A Brief History of Oil

The discovery of oil can be described as both a blessing and a curse. Its use as a cheap and plentiful energy source drove the huge economic expansion, and the increase in living standards, of the last 100 years. But its use has also led to devastating environmental impacts.

Oil dates back a mere 150 years. During its first 50 years, oil production was marginal and was mostly used for heat and light. Oil production—and its importance—started taking off at the beginning of the 20th century, in conjunction with Henry Ford’s assembly line and the beginning of automobile mass production.

Throughout the 20th century, and still true today, oil’s most essential role is as a transportation fuel. Oil fuelled both World Wars—transforming them into mechanized conflicts using tanks and aircraft—and both post-war booms. America’s love affair with the car began in earnest during the roaring 20s. Economic growth in the 1950s accelerated the migration out of city centres and the expansion of suburbia. Drive-in movies and restaurants epitomized North America’s love of the automobile during this period.

The manufacturing and use of plastic, a synthetic polymer derived from oil, also became an ever-increasing trend over the last century. Though the practice began in the 1920s, its prominence, like that of the car, really accelerated in the post-WWII years. Today, its use is ubiquitous, yet few people are aware of all the products derived from oil: toothpaste, contact lenses, credit cards, golf balls, polystyrene cups, plastic bags.

Who has oil and who needs it has shaped world politics for a century. In the early 1900s, important oil discoveries were made in Texas and Persia (now Iran). Venezuela joined the oil club in 1922, with the discovery of the Lake Maracaibo reserves. Large reserves in Saudi Arabia and Kuwait were discovered in the late 1930s. In 1960, the Organization of Petroleum Exporting Countries, OPEC, was created. OPEC’s oil embargo in 1973 and the Iranian revolution of 1979 produced price spikes that led to global economic downturns and revealed the world’s dependence on this non-renewable resource.

Despite short periods of increased energy efficiency and the development of alternative forms of energy during the oil crises, global production, demand, and use of oil has continued to climb. Though America remains the second largest producer of oil, its production peaked in the early 1970s while its demand continues to soar. It has largely eschewed energy efficiency and energy self-sufficiency, and is therefore extremely dependent on imports, mostly from Canada, the Middle East, and Venezuela.

Environmental Impacts of Oil

Like other fossil fuels, oil’s production, transport, and use have significant environmental impacts. Oil production creates air pollution, greenhouse gas emissions that lead to climate change, and wilderness destruction. Impacts on the landscape are so significant that Alberta’s oil and gas industry now cuts more trees and destroys more habitat than the province’s forest companies. The proliferation of offshore oil production, essentially a search for more and more remote sources of oil, has produced numerous large-scale oil spills, including a major spill from Nova Scotia’s Terra Nova offshore platform in 2004.

Transporting oil also has produced its share of environmental peril, from the Exxon Valdez disaster to leaks from both oil pipelines and gas pipelines everywhere they exist. Even when pipelines operate as intended, they cut swaths through the landscape that fragment important habitat.

And then there’s climate change. The production and use of oil has made a significant contribution to global greenhouse gas emissions, the increase in carbon dioxide concentrations in the atmosphere, and the consequent changes to our climate.

Peak Oil

At some point, no matter how much effort is put into discovering and producing more oil, its production will continue to decrease. The world won’t have run out of oil (there will still be about half the global reserves remaining), but reserves will be so depleted that maintaining production levels will be impossible. Economic disruption will follow because of a global economy that is dependent on cheap oil for so much of its activity and growth.

Where experts disagree is when peak oil production will occur. Generally, petroleum geologists seem to agree that peak production is at most a few years away. They rely on the influential work of geologist Dr. M. King Hubbert, who rightly predicted the peak of U.S. oil.

Some economists and oil executives believe that the world has decades before reaching peak oil production. However, they largely ignore the reality of oil production curves and simply point to erroneous predictions of peak oil from the past. They believe increased prices will spur exploration, more oil discoveries, and continued growth. However, every year since 1980, oil use has exceeded new discoveries by an increasingly wide margin. As the oil left to be discovered dwindles, exploration costs surpass the value of oil discoveries, making further exploration uneconomic. This has been the case for the last three years, which is why oil exploration remains low despite record oil prices.

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