3 Hidden Costs of High Oil Prices
As a barrel of oil hovers around $130, the news has been bombarding us with the obvious effects of high oil prices. As most people weep at the pump, some environmentalists are rejoicing. Gas consumption is down, but there are additional hidden costs to high gas prices that leave even green minded folks with a frown.
1-Difficult to Extract Oil & High Environmental Impact
High oil prices are making it economically viable to utilize oil that is difficult to extract. One example of this is just north of the border.
In the U.S., our single biggest source of foreign oil is from Canada. Although this may be reassuring from a foreign policy standpoint, much of this oil comes with a steep environmental price tag. Known as tar sands oil, 2 tons of sand are needed to produce one barrel of oil in a very resource and energy intensive process.
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One technique that is used is to mine the sand leaves huge holes in the earth and devastates the ecosystem. Another technique involves injecting steam underground, requiring large amounts of energy. Tar sands oil generates 2-3 times the greenhouse gas when compared to conventional oil.
“It is quit alarming from an ecological standpoint,” said David Fields of Greenpeace Canada. “Developing the tar sand will make it impossible for us to effectively tackle climate change.
2-Difficult to Extract Oil is an Unreliable Supply
There are reasons why many sources of oil were overlooked in the past. Some are in areas that are populated, making it difficult to obtain permits. Other oil reserves rely on large amounts of energy, making the operation vulnerable to fluctuating energy costs.
Going back to the Canadian tar sands example, large quantities of natural gas are needed to extract this oil. In the cool Canadian climate, large amounts of natural gas are also used to heat homes. If natural gas prices spike or Canadians prioritize conservation of natural gas reserves over short-term profits, this source of oil could dry up.
3-Oil Companies are More Powerful as Profits Increase
In 2007, Exxon made nearly $1300 a second in profits. With record high corporate profits, Exxon reported annual earning of $40.61 billion. While Americans are spending at the pump, the power of this company is increasing. Unfortunately, some of the companies that are rolling in dough are not necessarily ideal corporate citizens.
Exxon has refused to pay court ordered fines for the Exxon Valdez oil spill in 1989 to help compensate the fishermen for loss of their livelihood. The company has also supported groups that question global warming, a practice that has even been criticized by other oil companies.
The political power of oil companies is staggering and is a special interest that is often not in line with what is best for society. The oil industry has donated $180 million to political candidates since 1989. 89% of political donations made by Exxon went to republican candidates.
As with all complex situations, there are numerous positive and negative aspects. What other hidden factors do you find noteworthy?
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This whole article could be shortened to:
The Hidden Cost of High Oil Prices: They subvert my personal political agenda
Exxon hasn’t “refused to pay”. The article you cite quite clearly states that the case is tied up in appeals, and with good reason. As for the complaints that companies that invested in land and oil rights and that now that land and those rights are worth more - SO? Isn’t that EXACTLY what happened with the West Coast housing bubble? You bought a house. Your house appreciated at 25%+ per year. If you sold your house while values were high you made a killing. If you didn’t then you’re getting killed. Is anyone going to cry for Big Oil when and if the oil bubble bursts? No. So stop crying at a time when they’re making money and instead buy some of their stock.
Would be nice if we had some clean nuclear alternatives to turn to. But wait, you environmental alarmists killed that off years ago. You created the mess we are in yet you continue to blame the companies that provide the energy the world thrives on.
The oil is running out and everything that we have built with our amazing technological age relies on cheap abundant oil.
The reason we’re not drilling oil in the US is because there is very little left–oil production peaked in the USA in 1971 and will never again return to those levels because there simply isn’t that much oil–even ANWR would only supply us for something like 3 or 4 months
People in Africa are going to start starving first as first-world farmers become unable to pay $6 a gallon for diesel fuel.
The effects on the global industry will be crippling as demand exceeds supply and shortages become commonplace.
We’re in the first couple years of oil production decline right now. These will be remembered as good times, with plenty of abundant energy for everyone to waste.
Go Ron Paul!!
Just like in the old days, cars will be for the rich only, the poor saps will go back to living and dying in one dusty old town
I used to get mad at the high oil prices until I just accepted it as a fact of life. Now I just try to reduce my gas consumption, by doing things like slowing down http://www.slowdowntosavegas.com/
Its funny how all the normal people I talk to are against high gas prices, but when you put the blame squarly where it rest. Oil companies. You get all sorts of supporters. Funny wonder how much the oil companies paid you to post on comments and forums. And yes I dont care if it is .09cents or $2.00 per gallon or barrel or however you want to measure it. you cant compair it to the water, or other utilities, because they are not a monopoly. Unlike oil. I am actually glad that oil is high. Look at how many back yard mechanics are converting cars to electric. Look at how many new companies are making electric cars that the big automakers said were impossible. And now i have a reason to trade in the minivan for a 2 seater. So i have to thank you oil companies for pricing yourselves right out of the market.
I have to agree about the oil profits. You have to look at the profit margin per unit of gas. When you take that into account the oil companies are not always at fault. On the other hand, people who want business and don’t want any responsibility to the environment are short-sighted. Profits and nothing else without any social or environmental responsbility is not wise either. Case in point is the destructive damage of extracting oil from sand in Canada. Also, look at the environmental destruction of extracting coal from places like KY and WV. Profit motive is fine but it doesn’t come without responsibility which some people and corporations don’t seem to give a crap about.
In reality, slightly higher gas prices are good. In march, there was a huge decrease in miles driven. This reduces demand helps to curb the price of gas somewhat. Now if the value of the dollar will stop decreasing then perhaps the prices will stabilize. I do not think it should be allowed to drop below $3/gallon though. Otherwise, people will just go back to the old ways as usual of driving when they want and buying pig butt SUV gas guzzlers.