Sourcing Blindness and the Energy Industry

In today’s highly developed economies, many people are unaware of where the essentials of their lives come from. Energy is no exception. Finding effective, elegant solutions to the carbon problem—and creating practical change—begins with understanding how today’s energy systems and applications work.

Where did these mangos come from?

On April 26, 1956 an old, converted WWII container ship called Ideal X arrived in Houston from Newark, New Jersey with a shipment of 58 truck trailers on its specially-designed cargo deck. This was the world’s first use of a shipping container, ushering in an era of streamlined, low-cost shipping that changed the course of global trade. It also ushered in, along with many other factors such as rapid urbanization and corporatization, an era in which people gave increasingly less thought to the source of the goods they consumed.

Fast forward to today, and many people access the essentials they need to live and work without giving much thought to their origin. Unless you have a preference for Turkish figs or Mexican mangos, you may not know where the ingredients of your dinner came from. We may have an academic understanding of where the water for our home or business is sourced, but most don’t think much about it. We just turn on the tap.

This “Source Blindness” is prevalent in many areas of life, and energy is no exception.

While most people are theoretically aware of how energy systems and infrastructure operate, most are often unaware of the details. And why wouldn’t they be? In the developed world, power, natural gas, gasoline, plastics and the like are almost always there when you need them. But when it comes to helping evaluate and create solutions to support decarbonization efforts, this source blindness makes it difficult to understand our options.

Where does energy come from?

Let’s start with electricity. In the United States, we get our 4,171 billion kWh of electricity from a variety of sources. These include 2,653 billion kWh from fossil fuels such as natural gas, coal and petroleum. We get the balance from non-fossil sources such as nuclear, hydropower, wind, solar and others. All of these sources feed into one of three major power grids that serve the nation’s power needs. The power sources for your home or business depend on your specific location and how the electricity is bought and distributed.

Renewable energy has made tremendous advancements in recent years. And Occidental has invested in this area, including by installing solar-powered oilfield infrastructure. But today this technology has its limits. It can be difficult to find the large amounts of suitable land needed to site wind and solar projects. And the best renewable resources are often in remote areas far from existing electricity demand, requiring new transmission infrastructure to be able to harness these resources.

The nation’s oil and gas is produced from a number of basins around the country and imported from other countries. The Permian Basin in West Texas and Eastern New Mexico is the most productive oilfield in the world. There are other vast U.S. fields, and in general the shale revolution made the U.S. a leader in oil and gas production. In 2018, the Top 5 countries from which we imported oil and gas were Canada, Saudi Arabia, Mexico, Venezuela and Iraq.

How is Our Energy Used Today?

Many people associate oil refineries and power plants with the environmental impacts of greenhouse gas emissions. But while many people may initially have a negative reaction to these facilities, they are currently vital to meeting our energy needs.

The U.S. consumes around 20 percent of the world’s [petroleum]. In 2018, for example, here’s how U.S. petroleum consumption broke down:

  • 69% Transportation

About 14.16 million barrels per day

  • 25% Industrial

About 5.13 million barrels per day

  • 3% Residential

About 0.56 million barrels per day

  • 2% Commercial

About 0.48 million barrels per day

  • 1% Electricity

About 0.11 million barrels per day

The energy industry—from exploration and production to refining and distribution—builds supply to meet demand. So where do we “cut” our dependency on fossil fuels for energy production? Switching to an electric car feels good. But you then merely shift energy from the “transportation” column over to the “electricity” column—and much of the nation’s electricity is generated from oil or coal.

People can alter some of their everyday behaviors in order to make a difference, such as driving and flying less, not using plastic bags at the grocery store, turning the lights off when you leave a room. But with the societal demands for transportation and goods made from petroleum, there is a limit to most individuals’ ability to cut their reliance on fossil fuels.

Plastics, made possible by petroleum, pervade our society. The plastic market is on track to reach over $720 billion by 2025. Using oil and gas products has become so enmeshed into our everyday lives, we may no longer realize when we’re using them. In fact, it’s one of the few commodities that you don’t always know you’re consuming. Consider these end products that all contain petroleum:

  • Ink
  • Furniture upholstery
  • Bicycle tires
  • Food preservatives
  • Pens
  • Medicines
  • Perfumes
  • Soap
  • Vitamins
  • Guitar strings
  • Candles
  • Crayons
  • Rubbing Alcohol
  • Carpet
  • Tents
  • Kayaks
  • Bandages
  • Hair curlers
  • Refrigerators

These are just a few examples on the consumer side. The industrial side is even more pervasive, including the raw materials used to make the things listed above and hundreds of thousands of other things we take for granted each day—from the asphalt used to make roads to the advanced fiber that makes high-speed internet possible.

Given the current state of technology, the oil and gas industry provides a product necessary for the production of all these products. And we are the source of demand. So the first step in reducing CO2 emissions is to first understand how the energy industry fits into our lives—and then work together to find new ways to conserve, innovate, reengineer and rethink. People don’t want to give up their cars, their contact lenses, their camping gear and their free 2-day shipping. That’s why we all have to work together to meet both carbon reduction demands AND the demands of the marketplace.

Because people may not know what goes into what makes their lifestyle possible, but they do know that it’s time for a change.

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