Oil

Exploration

The exploration of oil starts from the study of surface rocks and terrain. Geologists identify an area where oil may be found by conducting an evaluation of an area's geological history and by comparing the results to other areas where gas and oil are known to be present. ⁵

Once such an area is designated for exploration, more specific tests are conducted including an above-ground rock formation study, a sample rock collection, deep rock layer measurements. Currently, satellite imaging techniques are widely used in oil and gas exploration process.

Production

Crude oil that is extracted from the ground usually consists of a mixture of hydrocarbons of varying molecular weights, structures and properties. ⁶ As a result, crude oil needs to be processed into one of a number of more refined petroleum products before it can be used for most applications.  To process oil, it is first heated to a vapor, then passed upward through a tower containing trays at various levels. The vapors are very hot at the bottom, but become cooler as the rise, so that different fractions condense in the trays at different heights. The lighter the fraction the higher up it condenses. In an average crude oil the fractions, beginning with the lightest, are: (1) dissolved gases, (2) petroleum ether, (3) gasoline, (4) kerosene, (5) gas oil, (6) lubricating oils, (7) fuel oils, and (8) asphalt." ⁷

Peak Oil

Scientists have warned that the production of world oil will get to a point that the maximum rate of global petroleum extraction is reached, after which the rate of production will enter terminal decline. ⁸ The term "peak oil" was created and first used by M. King Hubbert in 1965, who accurately predicted that the U.S. oil production would peak between 1965 and 1970. He developed a roughly symmetrical bell-shaped curve , which describes the production rate of a limited resource. Scholars have developed various models based on the original one taking into account various real world factors.

Even though the peak oil theory is widely used, there is debate around the issue. Optimistic scientists estimate the peak production will come in 2020 or later and they predict investments in alternatives will prevent a crisis. However, pessimistic predictions believe the peak either has already occured or will come very soon. ^{9 10}

Political Impact

Major oil producing regions in the world are politically unstable, where political unrest, civil war and revolution poses great threats to the stability of international energy market. The threat of terrorist  attacks on oil fields or principal transit routes also present serious challenges to energy security.

The United States consumes almost 20 million barrels of petroleum per day (MBD, or 7.2 billion barrels annually. It currently imports 11.6 million barrels of petroleum per day , or 59% of its consumption. ¹⁸ President Bush once said that “America is addicted to oil”. ¹⁹ This situation threatens the nation’s national security in terms of economic destruction and direct military confrontation. Firstly, the external disruption of oil supply can have detrimental outcomes to the U.S. economy. The oil shock in 1970s hurt the U.S. economy and it resulted in a New York Stock Exchange loss of $97 billion in six weeks. Today, the U.S. is more dependent on foreign oil than ever before, any shocks or disruptions from oil exporting countries would have a worse impact on the economy. Secondly, the terrorists’ attacks are more diversified and unpredictable. Oil fields and principal transit routes are their potential targets, which could seriously disrupt the global market. Further, inappropriate dealing with political conflicts in oil producing regions could result in direct confrontation and revenge attacks in the United States.

Economic Impact

The largest economy in the world fuels 95% of its transportation by oil at the cost of a quarter-trillion dollars.  The United States has the mightiest economy and the most mobile society in the history of the world. Its mobility is 96%15 fueled by oil costing a quarter-trillion dollars a year16 and consuming seven of every ten barrels the nation uses. Oil provides 40–43% of all energy used by the United States, Europe, Asia, Africa, and the world. Oil dependence varies—30% in China, 50% in Japan, 59% in Central and South America— but it’s high everywhere. ²⁰

The U.S.'s dependence on foreign oil results in a high cost for the US economy to insure the stability of the oil producing countries and transport the oil back to the United States. It also makes the U.S. subject to a risky international market where OPEC manipulates world oil prices taking advantage of its monopoly power. Oil price shocks and price manipulation by OPEC have cost the U. S. economy dearly—about $1.9 trillion from 2004 to 2008. ²⁰

Environmental Impact

The tremendous burning of oil, along with other fossil fuels, releases carbon dioxide, making it the single largest contributor to climate change. The burning of gasoline, largely for transportation needs, accounts for 36% of total greenhouse gas emissions. ²³ In the U.S., fossil fuels supply 85 percent of the primary energy consumed and is responsible for 98 percent of carbon dioxide emissions. ¹ The U.S. EPA ranks the major greenhouse gas contributing end-user sectors in the following order: industrial, transportation, residential, commercial and agricultural. ²³

Renewable Energy Technology

The development of renewable energy in the United States is critical to the nation, because it has the potential to help the U.S. reach the goal of energy independence, boost the economy and address climate change issues. It is particularly meaningful at this special time when the U.S. is facing a severe economic recession. Various acts of legislation addressing research, promotion, green businesses as well as green jobs lead to a prosperous and growing renewable energy industry.

Oil Solutions Initiative

The Oil Solutions Initiative was collaboratively organized by Rocky Mountain Institute (RMI) and the Brookings Institution's Energy Security Initiative, which proposes to convene top stakeholders in the implimentation of oil solutions.

The Oil Solutions Initiative describes its goals as "to achieve alignment on critical bottlenecks that prevent the reduction of U.S. dependence on oil, and the corresponding policies that will enable to overcome these bottlenecks." The Oil Solution Initiative hosted a “Visioning Summit” from December 18 to 19, 2008 in Washington DC and a “Leadership Roundtable” in Spring 2009 on Visioning Summit output. ²²