Water is the New Oil
Okay, you might not be able (yet) to run your car on it, but oil is at the moment a universal need. So is agricultural and potable water. We can painfully accept shortages of oil, either by price increases, alternative fuels or conservation. But fresh water is essential to life itself and from there, allow me to draw certain conclusions.
The energy business should be looking over its shoulder at such disruptive technologies as solar, wind and thermal. A disruptive technology is one that one that displaces an established technology and shakes up the industry. Kodak faced one with the arrival of digital photography and it not only shook them up, it effectively destroyed the company.
A May 25, 2015 Guardian newspaper headline reads: Oil company bosses' bonuses linked to $1tn spending on extracting fossil fuels. Exxon Mobil, Shell, Chevron, Total and BP pour funding into projects to unlock oil reserves – despite scientists warning they will lead to climate change disaster. That headline may (or may not) cause you to draw in your breath, depending upon your environmental views.
But it set me thinking about major oil companies recognizing a disruptive train at the other end of the tunnel and doing something to ease the pain. Because pain is surely coming in the fossil-fuel industries, whether it be in the form of a drop in oil prices, environmental decline or a world gone electric.
There are two ways Big Oil might choose to ease itself on through a disruptive period: invest heavily in alternative energy sources or find a new and untapped natural resource.
The latter may be the safer bet, because Big Oil is late to the game in renewable resources and dominance in agricultural and potable water lies waiting at their feet. Plus the timing is right.
California (the world’s 6th largest economy) is facing a water-shortage disaster and Chevron or Exxon coming big-time to their aid would be seen as America at its best and a heroic act.
It’s been a long time since Big Oil has been looked upon as a hero. What an overwhelming public-relations opportunity.
Consider these contexts:
Desalinization is the only route available that could make a significant impact at the moment but it would take enormous financial resources to achieve. Big Oil is cash rich and scared to death of a decline in oil prices. So they have those enormous financial resources and the motivation to move toward dominating another market. Disclaimer: I’m not anxious to see freshwater domination by a single industry, but I’m very anxious to see a major move toward desalinization.
Oil is harder and harder to find and retrieve economically. Four-fifths of the planet is water and it’s there for the taking. World population centers tend to stay close to oceans (if they have one available) and Big Oil knows how to do pipelines where needed. Fresh-water pipelines pose no environmental threats. The oceans are rising, not falling and you don’t have to drill for seawater.
Big Oil also knows how to build refineries and (in my admitted ignorance) I presume desalinization is both less complicated and expensive than refining.
The need for fresh-water will never decline, as the need for oil will certainly taper off. It’s in the cards and the deck is stacked in favor of renewable energy. Certainly, in any case, oil is a finite resource.
That pretty much outlines my ideas for controlling this particular disruptive technology that threatens a major industry. Get out in front while there is still a front to get out in and become your own disruptive force.
Anyone at Big Oil interested? Probably not, but they should be.