-era.html">specifically for sources of energy</a> was a striking change. </p>
<h2>Crude proves itself on the battlefield</h2>
<p>“World War I was a war,” <a href="https://books.google.com/books?id=C6pGQvVqNAoC&pg=PT246&dq=And+these+machines+were+powered+by+oil&hl=en&sa=X&ved=0ahUKEwjL-637l4bTAhUJxoMKHYs0Bq8Q6AEIIjAB#v=onepage&q=And%20these%20machines%20were%20powered%20by%20oil&f=false">writes historian Daniel Yergin</a>, “that was fought between men and machines. And these machines were powered by oil.” </p>
<p>When the war broke out, military strategy was organized around horses and other animals. With one horse on the field for every three men, such primitive modes dominated the fighting in this “transitional conflict.”</p>
<p>Throughout the war, the energy transition took place from horsepower to gas-powered trucks and tanks and, of course, to oil-burning ships and airplanes. Innovations put these <a href="https://theconversation.com/as-the-us-entered-world-war-i-american-soldiers-depended-on-foreign-weapons-technology-75034">new technologies</a> into immediate action on the horrific battlefield of World War I. </p>
<p>It was the British, for instance, who set out to overcome the stalemate of trench warfare by devising an armored vehicle that was powered by the internal combustion engine. Under its code name “<a href="http://www.iwm.org.uk/history/how-britain-invented-the-tank-in-the-first-world-war">tank</a>,” the vehicle was first used in 1916 at the Battle of the Somme. In addition, the British Expeditionary Force that went to France in 1914 was supported by a fleet of 827 motor cars and 15 motorcycles; by war’s end, the British army included <a href="https://books.google.com/books?id=KM4ODAAAQBAJ&pg=PA15&lpg=PA15&dq=British+army+included+56,000+trucks,+23,000+motorcars,+and+34,000+motorcycles+world+war+i&source=bl&ots=lFl0FgrUPx&sig=tJFI3gkKU7Nq1mOYfpj5dshoXdY&hl=en&sa=X&ved=0ahUKEwiul9y5mIbTAhVJ2IMKHWfvBY4Q6AEIHTAB#v=onepage&q=British%20army%20included%2056%2C000%20trucks%2C%2023%2C000%20motorcars%2C%20and%2034%2C000%20motorcycles%20world%20war%20i&f=false">56,000 trucks, 23,000 motorcars and 34,000 motorcycles</a>. These gas-powered vehicles offered superior flexibility on the battlefield.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/163734/original/image-20170403-21950-iwpinx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/163734/original/image-20170403-21950-iwpinx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=492&fit=crop&dpr=1 600w, https://images.theconversation.com/files/163734/original/image-20170403-21950-iwpinx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=492&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/163734/original/image-20170403-21950-iwpinx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=492&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/163734/original/image-20170403-21950-iwpinx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=618&fit=crop&dpr=1 754w, https://images.theconversation.com/files/163734/original/image-20170403-21950-iwpinx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=618&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/163734/original/image-20170403-21950-iwpinx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=618&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Government airplane manufactured by Dayton-Wright Airplane Company in 1918.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/usnationalarchives/5506534874/in/photolist-8UCf3R-6WV5jD-9oAqYs-9kYtjo-9oAp9w-6zurAN-8UCf48">U.S. National Archives</a></span>
</figcaption>
</figure>
<p>In the air and sea, the strategic change was more obvious. By 1915, Britain had built 250 planes. In this era of the Red Baron and others, primitive airplanes often required that the pilot pack his own sidearm and use it for firing at his opponent. More often, though, the flying devices could be used for delivering explosives in episodes of tactical bombing. German pilots applied this new strategy to severe bombing of England with zeppelins and later with aircraft. Over the course of the war, the use of aircraft <a href="https://books.google.com/books/about/The_Prize.html?id=WiUTwBTux2oC">expanded remarkably</a>: Britain, 55,000 planes; France, 68,0000 planes; Italy, 20,000; U.S., 15,000; and Germany, 48,000. </p>
<p>With these new uses, wartime petroleum supplies became a critical strategic military issue. Royal Dutch/Shell provided the war effort with much of its supply of crude. In addition, Britain expanded even more deeply in the Middle East. In particular, Britain had quickly come to depend on the Abadan refinery site in Persia, and when Turkey came into the war in 1915 as a partner with Germany, British soldiers defended it from Turkish invasion. </p>
<p>When the Allies expanded to include the U.S. in 1917, petroleum was a weapon on everyone’s mind. The <a href="http://americanarchivist.org/doi/pdf/10.17723/aarc.7.4.n075h48gx5005q72?code=same-site">Inter-Allied Petroleum Conference</a> was created to pool, coordinate and control all oil supplies and tanker travel. The U.S. entry into the war made this organization necessary because it had been supplying such a large portion of the Allied effort thus far. Indeed, as the producer of nearly <a href="https://books.google.com/books?id=9BfqsLQDXnMC&pg=PA131&lpg=PA131&dq=President+Woodrow+Wilson+appointed+the+nation%E2%80%99s+first+energy+czar&source=bl&ots=pJvqoe1CXM&sig=IifxDWNZu-ITZJqBDYSSs_OWlpI&hl=en&sa=X&ved=0ahUKEwiByq2bmobTAhWc14MKHeQrDtQQ6AEIHDAA#v=onepage&q=nation%E2%80%99s%20first%20energy%20czar&f=false">70 percent of the world’s oil supply</a>, the U.S.’ greatest weapon in the fighting of World War I may have been crude. President Woodrow Wilson appointed the nation’s first energy czar, whose responsibility was to work in close quarters with leaders of the American companies. </p>
<h2>Infrastructure as a path to national power</h2>
<p>When the young Eisenhower set out on his trek after the war, he deemed the party’s progress over the first two days “not too good” and as slow “as even the slowest troop train.” The roads they traveled across the U.S., Ike described as “average to nonexistent.” He <a href="https://books.google.com/books?id=WiUTwBTux2oC&pg=PA190&lpg=PA190&dq=we+could+do+three+or+four&source=bl&ots=_2EWq69--U&sig=VpYppLpNANQ1PYU98KBYD9BVES8&hl=en&sa=X&ved=0ahUKEwjz7a_hmobTAhVO1WMKHXSsDJIQ6AEIGjAA#v=snippet&q=the%20heavy%20trucks%20broke%20through%20the%20surface&f=false">continued</a>: </p>
<blockquote>
<p>“In some places, the heavy trucks broke through the surface of the road and we had to tow them out one by one, with the caterpillar tractor. Some days when we had counted on sixty or seventy or a hundred miles, we could do three or four.” </p>
</blockquote>
<p>Eisenhower’s party completed its frontier trek and arrived in San Francisco, California on Sept. 6, 1919. Of course, the clearest implication that grew from Eisenhower’s trek was the need for roads. Unstated, however, was the symbolic suggestion that matters of transportation and of petroleum now demanded the involvement of the U.S. military, as it did in many industrialized nations. </p>
<p>The emphasis on roads and, later, particularly on Ike’s interstate system was transformative for the U.S.; however, Eisenhower was overlooking the fundamental shift in which he participated. The imperative was clear: Whether through road-building initiatives or through international diplomacy, the use of petroleum by his nation and others was now a reliance that carried with it implications for national stability and security. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=342&fit=crop&dpr=1 600w, https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=342&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=342&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=430&fit=crop&dpr=1 754w, https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=430&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/163713/original/image-20170403-21972-os4ean.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=430&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Eisenhower served in the Tank Corps until 1922.</span>
<span class="attribution"><a class="source" href="https://prologue.blogs.archives.gov/2013/02/25/eisenhower-and-tank-drivers-ed/">Eisenhower Presidential Library, ARC 876971</a></span>
</figcaption>
</figure>
<p>Seen through this lens of history, petroleum’s road to essentialness in human life begins neither in its ability to propel the Model T nor to give form to the burping plastic Tupperware bowl. The imperative to maintain petroleum supplies begins with its necessity for each nation’s defense. Although petroleum use eventually made consumers’ lives simpler in numerous ways, its use by the military fell into a different category entirely. If the supply was insufficient, the nation’s most basic protections would be compromised. </p>
<p>After World War I in 1919, Eisenhower and his team thought they were determining only the need for roadways – “The old convoy,” he explained, “had started me thinking about good, two lane highways.” </p>
<p>At the same time, though, they were declaring a political commitment by the U.S. And thanks to its immense domestic reserves, the U.S. was late coming to this realization. Yet after the “war to end all wars,” it was a commitment already being acted upon by other nations, notably Germany and Britain, each of whom lacked essential supplies of crude.</p><img src="https://counter.theconversation.com/content/74585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brian C. Black does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Before World War I, petroleum had few practical uses, but it emerged from the war as a strategic global asset necessary for national stability and security.Brian C. Black, Distinguished Professor of History and Environmental Studies, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/716572017-02-24T16:37:31Z2017-02-24T16:37:31ZThe destructive life of a Mardi Gras bead<p>Shiny, colorful bead necklaces, also known as “throws,” are now synonymous with Mardi Gras. </p>
<p>Even if you’ve never been to the Carnival celebrations, you probably know the typical scene that plays out on New Orleans’ Bourbon Street every year: Revelers line up along the parade route to collect beads tossed from floats. Many try to collect as many as possible, and some drunken revelers will even expose themselves in exchange for the plastic trinkets. </p>
<p>But the celebratory atmosphere couldn’t be more different from the grim factories in the Fujian province of China, where teenage girls work around the clock making and stringing together the green, purple and gold beads. </p>
<p>I’ve spent several years researching the circulation of these plastic beads, and their life doesn’t begin and end that one week in New Orleans. Beneath the sheen of the beads <a href="https://www.routledge.com/Beads-Bodies-and-Trash-Public-Sex-Global-Labor-and-the-Disposability/Redmon/p/book/9780415525404">is a story that’s far more complex</a> – one that takes place in the Middle East, China and the United States, and is symptomatic of a consumer culture built on waste, exploitation and toxic chemicals.</p>
<h2>‘The same thing over and over’</h2>
<p>The Mardi Gras bead originates in Middle Eastern oil fields. There, under the protection of military forces, companies mine the oil and petroleum, before transforming them into polystyrene and polyethelene – the main ingredients in all plastics. </p>
<p>The plastic is then shipped to China to be fashioned into necklaces – to factories where American companies are able to take advantage of inexpensive labor, lax workplace regulations and a lack of environmental oversight.</p>
<p>I traveled to several Mardi Gras bead factories in China to witness the working conditions firsthand. There, I met numerous teenagers, many of whom agreed to participate in the making of my documentary, “<a href="http://beadsbodiesandtrash.com/">Mardi Gras: Made in China</a>.”</p>
<p>Among them was 15-year-old Qui Bia. When I interviewed her, she sat next to a three-foot-high pile of beads, staring at a coworker who sat across from her.</p>
<p>I asked her what she was thinking about.</p>
<p>“Nothing – just how I can work faster than her to make more money,” she replied, pointing to the young woman across from her. “What is there to think about? I just do the same thing over and over again.”</p>
<p>I then asked her how many necklaces she was expected to make each day.</p>
<p>“The quota is 200, but I can only make close to 100. If I make a mistake, then the boss will fine me. It’s important to concentrate because I don’t want to get fined.”</p>
<p>At that point the manager assured me, “They work hard. Our rules are in place so they can make more money. Otherwise, they won’t work as fast.”</p>
<p>It seemed as if the bead workers were treated as mules, with the forces of the market their masters.</p>
<h2>Hidden dangers</h2>
<p>In America, the necklaces appear innocent enough, and Mardi Gras revelers seem to love them; in fact, <a href="http://articles.latimes.com/2012/feb/15/nation/la-na-mardi-gras-beads-20120216">25 million pounds</a> get distributed each year. Yet they pose a danger to people and the environment.</p>
<p>In the 1970s, an environmental scientist named Dr. Howard Mielke was directly involved in the legal efforts to phase out lead in gasoline. Today, at Tulane University’s Department of Pharmacology, he researches the links between lead, the environment and skin absorption in New Orleans.</p>
<p>Howard mapped the levels of lead in various parts of the city, and discovered that the majority of lead in the soil <a href="http://dhh.louisiana.gov/assets/oph/Center-PHCH/Center-PH/genetic/LEAD/NewsandUpdates/MardigrassBookmarkLeadPoisoning.pdf">is located directly alongside the Mardi Gras parade routes</a>, where krewes (the revelers who ride on the floats) toss plastic beads into the crowds. </p>
<p>Howard’s concern is the collective impact of the beads thrown each carnival season, which translates to almost 4,000 pounds of lead hitting the streets.</p>
<p>“If children pick up the beads, they will become exposed to a fine dusting of lead,” Howard told me. “Beads obviously attract people, and they’re designed to be touched, coveted.” </p>
<p>And then there are the beads that don’t get taken home. By the time Mardi Gras is over, thousands of shiny necklaces litter the streets, and partiers <a href="http://nola.curbed.com/2017/1/19/14325568/nola-seeks-temporary-workers-mardi-gras-sanitation-trash-clean-up-2017">have collectively produced roughly 150 tons of waste</a> – a concoction of puke, toxins and trash.</p>
<p><a href="http://www.ecocenter.org/healthy-stuff/article/news-ecolink-press-releases/holiday-and-mardi-gras-beads-found-contain-lead-and-hazardous">Independent research</a> on beads collected from New Orleans parades has found toxic levels of lead, bromine, arsenic, phthalate plasticizers, halogens, cadmium, chromium, mercury and chlorine on and inside the beads. It’s estimated that up to 920,000 pounds of mixed chlorinated and brominated flame retardants were in the beads.</p>
<h2>A thriving waste culture</h2>
<p>How did we get to the point where 25 million pounds of toxic beads get dumped on a city’s streets every year? Sure, Mardi Gras is a celebration ingrained in New Orleans’ culture. But plastic beads weren’t always a part of Mardi Gras; they were introduced only in the late 1970s. </p>
<p>From a sociological perspective, leisure, consumption and desire all interact to create a complex ecology of social behavior. During the 1960s and 1970s in the United States, self-expression <a href="https://www.routledge.com/Beads-Bodies-and-Trash-Public-Sex-Global-Labor-and-the-Disposability/Redmon/p/book/9780415525404">became the rage</a>, with more and more people using their bodies to experience or communicate pleasure. Revelers in New Orleans started flashing each other in return for Mardi Gras beads at the same time the free love movement became popular in the U.S.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/157749/original/image-20170221-18627-1otnhq7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The aftermath.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/neaththetwilightsky/234952280/">Jaime/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>The culture of consumption and ethos of self-expression <a href="https://www.routledge.com/Beads-Bodies-and-Trash-Public-Sex-Global-Labor-and-the-Disposability/Redmon/p/book/9780415525404">merged perfectly with the production of cheap plastic in China</a>, which was used to manufacture disposable commodities. Americans could now instantly (and cheaply) express themselves, discard the objects and later replace them with new ones. </p>
<p>When looking at the entire story – from the Middle East, to China, to New Orleans – a new picture comes into focus: a cycle of environmental degradation, worker exploitation and irreparable health consequences. No one is spared; the child on the streets of New Orleans innocently sucking on his new necklace and young factory workers like Qui Bia are both exposed to the same neurotoxic chemicals.</p>
<p>How can this cycle be broken? Is there any way out? </p>
<p>In recent years, a company called <a href="http://www.zombeads.biz/">Zombeads</a> have created throws with organic, biodegradable ingredients – some of which are designed and manufactured locally in Louisiana. That’s one step in the right direction. </p>
<p>What about going a step further and rewarding the factories that make these beads with tax breaks and federal and state subsidies, which would give them incentives to sustain operations, hire more people, pay them fair living wages, all while limiting environmental degradation? A scenario like this could reduce the rates of cancers caused by styrene, significantly reduce carbon dioxide emissions and help create local manufacturing jobs in Louisiana.</p>
<p>Unfortunately, as Dr. Mielke explained to me, many either are unaware or refuse to admit that there’s a problem that needs to be dealt with.</p>
<p>“It’s part of the waste culture we have where materials pass briefly through our lives and then are dumped some place,” he said. In other words: out of sight, out of mind.</p>
<p>So why do so many of us eagerly participate in waste culture without care or concern? Dr. Mielke sees a parallel in the fantasy told to the Chinese factory worker and the fantasy of the American consumer.</p>
<blockquote>
<p>“The people in China are told these beads are valuable and given to important Americans, that beads are given to royalty. And of course [this narrative] all evaporates when you realize, ‘Oh yes, there’s royalty in Mardi Gras parades, there’s kings and queens, but it’s made up and it’s fictitious.’ Yet we carry on with these crazy events that we know are harmful.”</p>
</blockquote>
<p>In other words, most people, it seems, would rather retreat into the power of myth and fantasy than confront the consequences of hard truth.</p><img src="https://counter.theconversation.com/content/71657/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Redmon does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Each Mardi Gras, 25 million pounds of beads hit the streets of New Orleans. One researcher went to the Chinese factories that make them – and spoke to the workers who believe the beads will be given to royalty.David Redmon, Lecturer in Criminology, University of KentLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/698322016-12-12T03:40:27Z2016-12-12T03:40:27ZWhy OPEC’s gambit to raise oil prices might not work<p>After months of speculation by oil market watchers, the Organization of the Petroleum Exporting Countries (OPEC) <a href="http://www.opec.org/opec_web/static_files_project/media/downloads/press_room/OPEC%20agreement.pdf">recently announced a six-month production cut</a> of 1.2 million barrels per day (b/d) with the aim of driving up the price. It’s set to take effect on Jan. 1. </p>
<p>Saudi Arabia will be responsible for a little less than half of the total, or just under 500,000 b/d, followed by 210,000 for Iraq and about 135,000 for Kuwait and the United Arab Emirates each. A nonmember, Russia, pledged to cut about 300,000 b/d as part of the deal. </p>
<p>The move, which could be extended for another six months, was in response to the expected continuation of weak oil market conditions: too much supply and too little demand. The result was that for the first time since 1998, OPEC reported a <a href="http://www.opec.org/opec_web/static_files_project/media/downloads/publications/ASB2016.pdf">collective current account deficit of almost US$100 billion in 2015</a>, compared with a surplus of $238 billion in 2014.</p>
<p>The crude oil price reacted as intended by <a href="http://www.reuters.com/article/us-global-oil-idUSKBN13R02L">climbing 15 percent</a> almost immediately, <a href="http://www.macrotrends.net/1369/crude-oil-price-history-chart">settling at about $51</a>. That’s up from a low of less than $30 earlier this year.</p>
<p>The planned cuts and market reaction raise a lot of questions, however, such as why the oil price increased even though the reductions have yet to take effect and whether it will continue to rise. As an energy economist, I believe the best way to answer these and other important questions is by exploring a fundamental concept of my field: supply and demand. </p>
<h2>Economics 101</h2>
<p>Oil markets are notoriously difficult to predict because <a href="http://www.beg.utexas.edu/energyecon/thinkcorner/Think%20Corner%20factors%20impacting%20oil%20price.pdf">there are so many factors</a> that affect the price.</p>
<p>Supply-side factors include crude quality, cost of resource development and production, access to resources, availability of infrastructure, environmental and economic regulations, and the behavior of suppliers such as OPEC. </p>
<p>Probably more complex are demand-side factors: demand growth in various markets for various petroleum products, the state of the refining industry, pricing policies (taxes and subsidies) for different products in different countries, environmental regulations for end use, and energy policies regarding efficiency and alternatives.</p>
<p>While financial trading is the most important factor influencing the oil price in the short-term, whether the price continues to rise or not in the coming weeks and months will depend on fundamental supply/demand dynamics. </p>
<h2>Will members comply?</h2>
<p>First, OPEC members have a mixed record complying with previous agreements to cut production levels. </p>
<p>When OPEC first started the quota system in the early 1980s, Saudi Arabia had to reduce production by up to 6 million b/d to maintain the organization’s quota as other members flouted their commitments. From 2009 to 2013, OPEC production has been typically <a href="https://assets.bwbx.io/images/users/iqjWHBFdfxIU/ip0Au96J5o_8/v4/-1x-1.png">1 million to 2 million b/d above the quota</a>. </p>
<p>Thus verification of compliance with the cuts will be important if markets will have any faith that they’ll actually materialize. </p>
<p>Also, oil data, especially short-term production and storage data by state-owned entities, tend to be opaque. The “reference” production levels for some countries (e.g., Iran, Iraq, Venezuela) might be higher than how much they can sustainably produce. The reference level is the base amount from which cuts will be made. </p>
<p>Although Iran’s October production was reported at about 3.7 million b/d, for example, the reference level was accepted as 3.975 million b/d, the <a href="http://www.arabtimesonline.com/news/opec-deal-expected-tighten-oil-market-2017-production-cut-750000-1-million-bpd-seen/">amount it produced at its peak in 2005</a>. </p>
<p>Russian production – which won’t be subject to monitoring – may be down during the winter months due to scheduled maintenance or by focusing on drilling.</p>
<p>In other words, cuts may appear to be compliant with the agreement, but the actual supply to global markets may not be much different than what it would be without it.</p>
<h2>Will the US get back in the game?</h2>
<p>Second, whether U.S. producers of unconventional oil fields like shale in North Dakota are capable and willing to respond to higher prices by drilling more wells and increasing production is crucial. </p>
<p>Coincidentally, U.S. production fell a little over 1 million b/d after the price of oil plunged early last year. So if they do boost production to take advantage of higher prices, the increase could make the cuts a wash. The question then becomes, would a higher price tempt them to begin drilling again? </p>
<p>Since the price collapse, drilling in the U.S. has focused on the Permian Basin in west Texas and New Mexico. The number of rigs operating in the Permian has increased by about 100 since April to reach 235, or <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother">a little under half of the 477 rigs actively drilling for oil across the U.S.</a> Another 119 rigs are drilling for gas. At the peak in October 2014, <a href="http://fuelfix.com/blog/2016/08/12/permian-basin-leads-big-jump-in-rig-count/">1,609 rigs were operating in oil basins</a> in the U.S.</p>
<p>Sustained prices above $50 should encourage more drilling.</p>
<p>However, “upstream” operators (explorers and producers), oilfield services companies and “midstream” transportation and storage businesses have been going through a period of adjustment, having idled hundreds of rigs and laid off <a href="http://www.houstonchronicle.com/business/energy/article/Fed-U-S-oil-job-cuts-reach-about-118-000-7237605.php">tens of thousands of employees</a>. It will not be easy to mobilize these resources quickly. Nor is it clear that it makes financial sense to do so. </p>
<p>The availability of cheap loans during the post-financial crisis era of ultra-low interest rates was instrumental in encouraging too many companies to drill too many wells too quickly, which led to the collapse of <a href="http://www.eia.gov/dnav/ng/ng_pri_fut_s1_d.htm">natural gas prices in the U.S. in the early 2010s</a> and that of <a href="http://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm">oil prices in late 2014</a>. Many companies are still burdened by those debts. </p>
<p>If prices fall after billions of dollars of new investment, the financial recovery of many companies will be stunted. Combined with the uncertainty associated with the expected rise in interest rates and the high costs of remobilization rigs and crews, it is difficult to imagine U.S. oil companies overreacting to the OPEC cuts.</p>
<h2>Libya and Nigeria</h2>
<p>Third, Libya and Nigeria, though members of OPEC, are not part of the announced agreement. </p>
<p>Libyan production has been recovering from 250,000 b/d in August and reached almost 600,000 b/d in late November. Libya’s <a href="https://www.eia.gov/beta/international/analysis_includes/countries_long/Libya/images/crude_oil_production.png">long-term goal</a> is to pump 1.6 million b/d, the level before the ousting of Muammar Gaddafi, and the country might be able to pass the halfway mark next year.</p>
<p>Nigeria should be capable of producing close to 2 million b/d, but pipeline disruptions caused by conflict in the Niger Delta have reduced that to 1.5 million. The resolution of the conflict, albeit not an easy task given the longevity of it, could bring more supplies to the market and thus undercut prices.</p>
<h2>Macroeconomic malaise</h2>
<p>Finally, the world economy has been anemic in recent years despite low oil prices, which have historically been a driver of economic growth. Oil demand growth has been muted.</p>
<p>One potential reason is the reduction in fuel subsidies in recent years in some key countries <a href="https://www.chinadialogue.net/article/show/single/en/8709-Prices-at-China-s-petrol-pumps-stoke-debate-on-fossil-fuel-subsidy-reform-">such as China</a>. So consumers in many countries may be paying the same price for petroleum products now as they did in 2014 when the oil was $90 a barrel and will continue to do so unless governments reinstitute some subsidies. This might be difficult because macroeconomic policies in many countries seem to be failing to stimulate their economies. </p>
<p>Also, years of supporting energy efficiency and alternative fuels or technologies along with regulating emissions might be dampening oil demand growth in some countries. One can only speculate that a sustained and significant increase in the price of oil would encourage these policies. </p>
<p>Overall, OPEC’s production cuts are not building on strong demand growth. To the extent it succeeds in raising the price, it can end up undermining demand. </p>
<h2>Back to the fundamentals</h2>
<p>It is difficult to do justice to the complexity of oil market dynamics in such a short article. </p>
<p>In short, though, the planned OPEC cuts have already provided some respite for oil producers, in terms of higher prices, thanks to the eagerness of financial traders. But once the excitement of the news passes, these and other demand-supply fundamentals will once again govern the oil price.</p>
<p>Although these higher prices will enhance producer revenues and slow the buildup of oil inventories, they can also dampen demand growth and encourage too much production too soon.</p><img src="https://counter.theconversation.com/content/69832/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gürcan Gülen works for a university research unit that receives funding from various organizations. For details see <a href="http://www.beg.utexas.edu/energyecon/">http://www.beg.utexas.edu/energyecon/</a>.</span></em></p>To see why, one must only consider the core economic principle of supply and demand.Gürcan Gülen, Research Scientist, The University of Texas at AustinLicensed as Creative Commons – attribution, no derivatives.