Written essentially in the style of a textbook, Morgan Downey’s Oil 101 moves systematically through the major areas of knowledge required for a basic understanding of the global petroleum industry. These include:
- The history of oil use, including predictions about the future
- The chemistry of crude oil
- Exploration for and production of oil
- Transporting oil
- Storing oil
- Seasonal demand variation, pricing, and oil markets
Downey covers each in a clear and informative manner, though he sometimes delves into a greater level of detail than most amateurs will prefer. For instance, some of the forays into chemistry are at a level of sophistication well above what casuals readers are likely to retain. That said, the book is laid out in a highly structured way, so it is easy to gloss over technical portions without losing track of the overall structure of the text.
One thing the book strongly demonstrates is the enormous amount of expertise and capital that have been developed within the petroleum industry. For instance, the section on how offshore oil platforms are constructed and operated shows what an astonishing number of things can be executed deep underground, from a steel platform above the ocean’s surface: everything from horizontal and vertical drilling to the assembly of steel pipes (cemented in place), the use of explosives, the installation of automatic or remote-controlled valves, the injection of acids and chemicals, etc. The discussion of refining and transport technologies and infrastructure is similarly demonstrative of sustained investment and innovation. While it is regrettable that all of this effort has been put into an industry that is so climatically harmful, it does suggest that humanity has a great many physical and intellectual resources to bring to bear on the problem of finding energy. As more and more of those are directed towards the development of renewable energy options, we have reason to hope that those technologies will improve substantially.
The final portion of the book, about oil prices and forward oil markets, was the least interesting for me, as it deals with complex financial instruments rather than matters of chemistry, geology, etc. Still, for those who are seeking to understand how oil prices are established, as well as what sorts of financial instruments exist that relate to hydrocarbons, these chapters may be useful. Downey does provide some practical advice to those whose organizations (companies, countries, etc) are exposed to changes in oil markets: “The decision not to hedge [Buy financial products that reduce your exposure to a risk of major price changes] should be an active decision. Management should clearly inform investors why they decide to face the full volatility of the oil market when they have an opportunity to manage the risk.” Managing such risks on an individual level has been discussed here before.
All told, this book is well worth reading for all those who are curious about the energy basis for global civilization, why it is established the way it is, and some of the key factors that will determine which way it goes. Downey is a low-key proponent of the peak oil theory. He argues that reserves, especially in OPEC, are inflated and that a peak and bell-shaped drop-off in production are inevitable: probably between 2005 and 2015, provided depletion occurs globally at about the same rate as it did in the United States following their peak in 1970. For those hoping to grasp the implications of that projection, as well as those hoping to plan for a world based on other forms of energy, the information contained in this book is both valuable and well-presented.