New Energy Emergence(y) (Oil blog: Part three)

“I know we’re in an oil country and we need American energy. You wouldn’t always know it, but it went up every year I was president”: – Barack Obama

He was reminding people of Houston, Texas about his administration’s contribution to the American energy horizon. During his period, the US framed policies to become the biggest oil producer in the world. But how and why?

The United States of America is a Forever oil-hungry nation. It contributes to 20% of oil consumption with only 4% of the world’s population whereas China with quadruple the population consumes a reasonable 16% of it. This American obsession with oil is not new, it has continued from the start of the 20th century and it finally exploded in the post-World War II era. This was the era of stability and when the American dream was taking shape. Earlier America’s domestic production was sufficient to quench its thirst but later, the USA became heavily dependent on imported oil, mainly from Arab countries. America started realising its mistake in the 1973 oil embargo which affected the daily life of Americans due to increased fuel prices. They were left to freeze in cold weather without any oil to provide them much-needed warmth. Once the issue was resolved, the US worked relentlessly to reduce its dependence on Saudi Arabia for oil and started looking for other countries. Eventually, Canada emerged as the biggest oil exporter to the USA. One more significant thing happened in the first two decades of the 21st century, America became the biggest oil producer.

During the last century, domestic production in America was at a similar ballpark and was growing at a minimal rate till the 2000s. However, during the Obama administration, oil exports and output of the USA started increasing substantially. America found new oil reserves in Texas and New Mexico during the early 2000s. This was achieved by the new tech of “Hydraulic Fracturing” or “fracking”. It is a process of bombarding water and other chemicals at the deep underground cracks to get oil or gas out from the rigid rocks. This oil is then collected for further processing. This has turned out to be an effective technique but very adversely affecting the environment. America was fortunate in this situation because it led to the US becoming a net oil exporter in the span of just 15 years. This was one of the biggest achievements of the Obama administration. Now, the USA has finally balanced out its oil game with Saudi Arabia and now they are equals during any negotiations.

Now we are in 2024, at the dawn of new sources of energy. The dusk of the oil age is looking in sight but still blurred. We don’t know when we will continue to use the oil as we are using it today. Then the statement of Sheikh Ahmed Zaki Yamani (which I mentioned at the start of the first blog) comes to our mind. Oil age will end when its usefulness is replaced by any other energy sources such as wind, solar etc and not when all the oil reserves get empty. This is such a powerful line for wise people to act upon and not wait for any further time to shift the energy source.

Oil might not be replaced by just one source; we will need many solutions depending on the use case. Nuclear has more energy but is not a commercial product to be used by everybody, Wind and solar are better for the environment but are heavily dependent on the climate and the geographical location, green hydrogen comes near in the ease of use, but still needs an improvement in its functionality. By pivoting to these sources, geopolitics won’t stop. New minerals such as rare earth metals like lithium, Uranium etc will become a cause for animosity between countries. As all these materials are controlled by a handful of countries. So even after all this, Geopolitics will remain, only participants will change.

In today’s world, there is a need for a multi-layer solution. Large-scale electricity generation by nuclear power plants, small scale by wind and solar, transport better shifted to electrical and green hydrogen fuel. Already traditional oil companies have started investments into such new energy sectors and many arab nations are also diversifying their money into various new ventures like Airways, Big flashy infra, tourism, sports (which is an altogether new world to delve into) etc.

So, this was the story of oil till today. Don’t know how it will go from here to the future. Our present demands some hard actions to overcome the Climate change contributed by these fossil fuels. Oil had an interesting story of its rise and prominence. Let any other fuel to rise. We will meet again with that new oil story. Surely it will be as interesting as this!

Thanks for reading it. We will meet in the new blog!

Image courtesy: Facebook, Investopedia, Unsplash, Reddit, Qatar Airways, dezeen.