Oil, Rust, Heat And Global Crises

Four days ago (the 8.8.06) British Petroleum closed Prudhoe Bay, the largest oilfield in the USA.

BP’s public relations claim that this was due to ‘corroding pipelines’. No one gets nervous when you hear about a bit – or even a lot – of rust.

The future for petrol... A Morningside petrol station, Brisbane

The future for petrol… A Morningside petrol station, Brisbane

But is it true or hype? The arctic tundra is warming and melting at an alarming rate. Pipelines are sinking in the squelchy morass left as the tundra warms, houses are sinking in mire and across the whole of the circumboreal conifer forests – as significant in scale as the Amazon rainforest – the trees are literally falling down and looking more like a drunken forest. Their roots, which used to be supported on a bed of permafrost, are now sliding into ooze. And that ooze has pockets of ancient trapped methane in vast – vast – quantities.

So as Prudhoe oil field slips slowly into the mire of its own creation is the next great Tipping Point of climate change being unleashed into the world’s atmosphere? Worried about carbon dioxide trapping heat? Methane is far more dangerous and traps much more heat.

The loss of Prudhoe Bay means a loss of 8% of US daily use and the “repairs” – installing pontoons and using summertime tankers – could mean long term closure. The New York Mercantile Exchange registered an immediate US$2 a barrel rise in crude oil prices, which will have knock on effects for the rest of the world.

Refineries in California and Washington are unlikely to find additional sources, with a negative impact on their local economies. With sources of crude being affected by international politics in Iran, Nigeria and Venezuela, the US government is considering releasing oil from its emergency stockpiles*.

The US federal government and the State of Alaska are suing BP for the damage caused to Prudhoe Bay by their leaky, rusted infrastructure.

On 9.8.06 the National Roads and Motorists’ Association predicted that petrol will rise to A$1.80 a litre in 2006**. Last weekend’s Courier Mail reported on the continuing decline in petrol station numbers as multinationals use cost-cutting as a way of killing off competition from local independent petrol stations. Every environmentalist who runs a car should try buying petrol from a local, independent petrol station.

Other sources predict that petrol will rise to A$3 a litre during 2007. That’s going to make buying food from shops, artificial fertilisers and pesticides very expensive. After the 1973 Arab-Israeli War, Britain experienced 25% inflation – maybe now is the time to pay off your credit card, support local, Australian-owned businesses and learn how to sow dinner***.

Jerry Coleby-Williams

* Ref:
ABC AM Show, 8.8.06 reporter Andrew Geoghegan

** Ref:
ABC News Online, 9.8.06

*** Ten years later, what happened?
November 2016

At the time of writing the full impact was hard to predict. The unfolding crisis ended up being known as the 2007-08 Oil Price Spikes, which caused the 2007-08 World Food Price Crisis for industrial agriculture.

Consequences of rising fuel prices included the setting aside of food growing land to instead grow biofuel. Less grain was grown, so food harvests and food storage fell as biofuel production rose.

The cost of petrochemical pesticides, the operation of farm machinery, food refrigeration and food transport costs all rose.

The cost of petrochemical fertilisers tripled: urea, diammonium phosphate, muriate of potash and superphosphate prices rose by 300%. This broke many Australian family-owned farms, many of which were suffering hardship from the low farm gate prices paid by supermarket contracts.

The affordability of food impacted on working families in the developed world. See The 2007/08 Agricultural Price Spikes: Causes and Policy Implications’, by the British Government.

In developing countries an extra 200 million people experienced malnutrition for the first time. Social and economic crises occurred in many countries, including riots.

Prudhoe Bay oil field re-opened in July 2007. About 2 billion barrels of recoverable oil remain and in 2013 Prudhoe Bay had slipped from the USA’s biggest oil producer to third place.

Now world oil production is suffering from a price collapse, in part due to rising gas production by fracking.

“Alaska’s problems go deeper than the current oil price collapse though. Simply put, the state is getting long in the tooth – at least as far as its productive assets go. The Prudhoe Bay Oil field, once the largest such field in North America, is starting to reach the end of its life. In 1985, the Prudhoe Bay field was pumping 2 million barrels per day – roughly a quarter of the total U.S. output. Today it is pumping 500,000 barrels a day. That’s leaving the 800 mile Trans-Alaska pipeline seriously under-utilized” – see: “Is the end in sight for Alaska’s Oil Based Economy?”.