Oil Glut


By Katharine Otto, January 20, 2018

Tracking history through personal time shows how my interests evolve.  In January, 2008, I was reading Oil! by Upton Sinclair, the 1926 novel he wrote about the oil industry.

In January, 2018, ten years later, I have read the biography of John D. Rockefeller, Sr., Titan, by Ron Chernow, published in 1998.  This book goes into detail about Rockefeller’s childhood, personal life, his creation of Standard Oil and business methods, retirement, and philanthropies.  It gives short character sketches of most of the people associated with Rockefeller.  It makes an attempt to reconcile the strange mixture of rapacious greed and Baptist charity that coexisted in the man.

I didn’t know it then, but the novel Oil! was probably based on the true story of Standard Oil and the way it destroyed, compromised, or bought out its competitors.  The monopoly was dissolved in 1911 when the US Supreme Court found Standard Oil in violation of the Sherman Antitrust Act.  Chief Justice Edward White gave the company six months to spin off its 33 subsidiaries.

If the purpose of breaking up Standard Oil was to destroy the monopoly and allow for competition, the plan backfired.  The same insiders controlled stock in all the subsidiaries, Chernow notes, and in the decade after the decision, the total value of the assets quintupled.  Rockefeller, who had a quarter of the stock in the parent company, and received the same amount of stock in all the subsidiaries, went from being a mere millionaire to a having net worth of  $900 million, and thus became the richest man on the planet.bkschertitan1998

In 2018, the largest oil companies in the world are Standard Oil descendants.  Standard Oil of New Jersey became Exxon; Standard Oil of New York evolved into Mobil; Standard Oil of Indiana became Amoco; Standard Oil of California was renamed Chevron;  Atlantic Refining morphed into ARCO and eventually Sun; and Continental Oil became Conoco, now a unit of Dupont and Cheeseborough-Ponds, according to Chernow.  British Petroleum later took over Standard Oil of Ohio.

Also in the past year, I have been reading about the divestiture of fossil fuel stocks from a number of pension plans in various countries, including the US and UK.  The Norwegian central bank has recommended similar divestiture from its sovereign wealth fund to avoid too much dependence on oil in its portfolio.

wsjoslooil111717This leads me to believe the industrial age, with its over-reliance on fossil fuels, specifically oil, has peaked, and we are on the path to some new paradigms regarding energy and its use.  I’ve speculated about what sells oil and realized war, international shipping, airplanes, plastics, trucks and automobiles provide some of the largest markets.  In other words, the “global economy” depends heavily on oil and will for the foreseeable future.

To reduce dependence on fossil fuels requires a longer and broader perspective than we have considered so far.   The drum beat for “growth” and “progress,” and for the “global economy,” American dominance, and “jobs,” presumes a continuation along the paths we have taken so far, yet they have led to world-wide malaise, toxicity, and conflict.  Will more of the same be better?

The US dollar lost 95% of its value between 1913, when the Federal Reserve Act was passed, and 2010.  More money isn’t necessarily better, and it leads me to wonder if the frenzy over money, from individual to international levels, misses the crucial issues.  They say money doesn’t buy happiness, but worry over money buys only pain.  They also say money is a symbol for energy, but energy blocked or misdirected, like money, festers and ultimately damages the host. Is more energy better, if it causes destruction?

Oil is the new gold, in today’s economy.  Oil may be more useful than gold, but the way it is used leads me to question whether we are wasting or misspending our energy and resources to acquire only excess, pollution, and trouble.

Oil has become so integral to our 21st century lives that it’s hard to imagine life without it. It’s also hard to imagine the pristine conditions the planet enjoyed before humanity started extracting that gooey black stuff from under the ground and spewing its spent components in the air, dumping it in the water, and spreading it over the land.

Does “the economy” really need to grow, or does it need to retract a little and engage in some self-reflection, to appreciate and make better use of what we have?  Will the “growth jobs” of the future concern themselves with cleaning up the ocean gyres, planting trees, and making re-usable shopping bags?  Are American citizens and taxpayers under any real obligation to support wasteful government mis-spending of empty money that rightfully belongs to the unborn?

Anyone who supports return to a healthy planet should consider how our national policies create artificial markets for fossil fuels, global warming, and planetary suicide.

28 thoughts on “Oil Glut

  1. Gail Kaufman

    Interesting question: “Does ‘the economy’ really need to grow, or does it need to retract a little and engage in some self-reflection, to appreciate and make better use of what we have?”

    There’s always been an assumption that growth is good. But perhaps good for the few and not the many?

    1. katharineotto Post author

      Whether growth is good depends on what’s doing the growing. If it’s a cancer, growth is dangerous, and ultimately fatal.

      If the dollar has lost 95% of its value since 1913, the “growth” of the economy may be a sham. Also, since the US is (and its people are) in so much debt, I have to wonder if our supposed “wealth” cancels itself out with debt.

      Finally, as you suggest, who really benefits by this “growth”?

    2. Cotton Boll Conspiracy

      Growth, as we typically understand it, is usually good. A company producing more products, presupposing the products are useful, don’t cause harm and have a market, is good. Salary growth is good – certainly for those receiving the wages. If we’re talking about the economy growing through people being more productive and earning more money as a result, that’s likely good. Money supply growth, on the other hand, often undercuts real wages and causes inflation. That is not good.

      1. katharineotto Post author

        Agreed. What I’m seeing, though, is saturated markets. Machines produce faster than the products sell, leading to the mushrooming of warehouses and storage units at ports. It seems some companies that have invested a lot of money in production machines can’t afford to stop production, even if their products aren’t selling as fast as they are being made.

      2. Cotton Boll Conspiracy

        You’re a lot closer to the Port of Savannah, for example, than I am, but what you’re describing is counterintuitive. Companies that overproduce goods for which there is decreased demand are tying up resources that could be used elsewhere. They are unable to pay creditors if they’re not selling goods. Even if they have invested a lot of money in machinery, it’s not going to do them much good to keep churning out products if the products aren’t selling.

        What you might be seeing, on the other hand, are companies holding onto products in warehouses until prices rise to make the products profitable, even substantially more profitable. The reason car companies go through expensive retooling every year is to remain competitive. Even the most successful models are retooled. Products which aren’t selling are typically scrapped.

      3. katharineotto Post author

        Cotton Boll,
        My impressions are only anecdotal. I remember a car dealer telling me the manufacturer would deliver unrequested cars to his lot. I read an article about how cars were rusting on the docks at the LA port. I met a guy whose job was to empty storage units by selling the stuff to remainder-type, or discount stores. You also need to consider lag time between production and sales. Large operations don’t have the flexibility to make changes quickly, so when a product goes out of style or is no longer “hot” there may be a huge backlog.

      4. Cotton Boll Conspiracy

        You make good points; what’s in style now may be completely out of vogue in six months, which usually doesn’t give companies time to adapt. They then end up dumping products just to get rid of them.

  2. Rosaliene Bacchus

    Excellent article, Katharine. You raise several important questions. Our global capitalist economic system breeds on continued growth. It puts more money into the coffers of the tiny elite class who don’t have to live in the “shit-holes” they create across our planet.

    Divestment from fossil fuel companies has been an important strategy among climate change organizations. Here’s the latest news on divestment from 350.org of which I’m a contributing member:

    1. katharineotto Post author

      Thanks for the link. If I had known about New York City before, I would certainly have included it in the post.

      Besides divesting of fossil fuel stocks, little people like us also need to keep in mind that our rampant consumerism, wastefulness, and–most important to me– war, create enormous demands for fossil fuels. Most people don’t see the link between war and global warming, but it is real.

  3. mcaimbeul

    Once again a fascinating article Katharine. Lori and I think you and Rosaliene are two of the best writers on the net. Your precise logical thought pattern and the questions you leave us to ponder are remarkable my friend.

    1. mcaimbeul

      I should also mention the information you two relay amazes us. I had no idea about the history of Standard oil and what it morphed into. I’m pleased to have developed a lifestyle where we only drive 1,200 miles a YEAR.

      1. katharineotto Post author

        Good for you. I was amazed, too, at what a gargantuan enterprise Standard Oil was (and is, considering its legacy). Now, if we could only stop the wars, which probably drink more oil than anyone has suspected . . .

      2. mcaimbeul

        Good point Katharine. Something rarely mentioned. I believe I read years ago that the largest consumer of oil is the defense department. I had a friend in Vietnam that said you could see the diesel cloud over the American bases from miles away. There’s always something just sitting there idling 24 hours a day.

      3. katharineotto Post author

        Rosaliene calls you “Mike” and “Lori.” Are those your real names? I would prefer using them.

        I’m not surprised that the defense department is the largest oil consumer. Because we have two military bases near Savannah, I merely intuited that all those planes and helicopters must use a lot of fuel. Thanks for the confirmation of my suspicions. We need to add a “stop-war” stanza to our global cooling song.

      4. mcaimbeul

        They’re our real names and please feel to use them. I often shudder when I think what war, test rockets and such do to our precious environment.

      5. katharineotto Post author

        Mike and Lori,
        Me, too. Modern warfare distances the warrior from the victim.

        Konrad Lorenz wrote a powerful essay about how that has evolved. When people used knives and swords, they had to engage intimately with the enemy. Each step forward (backward?) . . . from spears and bow/arrows, to guns, cannons and land mines, to aircraft and now drones, has distanced the perpetrators ever more from the destruction they cause. I suspect Americans are tepid about all our wars partly because we only experience them via media (unless family or friends are involved, of course). If we had war on our own turf, we may become less complacent. The way we are provoking everyone, I wouldn’t be surprised if all our enemies started to gang up on us.

  4. Jean-Jacques @ Gypsy Café

    Very good article, Katharine, that raises a few pertinent questions. I think that due to the evolutionary force within humans, growth in a general sense is likely a natural result of progress, but it depends on how growth is applied and managed. There can be intellectual and spiritual growth – and there can be material growth. We have reached peak material growth, but not peak spiritual growth. Interestingly Carl Jung was of the opinion that that humans (this version of it) had reached peak intellectual growth. Regardless, when oil runs out, which seems to be on the horizon, we will have to redirect the growth… but grow we must!

    1. katharineotto Post author

      thank you, Cecilia. I hoped the questions would provoke thought and inspiration for others. I used to think I had answers. I don’t believe that, anymore, but believe general discussion will open doors in unexpected places.


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