Big Oil about to Third World the US and Canada?
Up until 1950, the United States was the world’s leading oil producer, the Saudi Arabia of its day. In that year, the U.S. produced approximately 270 million metric tons of oil, or about 55% of the world’s entire output. But with a postwar recovery then in full swing, the world needed a lot more energy while America’s most accessible oil fields — though still capable of growth — were approaching their maximum sustainable production levels. Net U.S. crude oil output reached a peak of about 9.2 million barrels per day in 1970 and then went into decline (until very recently).
This prompted the giant oil firms, which had already developed significant footholds in Indonesia, Iran, Saudi Arabia, and Venezuela, to scour the global South in search of new reserves to exploit. Particular attention was devoted to the Persian Gulf region, where in 1948 a consortium of American companies — Chevron, Exxon, Mobil, and Texaco — discovered the world’s largest oil field, Ghawar, in Saudi Arabia. By 1975, Third World countries were producing 58% of the world’s oil supply, while the U.S. share had dropped to 18%.
For the most part, production in Third World countries posed no such complications. The Nigerian government, for example, has long welcomed foreign investment in its onshore and offshore oil fields, while showing little concern over the despoliation of its southern coastline, where oil company operations have produced a massive environmental disaster. As Adam Nossiter of the New York Times described the resulting situation, “The Niger Delta, where the [petroleum] wealth underground is out of all proportion with the poverty on the surface, has endured the equivalent of the Exxon Valdez spill every year for 50 years by some estimates.”
As vividly laid out by Peter Maass in Crude World, a similar pattern is evident in many other Third World petro-states where anything goes as compliant government officials — often the recipients of hefty bribes or other oil-company favors — regularly look the other way. The companies, in turn, don’t trouble themselves over the human rights abuses perpetrated by their foreign government “partners” — many of them dictators, warlords, or feudal potentates.
But times change. Pressures in the Third World have forced the major U.S. and European firms — BP, Chevron, ConocoPhillips, ExxonMobil, Royal Dutch Shell, and Total of France — to look elsewhere for new sources of oil and natural gas. Unfortunately for them, there aren’t many places left in the world that possess promising hydrocarbon reserves and also welcome investment by private energy giants. That’s why some of the most attractive new energy markets now lie in Canada and the United States, or in the waters off their shores. As a result, both are experiencing a remarkable uptick in fresh investment from the major international firms.
Both countries still possess substantial oil and gas deposits, but not of the “easy” variety (deposits close to the surface, close to shore, or easily accessible for extraction). All that remains are “tough” energy reserves (deep underground, far offshore, hard to extract and process). To exploit these, the energy companies must deploy aggressive technologies likely to cause extensive damage to the environment and in many cases human health as well. They must also find ways to gain government approval to enter environmentally protected areas now off limits.
The formula for making Canada and the U.S. the “Saudi Arabia” of the twenty-first century is grim but relatively simple: environmental protections will have to be eviscerated and those who stand in the way of intensified drilling, from landowners to local environmental protection groups, bulldozed out of the way. Put another way, North America will have to be Third-World-ified.
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