Jed Morey’s Blog

My Island. Your Island. Long Island.

Our Addiction To Oil

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It isn’t money, love or greed—it’s oil. Oil makes the world go round.

Wars are waged over it and the weapons of war are powered by it. Films are made about it on film made out of it. It’s everywhere. Hell, what’s a slick or two between friends? Ashes to ashes, dust to dust. That’s what I say. It started out as pure darkness, undisturbed beneath the ocean floor or desert sand, and we beckoned it into the light and into our cars. Now it’s in the Gulf. Pay it no never mind. This is what we wanted. To be swimming in oil. Now we can. Drill, baby, drill.

Look at it move—that sexy, mucilaginous shadow slowly making its way through the water, preparing to lick the shore. I swear you can almost hear it purr. Drill, baby, drill. We consume it. Literally. It’s in our food, the animals we eat, the Vaseline on our lips. Now we’re having ourselves a good, ol’ fashioned Texas Tea Party. Come one, come all. Fill up your 10-gallon hats with our crude.

This isn’t a disaster, it’s a dream. No, a dream would be if it hardened. Then we could fill in that gap between New Orleans and Pensacola and drive on it. Pre-mixed blacktop. Why, just think of the development possibilities. I can see the real estate signs now: New Waterfront Properties on Oil Beach Preserve.

My God. What have we done?

Our sacred black lifeblood is hemorrhaging from the shortcuts we’ve taken. This is the moment we should all recoil in horror with hands cupped over our faces, staring unblinkingly, realizing the spectacle we are witnessing is of our own doing. The moment we see Tyler Durden for who he really is. We talk about our addiction to oil in distant and intangible terms because we never actually see the junk going into our veins. It comes from beneath the Earth’s surface, into a rig and through a refinery. Then it’s shipped on a barge, poured into holding containers and returned underground into gas tanks and boilers. The whole time it’s invisible to the naked eye. Then it evaporates when we use it and the process begins again.

Our addiction is only revealed when a break in the flow occurs and we come face-to-face with our demons.

Much of the attention paid to our oil addiction is focused on our consumption of the drug itself and finding new ways to get our fix. Renewable energy, bridge fuels, new areas of exploration. We seek answers in corn for ethanol, blasting through shale and developing technology to harness energy from algae, wind, sun and the tide. But what about the dealers?

It’s time to shed light on those who control the supply, the obscure cartel dealing in the shadows. They aren’t runners and kingpins. They are financiers and politicians who operate under a different code of ethics and evade the very laws they establish.

Deepwater Horizon—the drilling rig that exploded in the Gulf—was owned by Transocean, which also served as the drilling contractor, but the well and the crude itself are owned primarily by British Petroleum. Transocean operates out of Texas but is incorporated in Switzerland, with an office in the Caymans for good measure. Can’t be too transparent, you know. The rig was less than 10 years old. State of the art. One of the primary contractors was Halliburton.

Predictably, Wall Street has already weighed in and made its own prognostications about the impact of the spill. Just 10 days after the initial explosion that claimed the lives of 11 men, Morgan Stanley issued what the Oil and Gas Financial Journal calls a “comprehensive” report on the “financial implications” of the explosion. The bottom line is that insurance will cover most of the costs associated with the spill and that the inevitable regulation that will occur should financially benefit the industry. In fact, Morgan expects “established offshore drillers with the newest deepwater units to benefit as demand for their rigs is likely to increase” and that it will be “positive for the drilling industry.” They also conclude that “this would make the long-term supply outlook for tankers more favorable.”

What sickens me about this heartless yet rosy outlook for the oil industry is that the human and environmental toll is meaningless to financial analysts. What should sicken everyone is that Morgan Stanley is not only the most trusted analyst firm for the oil industry, it is itself one of the biggest oil companies in the world. Morgan has interests in crude oil production and storage, tankers and transportation. It is also one of the largest traders of oil on an unregulated commodity exchange that it founded. Morgan Stanley is a powerhouse oil company that should benefit handsomely from its own predictions which, even before the spill, included oil prices hitting $95 per barrel by December.

If 11 men hadn’t perished, the Gulf wasn’t flooded with oil, and our addiction wasn’t brought so painfully to light, perhaps I could close this column with some clever and pithy statement lamenting about the irony of it all. Something snarky about Halliburton and Wall Street, price fixing and collusion, the astounding conflicts of interest. But it’s too sad. It’s too much.


Written by jmorey

June 24, 2010 at 1:56 am

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