Thursday, August 27, 2009

Oil turns 150

150 years ago today, the modern oil industry was born when Edwin “Colonel” Drake drilled the world’s first successful oil well in Titusville, Pennsylvania. It’s the classic “people told me I couldn’t do it” story of entrepreneurship. The locals dubbed his well “Drake’s folly,” and gathered around to jeer his persistence. The bank ordered him to stop drilling. But before the bank’s letter reached Drake, on August 27, 1859 his bit struck oil, which began bubbling out of the ground the next day, launching a new hydrocarbon era.

It goes without saying that the industry has come a long way since Drake’s primitive wooden rig, thanks to a steady stream of scientific innovations. Four of the top five biggest companies in the world, and seven of the top ten, are oil companies, bringing in over $2 trillion in revenue each year. Colonel Drake’s drill reached a depth of 70 feet. Today, massive rigs drill thousands of feet beneath the sea floor.

But unlike the dauntless Colonel Drake, today’s oil industry is a culture of “can’t,” spending millions of dollars to fight bills that will spur innovation in new energy technologies by fearless 21st century Colonel Drakes. We “can’t” stop global warming. Clean energy is “too hard” to invent, and “a long way off.” We’re “dependent” on coal and oil for our way of life.

Of course, to make any of these statements true, you have to tack the word “today” to the end. Coal and oil provide most of our energy and jobs… today. Clean energy is too expensive… today. But not in the future, if we act now.

Sure, if you raise the price of coal some miners will lose their jobs, but they’ll soon move to new jobs working in a windmill or solar panel factory. And sure, if you require people to buy renewable energy the price will rise today, but as government supports accelerate the industry’s growth, economies of scale will soon bring costs down.

Today’s business and political leaders are suffering from a myopia of the now. “Can’t,” “too hard,” and “dependent” are three words that have no part in any businessman’s or politician’s vocabulary. For that matter, they’re words that shouldn’t belong in the vocabulary of any American. Simply put, skeptics and defenders of the status quo make terrible businessmen. If oil executives continue to ignore the signs of peak oil and avoid investments in new energy, they will doom their businesses in the long run.

Colonel Drake reminds me of another story of farsighted perseverance in the face of skepticism: Noah’s ark in the Bible. Living in the middle of the desert, there seemed to be no reason to fear an impending flood. The locals thought he was crazy for building a boat in the desert. “You’re an alarmist!” they jeered. “Building a boat would be expensive! Goat herders will lose jobs!” But Noah had listened to the warnings and trusted the Expert, and so while he continued to prepare for the far off disaster, the skeptics stood around and mocked him, and went about their business as usual.

And when the floods came, we all know what happened to the skeptics. I can only hope that today’s skeptics and defeatists don’t stop the rest of us, and our own Colonel Drakes, from building our own ark - so when the sea levels rise, it’s only the skeptics who are washed away.

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