Almost everyone is happy when oil prices fall and consumers save money at the pump. However, there is a difficulty with oil prices falling too far too fast which is almost never brought up. Everything that has a beginning has an end, and this includes the oil industry. There will come a day when the world’s oil demand will peak and the oil industry will begin its slow decline into history. When this day will come is still the subject of much debate; but whether in 20 years or 80, it is coming. When that day environmentalists anticipate so eagerly does come to pass what will remain? Among other things, the infrastructure which once moved oil across the globe.

Decommissioning oil wells and freighters is a relatively simple matter; but much of the oil transported across the world is moved through pipelines. Pipelines stretch hundreds or thousands of miles and often have sections which run under water. These pipelines which have been being built for over a century are made of steel and the problem with steel is, no matter what is done to prevent it, steel always rusts. Many of these rusting pipelines remain in use well past their intended lifespan. Of course, the oil industry is aware of this, and has made significant strides to prevent further deterioration of their assets.

This preventative maintenance protects worker safety, the safety of the public, and extends the lifespan of these assets. The repair and maintenance of infrastructure is the responsibility of the owner, but what happens when the owner becomes cash strapped? Opponents of the oil industry have been working to add costs to the industry for decades. More taxes, more regulations, more royalties, all of these deprive businesses of capital. What happens when, combined with falling oil prices these costs become too high for a company to bear and a choice is made to cut back on capital spent on maintenance?

The billions of dollars spent on maintenance every year by oil companies must come from somewhere. If the oil industry goes into decline sooner rather than later and companies begin to fold, someone is going to be left with a massive cleanup bill. As was decided in a recent case in Canada, when a company goes bankrupt creditors come before cleanup. If those responsible for taxing the oil industry are not putting aside some part of the money extorted from these companies for cleanup, perhaps it is time they do so.