Big Oil Says Forget about Peak Oil

Trend: Big Oil denies that Peak Oil is real; therefore, alternatives to fossils fuels are not needed.

Jim Jubak at MSN Money describes the efforts of Big Oil representatives to reassure oil consumers that there's plenty of oil for the forseeable future. According to their pronouncements, there's no reason to develop alternative energy technologies. Why would anyone doubt their motivations?

Even if Peak Oil is predicting the decline of oil too early, what about climate change and dependence on terrorist supporting states?

Has Big Oil dropped the price of oil recently to stifle the development of alternative energy technologies?

Below are some excerpts from Jubak's article.

Link: 3 stocks for a world running out of oil - MSN Money

...the National Petroleum Council, a federally chartered and privately funded oil-industry research group, ...graciously agreed to a request from the U.S. Department of Energy to "study" claims that world oil production has peaked. Lee Raymond, former chairman of ExxonMobil and current chairman of the National Petroleum Council, will chair the study, due in the summer of 2007, of "peak oil." Proponents of peak oil say that while the world isn't about to run out of oil tomorrow, global oil production has peaked, in 2005 possibly, or will soon peak, around 2010 possibly.

Talk about putting the fox in charge of the henhouse.

We can anticipate the study's conclusion from public comments made by ExxonMobil and Raymond. Mark Nolan, ExxonMobil's chief in Australia, told an oil-industry conference in September that "the end of oil is nowhere in sight." ExxonMobil officials are fond of citing the U.S. Geological Survey study that estimates that only 1 trillion barrels of a total 3 trillion barrels of conventional recoverable oil has been produced.

You don't have to be much of a conspiracy theorist to understand why companies sitting on the biggest oil reserves would want to convince us all that oil production hasn't peaked. If the slide to crisis isn't gradual, it could set off alarm bells and lead to a crash program to develop alternatives to oil -- not a happy development for oil companies. A base price of $55 a barrel this year, $60 next year and $65 the year after that is certainly preferable to a sudden peak to $200 a barrel that leads to the vast investment in wind and solar power and alternatives to gasoline-powered vehicles. Too much investment in alternatives could drive down global demand for oil while oil owners still have a big supply of oil in their inventories. Better to convince consumers there's plenty of oil so they'll keep buying even as the price gradually increases.

Listen to state-owned Saudi Aramco's Chief Executive Abdallah Jum'ah make exactly this point at a speech in Vienna in September:

The world has produced only 18% of the earth-producible potential of 5.7 trillion barrels of oil, he said, using a resource estimate 90% above the U.S. Geological Survey's estimate. "That fact alone should discredit the argument that peak oil is imminent, and put our minds at ease concerning future petroleum supplies." The remaining 4.7 trillion barrels of oil is enough to last more than 140 years, he added.

In other words relax, do nothing and just keep buying our oil with your dollars.

Peak-oil advocates such as Kenneth Deffeyes, an emeritus professor of geology at Princeton University and author of "Beyond Oil: The View from Hubbert's Peak," pretty effectively punch holes in those numbers, in my opinion. I don't know if Deffeyes hit the mark exactly when he pegged December 2005 as the peak year for global oil production, but I am convinced by his geologist's logic in predicting a long-run decline in oil production from conventional sources in the near past or the not-too-distant future. (I highly recommend "Beyond Oil" for its solid summary of the geology behind peak oil and its level-headed assessment of other energy sources.)

Comments

[PeakEngineer]

5.7 trillion barrels? Good grief.