Monday, January 04, 2010

Chevron and Its Claim of Energy Efficiency

First, two caveats.

1. Just about every oil company in the world, including Chevron, is under attack for one reason or another. Sometimes the attacks have legitimate reasons behind them and sometimes the attacks are rhetorical overkill. My post is more in the category of simple reality check.

2. Chevron doesn't have the aggressive anti-environmental record of Exxon and it doesn't have the aggressively hypocritical reputation of British Petroleum (BP) which for some years touted its environmental record while not being so green behind the scenes. Chevron isn't as bad as some oil companies but it's still an oil company. And oil companies need good public relations these days no matter who they are.

I noticed an ad the other day in Technology Review, February 2010. The ad is on page 2 and part of it reads:
At Chevron, we've focused on energy efficiency for decades. Since 1992, we've improved the energy efficiency of our own global operations by 28%. And with Chevron Energy Solutions we help other businesses and governments do the same—from Colorado where we're upgrading municipal buildings to reduce energy costs by 24% to 30%—to Pennsylvania where we're helping schools reduce their energy bills by more than a million dollars a year.

I don't argue the basic honesty of what's being said except to say that it's incomplete and therefore misleading. Energy efficiency is real as well as important if you're installing LEDs or weather-proofing buildings. But such things are not the only energy efficiency games in town.

The truth is that it's getting harder and harder to drill for oil. It takes more money, people, equipment and, yes, energy to create energy. That's efficiency going in the wrong direction.

Also, as oil companies find less and less light sweet crude, they have to turn to heavy oil which is clearly less efficient to refine. To turn heavy oil into gasoline requires high heat and high pressure, both of which take more energy.

Finally, most of what an oil company produces is used to provide fossil fuels for transportation. But cars based on diesel and gasoline are not as efficient as cars that use—or mostly use—electricity from power companies. Fueling a battery by plugging into the power grid is far more efficient than fueling a car with gasoline.

Even when power grids get their energy from plants that burn fossil fuels, electric cars are still more efficient. In the long run, however, power plants are going to have to switch to sustainable forms of energy such as solar and wind.

The Chevron ad begin with the sentence: "Every dollar invested in energy efficiency today could return two dollars in energy savings." Again, energy efficiency of the kind Chevron is promoting happens to be important. But eighty years ago a dollar's worth of energy invested in an oil field produced a hundred dollars worth of energy.

Today, in Texas, some oil wells now use more energy than they produce. Why? Because arcane laws, subsidies and tax rules make it profitable. On the other hand, there are wind turbines that return 30-60 dollars of energy for every dollar of energy invested. Something needs to change.

Although there are plenty of oil wells in the world that return excellent net energy, the reality is that worldwide the net energy per barrel of oil drops yearly as more energy is required to produce that barrel. Oil is refined into many different products and we as consumers can't easily see how energy is used to make energy but let me offer a rough metaphor of sorts: for every 100 gallons of gasoline we put in our cars, we used to give the oil companies a gallon back to go out and find more oil, pump it, refine it and transport it to our gas tank. Now for every 100 gallons we put in our cars, we have to give back anywhere from 3 to 10 gallons depending on who's providing our oil (if you get your gas exclusively from those handful of inefficient Texas wells, you might as well get a horse!).

Oil companies are going to be in business for many years to come simply because it's going to take at least twenty years to build a truly efficient energy infrastructure that is sustainable and sensible, but the oil companies, Chevron included, are going to have to change.

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