It depends who you ask.
In recent years there’s been a volley of sorts about data replacing oil as the world’s most valuable resource. The basic premise is that in this new digital economy, data and what you extract from that data is similar to oil a century ago. An untapped, massive asset that—depending on how you extract and use it—can have enormous rewards. The raw material’s value comes from the refinement into a commodity. For oil, it’s the energy extracted; for data, it's in the knowledge extracted.
Economists, professors and even CEOs are touting that data is the new oil in today’s economy while others are saying, “no way!” (See the [many] references below for examples.)
The earliest mention of this notion is from 2006. UK Mathemetician and architect of Tesco’s Clubcard, Clive Humby said, “Data is the new oil. It’s valuable, but if unrefined it cannot really be used. It has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity; so must data be broken down, analyzed for it to have value.”
More recent, a 2014 article from Wired titled, Data is the New Oil of the Digital Economy, argues that in a digital economy data is more valuable than ever, the key to a smooth functioning society and without it, things would grind to a halt. That companies should start treating data like the asset it is and by using that data, it opens huge opportunities for the business. Good data beats opinion every time and the insights allow organizations to potentially open new avenues for growth. Interestingly, last month, Wired followed up with: No, Data is Not the New Oil. But we’ll get to that.
Those on the “It Is!” bandwagon say that oil has been one of society’s most valuable resources and that those who controlled it also controlled the economy. Hence, in today’s digital economy, data and the knowledge and insight gained from it makes it potentially more valuable. That data analytics is now fundamental to business.
‘For’ folks also talk about how our personal information is now the most valuable commodity and how all that information is controlled by essentially 5 global, borderless, mega-corps who are larger than most governments. They’re making loads of money and have immense power. This dominance has some calling for antitrust breakups of those companies. (For context, Google owns around 80% share of search and Standard Oil had only a 79% share of the American market when it was split.) Black gold has been replaced by data, they say. More power, more profit like the oil barons of yore.
These companies are generally exchanging access to their systems for our personal information. The potential issue occurs when two of those companies control close to 90% of all new internet advertising and the rest of the internet economy suffers. The ‘For’ people always seem to latch on the notation that data helps us. Helps create new solutions/products, helps with weather predictions and self-driving cars and that our lives have drastically improved due to data.
The other side, ‘No, Data is not the New Oil’ folks say that while the analogy or metaphor might fit and is handy as a marketing tool, as you dig deeper, the comparison breaks down. And it’s not just that one of them is a liquid.
First, they say, is that oil is a finite resource while data is infinite and reusable. Oil requires lots of resources to be transported while data can go around the world in however many milliseconds. Also, as data is used it becomes more useful rather than becoming exhaust or lost providing light or heat. Thus, assuming data’s usefulness is done after using it, like oil, is misguided.
Being finite, oil will become harder to extract as less is available. Data, on the other hand, is growing rapidly (duh) and is constantly being added to. With IoT, more data than you can imagine is being collected every day. And in its raw form, data can become any number of things. It can pretty much represent just about anything a computer can process. With oil, it’s oil. Crude turns into gasoline, jet fuel, plastics, lubricants, streets, and other very specific types of products. Plus, data mining has a much less detrimental impact on the environment.
They also note that its more appropriate to compare data to energy sources like the sun, water, and wind since there is an abundance of those.
The one thing they agree on however, is the power that comes from the resource. But treating data like oil only contributes to the imbalance of power. Those who have the resources and those who don’t.
What do you think? Is it a reasonable comparison?