Information's ability to influence economic activity grows in step with burgeoning capacities to process and deliver data. This is so no less in the oil and gas industry than it is anywhere else. As an item of policy-making, however, the role of information must stay in perspective. Information cannot annul certain economic principles, however much it may change ways in which they are applied.
Dramatic new evidence of information's influence over petroleum operations emerged last month, when Texaco Inc. announced three major deepwater hydrocarbon discoveries in the Gulf of Mexico. All three resulted from computationally intensive 3D seismic technology. One of them is on a structure imaged below thick salt. None is in water shallower than 1,300 ft.
Sophisticated technology
Development of these finds would not be conceivable without sophisticated technology brewing in a cooperative of producers and service companies that Texaco leads. And cooperative technology development would not be possible without the ability to process and share massive amounts of information.
It will not shock anyone familiar with the modern oil and gas industry that this mature and inherently mechanical enterprise is, like so many others, rapidly learning to generate value with information. It might surprise outsiders, though.
The view seems to be growing of an economic world divided between information businesses and other, more mechanical types. Inevitably, the former come to be deemed preferable. Producers of facts present fewer risks to the environment and its creatures than do producers of food, fuels, airliners, or bicycle tires. An environmentally conscious country can make itself favor an economy based increasingly on information and decreasingly on agriculture, resource development, and manufacturing.
Yet no economy thrives on information alone. Factors of production remain land, labor, and capital. Information technology improves the efficiency with which those factors interact to create wealth. It does not make any of those factors unnecessary.
The Texaco discoveries, for example, represent work, incomes, government revenues - economic activity, in other words - and the prospect for more. And they result from land put to economic use and capital placed at risk. Whatever deepwater development know-how and 3D seismic data Texaco and its partners might possess, economic value would be slight without contributions of land and capital.
Information can be its own reward-but seldom in an economic sense until it attaches to some factor of production. For information to have economic value, someone must use it to make something else to sell. Information cannot sustain an economy in the absence of other inputs.
The administration of U.S. President Bill Clinton, a strong promoter of information industries and technologies, has a chance to acknowledge and act upon these fundamental balances. For the first time in 25 years, both houses of Congress have voted to approve oil and gas leasing of the Arctic National Wildlife Refuge Coastal Plain in Alaska. So far, the administration has opposed ANWR leasing on environmental grounds that the industry considers extreme.
What growth demands
By changing his administration's stance and signing the eventual budget bill that will contain ANWR leasing legislation, Clinton could move the country past a snag of unnecessary self-sacrifice. He could show that economic growth demands more than a fully integrated network of computer experts, helpful though they be.
In a healthy economy, people perform mechanical tasks with capital and land to grow food, produce fuel, assemble airliners, and make bicycle tires. It would be comforting to see this administration acknowledge that the exciting promise of information technology does not offset economic harm done by official limits on environmentally scorned essentials.
