ThePanelist.com - Is Big Oil Heading the Way of Salt?

Is Big Oil Heading the Way of Salt?

Written by Miranda Marquit

Thursday, 05 July 2007

Will Big Oil technology become obsolete?

Even though Big Oil is posting good gains for now, the question increasingly on the minds of some investors is, how long will it last? Well, even though interest in renewable energy investing is becoming more apparent, Big Oil, especially companies like Exxon (XOM) and Chevron (CVX), is still the main draw when it comes to energy investing. Without a clear plan for getting away from oil dependence, oil companies are likely to continue gaining.

In the short term, especially over the summer, concerns about oil supply, the U.S. driving season and instability in oil producing countries is likely to keep oil prices - and oil company profits - moving up. But what about the long-term?

At the Aspen Ideas Festival, which is happening all this week in Aspen, Colorado, the Aspen Daily News reports an interesting observation by former CIA director R. James Woolsey:

Oil is a valuable commodity now but 200 years ago, before the invention of refrigeration, so was salt, said R. James Woolsey, a former director of the CIA and current vice president of the consulting firm Booz Allen Hamilton.

"People fought wars over salt mines. It was very valuable back in its day," he said. "Then toward the end of the 19th century, electricity and refrigeration destroyed salt as a means of preserving meat. ...

"We need to decide it is an important national objective to break our oil dependence," he said.

Technological advances in clean energy research are moving at breakneck speed, said Woolsey, comparing it to the atmosphere that surrounded the development and implementation of Internet search engines 10 to 15 years ago.

So, is Big Oil headed the way of salt? Will our society truly develop the technology necessary to render oil dependence obsolete? I'm not sure if oil will become as technologically insignificant as salt, but it could diminish in importance as more emphasis is placed on renewable energy and more people decide that renewable energy investing is likely to pay more.

Disclosure: I do not own stock in the companies listed above. The only Big Oil company I am investing in is BP (BP).

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Comments (3)

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written by Greg Pinelli , July 05, 2007

It's nice that ex CIA heads have something to do. Finding an energy efficient substitute for oil (and natural gas) makes developing search engines and other computer accessories look trivial. Not only does it take a great deal more than late night electronic engineering to develop and apply a science of biofuel innovation..you actually have to plant the stuff..process it..and transport it to distribution channels. Real easy...about 5-7 years minimum.
By the way..and I'm sure this will come as a huge suprise to a CIA chief...but people can live without salt...try a week without a petroleum product.

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written by Alex Landefeld , July 07, 2007

Hmmm. I'll bet it's possible we use more salt these days, per capita, than we did before the days of poor refridgeration. Look at your foods to see the sodium content. Grains use seemingly huge amounts to preserve things as simple as Cream of Wheat. Look at your Northern cities (I live in Pittsburgh) where road salt is the winter "preservative" of our constant on-the-go society -- without roadsalt after a round of sleet or snow, I wouldn't be able to move my oil-dependent vehicle very far at all. I toured the salt mines under Whiskey Island, Cleveland, OH, several years ago: much has been mined...but way more remains, and will be used.

As for the oil, I don't think we'll be truly out from under the influence until we can safely use the two hydrogen atoms in every molecule of water to power our homes, transportation, communication and workplaces. Biofuels are a stepping stone -- certainly a profitable one, on which many fortunes will be made and lost over the decades -- but merely a stepping stone away from dependence on carbon-laden fuels.

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written by Andrew , July 09, 2007

The above comments seem to be ignoring Woolsey's point, or at least not engaging with it on the right level.

For one thing, we CAN use more salt these days because it is SO much less precious than it used to be. We use salt on the roads because it's cheap and easy and we're accustomed to it - we don't HAVE to, though. Other options exist.

For Greg, though -his point is that there are commodities in the past that, with time, have become much less valuable. Is it possible, just maybe, that this could happen to oil as well? We don't see it, but maybe we're too close... in the 18th century, would we have believed in refrigeration? I don't know that I would've been far-sighted enough to see that shift... and sure - it might take some years. Is that somehow a problem?

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Miranda Marquit
		About the author:
		Miranda is journalistically trained freelance writer who enjoys working out of her home nestled in the beautiful Cache Valley in Utah.
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