A Cleaner Oil Industry: Driven by Data and Common Sense
The West’s largest oil companies – Exxon Mobil, BP, and Chevron – have made pledges to significantly reduce their greenhouse gas emissions soon and will remain under strong pressure from environmentalists and investors to do so.
By combining the engineering prowess at these companies and other U.S. producers with far-ranging applications of data analytics, dramatic changes can be instituted to make their operations cleaner. This includes significantly reducing methane emissions, increasing the success of drilling operations, and improving refining processes so that they are more environmentally friendly and more efficient, thereby producing cleaner fuels.
Those championing climate change prevention should embrace these steps from Big Oil, while tracking the progress on these innovations and assessing plans to further cut emissions by 2050. BP has already said it will be a net-zero emitter by then. Attempts by some environmentalists to use the industry’s posture to bludgeon and drive it out of business are not only highly counterproductive, but not likely to work.
Simply put, the world needs large quantities of oil and will still need much of it in 2050. This was made clear on August 11, when President Biden called on OPEC to increase oil production to promote economic recovery and ease high prices for Americans. The U.S. Energy Information Administration also projects that the world will need 50% more energy by 2050, with most of that driven by higher demand in Asia, particularly China and India.
Since at least the 1970s, it has been fashionable for America’s left to bash oil companies and call for their demise. While this may work for some politically, it is bad economics and ultimately bad public policy.
The U.S. is in a formidable position to lead the world on the transformation of the oil industry. On July 26, the U.S. Energy Information Administration reported that the U.S. is the world's largest producer of oil, at 18.6 million barrels per day, or 20% of the world’s total. The world’s second largest producer, Saudia Arabia, is far behind at 10.8 million barrels a day.
China, our main economic competitor, produces just 4.9 million barrels a day and consumes 13.9 million barrels, a 9.0 million barrel a day deficit. The U.S. has been selling oil to China and we should aim to sell a lot more.
But decimating the U.S. industry will not curtail China’s appetite for oil. In fact, China will buy it from producers who have less stringent environmental practices, like Iran and Russia.
Furthermore, there are going to be large amounts of gasoline-powered vehicles for a long time. President Biden’s August 5 executive order calls for 50% of the new vehicles sold by 2030 to be emission-free. Most vehicles operating in 2030, though, will still be gasoline-powered. The improved quality of cars and trucks being made today and in the coming years means that many of them will last 10-15 years, into 2040 and beyond.
The world will benefit by having these vehicles powered with cleaner fossil fuels produced with less disruption to the environment, steps which engineering and data analytics, working together, will ensure.
Environmental and climate change activists are in a strong position with oil companies, which they can embrace and use to the advantage of transforming oil and gas into cleaner industries.
Push too hard, though, and things can quickly unravel to the point where we will be asking on foreign governments, with inferior environmental standards, to produce more oil. Just ask President Biden and the tens of millions of Americans who are frustrated with today’s high gas prices.