Saturday, February 25, 2017

Automation and Fossil Fuel Extraction

While the global economy is pretty uniform in weaning itself from the dirtiest fossil fuel on earth – coal – demand for the other such extractions (oil and gas) is still high, a likely scenario for the foreseeable future… until, one day, “alternative and renewable” energy sources command the energy market. “Clean” coal electrical generation from burning that black mineral seems to be little more than shoving really nasty effluents underground for future generations to deal with.
Sorry coal miners. Other than you, miners, there are very, very few people, especially not savvy business/energy analysts, who truly believe that your moribund industry, littered with bankrupt mines and coal processers, will reignite simply by revoking environmental rules that make the world safer for the rest of us. What’s worse is that natural gas is incredibly cheaper, vastly more accessible, incredibly abundant and burns much cleaner than even the highest grades of coal.
So if you are betting person, you might think to place your money on the massive numbers new jobs (or old jobs restored) that we expect will come back as oil and gas prices rebound. The drop in the price of fossil fuels hit the states that produce these energy-drivers very hard. Companies went under in our oil and gas states; jobs were lost in droves.
Roughly 163,000 oil jobs were lost nationally from the 2014 peak, or about 30 percent of the total, while oil prices plummeted, at one point by as much as 70 percent. The job losses just in Texas, the most productive oil-producing state, totaled 98,000.” New York Times, February 19th. But oil and gas prices are rising again. Are oil and gas workers celebrating? Clearly, a bunch of them are returning to the fields, ready to rebuild what has already made the United States the largest producer of oil and gas in the world, overtaking the Middle Eastern nations as well as Russia.
But as much as automation has taken over manufacturing – such that bringing back (“re-shoring”) that market sector to the U.S. overwhelmingly enriches the owners of automated equipment at the expense of the workers no longer required to do the work – it is having an equal impact on decreasing the need for workers in oil and gas. Roughnecks, oil-workers in general, have been one of the highest paid groups of blue collar workers on earth. Hard and dangerous work, volatile chemicals and often grueling working conditions combined with a need for incredible strength, amazing skills and powerful endurance meant high pay for those able to rise to the task. But that was then. Can we really restore all of those lost jobs and high pay rates today?
“[The] West Texas oil fields, where activity is gearing back up as prices rebound, illustrate how difficult it will be to meet that goal. As in other industries, automation is creating a new demand for high-tech workers — sometimes hundreds of miles away in a control center — but their numbers don’t offset the ranks of field hands no longer required to sling chains and lift iron.
“So while there is a general sense of relief in the oil patch that a recovery is gaining momentum, discussions at company meetings and family kitchen tables are rife with aching worries, especially among those who are middle-aged with no more than a high school education…
“‘People have left the industry, and they are not coming back,’ said Michael Dynan, vice president for portfolio and strategic development at Schramm, a Pennsylvania manufacturer of drilling rigs. ‘If it’s a repetitive task, it can be automated, and I don’t need someone to do that. I can get a computer to do that.’
“Indeed, computers now direct drill bits that were once directed manually. The wireless technology taking hold across the oil patch allows a handful of geoscientists and engineers to monitor the drilling and completion of multiple wells at a time — onshore or miles out to sea — and supervise immediate fixes when something goes wrong, all without leaving their desks. It is a world where rigs walk on their own legs and sensors on wells alert headquarters to a leak or loss of pressure, reducing the need for a technician to check.
“And despite all the lost workers, United States oil production is galloping upward, to nine million barrels a day from 8.6 million in September. Nationwide, with a bit more than one-third as many rigs operating as in 2014, production is not even down 10 percent from record levels.” NY Times. This makes oil and gas extraction even more efficient and cost-effective. Sorry oil workers.
Thus, coal extraction is not only uneconomic for the reasons noted above, but its mining processes have been so relatively idle for so long that cutting-edge automated technology has not even begun to be applied to this resource. Even if coal mines were to come back on line, an exceptionally unlikely scenario under any circumstances, you’d have to believe that robotic mining, computer-controlled extraction and processing, would apply equally to coal as well. It couldn’t work any other way in the modern global marketplace. Even under a scenarios of a return of coal as a major energy source, the returning jobs would just be a trickle… and even then, mostly sophisticated and well-trained automation experts.
In a world where the President has built his campaign on job retention/creation, his fellow billionaires are completely committed to replacing routinized labor by robots, and are eyeing artificial intelligence as a replacement even for high-end, white collar, college-educated workers. As quickly as manufacturing and resource extraction/cultivation are returned to this country, automation is being deployed to insure that manual labor is edited out of the system. The machine-owners – the one percenters – are scoring big as workers lose their hold on our economy.
Further, if Trump allows U.S. companies to bring their off-shore profits back to the U.S. under a lower tax scheme, as we learned in Reagan era, that cash will most likely stimulate mergers and acquisitions, not new job creation. And we also know what happens when companies merge… to improve efficiencies, they merge operations and cut costs. Layoffs! Fewer jobs!
If Donald Trump is equally successful in pushing those lower-end undocumented immigrants out of our country, knowing that mainstream “legal resident” workers have simply not been willing to do that marginal work at any price, we can expect to see automation take over those sectors as well. And if his tax scheme is all about cutting corporate taxes, then the machine owners will benefit, and the lost taxes that used to be generated by workers at higher rates… will simply vaporize. Where will the next tax base come from? Taxing Mexico to pay for the Wall?
The issue behind all of this looms particularly large. What happens in a world where even educated workers cannot find work as we are dominated by self-learning robots imbued with massive levels of artificial intelligence? What is the socio-political system that keeps us from becoming a nation where there is wealth for the top five percent and nothing for most of the rest of us? Who really has to own and benefit from a world of super-automated intelligent machines? That, my friends, is one of the biggest questions of the 21st century.
I’m Peter Dekom, and as you can see, this entire economic plan for America has been woefully under-thought, and we are saddled with slogans that are catchy but rather short on realistic solutions.

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