4 Sep 2013

Fracking, oil and pollution

This may not be the best business model
Last week, I said that the problem with oil and (natural) gas is not the way that it's conveyed to market, but demand (leading to GHG emissions) and pollution related to production.

It's economically easy to reduce demand by taxing oil/gas consumption. It's not politically easy because most people prefer cheaper energy today to a viable environment tomorrow. (Alternatively, politicians take bribes from oil/gas companies and ignore people's wishes.)

Now let's talk about pollution from "unconventional" sources such shale oil and gas that's produced from oil sands and/or fracking. I am talking about these methods because:
  • We're pretty familiar with pollution from conventional production methods
  • Unconventional production has a disproportionate impact on water (groundwater in particular)
  • Canada (where I'm living) has a lot of activity in oil/tar sands shale gas/oil
So here's my take on what's happening:

First of all, oil and gas companies are making lots of mistakes
Second, we see that they are doing this with permission of regulators and politicians
This is not happening in a vacuum -- people can see -- so industry seems to care
But it doesn't seem that they do in reality
The sad thing is that it's not impossible to improve
So, what I'm seeing here is a backlash against oil/gas firms for their abuse of regulations, communities and the environment. Industry may think that it can insulate itself with royalties, bribes and jobs, while ignoring best practices. I don't think so, and neither does the former president of Shell.

Bottom line: As I said before, oil and gas companies need to clean up after themselves. It may cost a little money now, but it will save a LOT of money later.