Thursday, 27 January 2011

Wicked oil (1)

In the last week 4 friends have sent me an email outlining a campaign to force oil companies to lower petrol prices.  The suggested solution is to buy from supermarkets to force oil companies to compete for trade.

I was surprised at the idea.  The Big Four supermarkets already have a dominant position in high street retail and I'm not keen to contribute further to this trend.

Here's a different view from Down Under:

The assumption in the email that the problem:  How to reduce petrol prices? is simple to solve or Tame in the terminology of Rittel and Webber.  I'm not so sure.

Ever since oil was discovered at Spindletop, Texas in 1901, sources of easily refined crude oil have been mined extensively.  On shore sources are diminishing and 2010 saw major controversy over an explosion during offshore drilling by BP in the Gulf of Mexico.  The site of the rig indicates that companies are having to explore areas with increasingly difficult access.  People in the USA are accustomed to cheap petrol prices and seem to have trouble connecting the rapid consumption of a finite resource with the need for ever riskier exploration methods.  The US government punished BP for the consequences of the explosion, but is not pleased with the news that BP has done a deal with Russia to explore oil in the Arctic.  This type of exploration is not cheap and requires new and experimental technology.  Tesco doesn't do oil exploration.  They sell what others make at a price the market can bear.

The underlying problem statements for the US public seem to be:

How do we maintain an unending and increasing supply of petrol?  How do we keep petrol prices low?  How do we prevent loss of life and damage to the environment in the process?

Rittel and Webber would describe this as a Wicked problem.

'..we are calling them "wicked" not because these properties themselves are ethically deplorable.  We use the term "wicked" in a meaning akin to "malignant" (in contrast to "benign") or "vicious" (like a circle) or "tricky" (like a leprechaun) or "aggressive" (like a lion, in contrast to the docility of a lamb.)'

Several commentators, notably Matthew Simmons (Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy), have alerted the world to the unreliability of Middle Eastern oil reserves and the idea that Peak Oil has been reached - ie that the major sources of oil are now in decline.

Here's a simple graphical illustration of this point. The decline probably doesn't accelerate this quickly, but if we factor Peak Oil in, we're more likely to ride the wave.

It has been suggested that the original catalyst for the invasion of Iraq was the threat to oil price stability by Saddam Hussein. Some commentators assert that Iran became a potential target for similar reasons.

Dominance of oil and gas supplies enables countries to exert control over neighbouring territories. Ukraine developed a degree of independence until Russia brought the country to heel by stopping all supplies and enforcing prices beneficial to them.

The BRIC countries (Brazil, Russia, India and China) are developing at a formidable rate with an increasing demand for commodities including oil.  In the West we have shifted from one car per household to one car per adult in many areas.  Developing countries, such as China, have shifted from the bicycle to the car.

The increased use of motor vehicles is thought to be a major contributor to diminishing air quality and greenhouse gases. GHGs are linked to climate change.

Some people argue that cars should be run on biofuels. One suggestion is to use oil from crops such as rapeseed. We have an increasing world population, rising standards of living in developing countries and a greater demand for food. Crops have been poor in the last couple of years because of global weather events, highlighting the vulnerability and unpredictability of food supply. Biofuel crops compete for land with food crops.

We import much of our food in the UK. Supermarkets source a ready, cheap supply of fresh products from around the globe so that we can buy all year rather than consuming seasonal produce. Imports depend on oil supply for transport. In the UK our hard pressed farming sector struggles to meet costs from prices paid by wholesalers (including supermarkets). Some make more money from selling farmland to property developers, reducing the supply of land for food or biomass crops.

My suggested list of problem statements now includes:

How do we continue to run our cars? How do we maintain clean air? How do we reduce our impact on climate change? How do we maintain access to affordable, dependable supplies of food? How do we house our population to an acceptable standard?

My students sometimes struggle to grasp the notion of a wicked problem. I use the analogy of a waterbed. If you press down in one area, another part pops up. There is no neat and easy way to solve this and every solution may throw up unintended consequences.

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