Yesterday ExxonMobil ran an anti-peak oil ad in The New York Times and The Washington Post titled, "Peak Oil? Contrary to the theory, oil production shows no sign of a peak."
Frankly it was nothing more than a load of B.S.
Before I tear into this barefaced propaganda, I want you to take a look at the advertorial for yourself.
The ad claims that "abundant oil resources still available." Yeah right.
If the world's oil resource is truly "abundant", then why have there been no major oil field discoveries (oil fields that can produce a million barrels per day) in the past 30 years?
Face the Facts Jack
The number of significantly sized oil field discoveries has declined dramatically since the 60s. The large reserves and production capability of these fields are essential to increase world oil production. Smaller oil fields only serve to offset the production declines in the older giants.
Since 1990, there have been a few small and medium-sized discoveries in the world - a total of 35 - and none of these have a production capability above one million per day.
The last significant discovery, the Papa-Terra oil field offshore of Brazil, occurred in 2003. And although Papa-Terra is a decent sized oil field - a 700 million barrel reserve - the oil is under 4,000 feet of water and is an extremely low-grade crude
To put the size of Papa-Terra into context, at current global oil consumption rates, this amount of oil is consumed in 8.3 days! In fact, 85 Papa-Terras would be required to replace global production over the last two years.
The fact is this: The days of find giant oil fields is over.
The giants discovered in the 50s and 60s contributed most to worldwide reserves, with 181 billion and 218 billion barrels, respectively. Since that time the drop has been nothing less than drastic.
Discoveries in the 80s and 90s contributed only 33 billion and 27 billion barrels, respectively. In this century there have been only 16 billion barrels found.
Some people will argue that high oil prices will motivate producers to bring on more production, thus lowering prices.
This is, of course, is a basic economic rule. But this rule does not hold when the commodity in question is nonrenewable and is getting more and more difficult and expensive to find.
Despite several periods of higher oil prices, production in the United States has not reversed the overall decline from the production peak in the 70s.
If higher oil prices are all that is required to increase production rates, then why hasn't the U.S. been able to do so?
The point is this: If oil was so "abundant", as Exxon puts it, there'd be discoveries of giant oil fields all the time and prices wouldn't be nearly as high as they are today.
A Half-Truth is the Most Cowardly of Lies
Many of Exxon's competitors, including BP and Shell, have recognized the coming oil shock and have begun, albeit slowly, to restructure their research and development accordingly.
ExxonMobil has evidently determined that the best way to address the crisis is to convince the general public and politicians to believe that there is no crisis.
A quote from the 1995 movie The Usual Suspects really sums this up nicely: "The greatest lie the devil ever told was convincing the world he doesn't exist."
Now before you go off to write me nasty hate emails, I'm not comparing Exxon to the devil. I'm just saying that both parties have apparently tried to pull the wool over our eyes.
Take a look at that ad again. It's quite misleading. The advertorial claims "According to the U.S Geological Survey, the Earth was endowed with over 3.3 trillion barrels of conventional recoverable oil."
The key word in that sentence is "was". Sure, the world contained that much oil before extraction began in the 19th century. But after a hundred and fifty years of exploiting this resource, oil supplies have certainly declined.
Also take a look at the sentence that states, "Since the dawn of human history, we have used a total of about one trillion barrels of oil"
Uh, the last time I checked we've only been using oil in mass amounts for about 150 years. No self respecting cave man used gasoline to power his SUV. According to every Flintstones episode I've ever seen they used their feet to get around.
Read between the lines.
"Whoever is careless with the truth in small matter cannot be trusted with important matters." - Albert Einstein
Most credible petroleum geologists have recently become much more pessimistic about the possibility of finding the huge new reserves needed to meet growing world demand.
The fact is that the production of the cheap oil on which all modern economies are based is fast approaching the day when it will fail to meet the world's demand.
Even the most optimistic forecasts suggest that world oil peaking will occur in less than 25 years. And waiting until world oil production peaks seems like a risky role of the dice to me.
But waiting for the peak seems to be precisely the strategy that ExxonMobil advocates.
Exxon's ad asserts that "there is a lot of oil yet to be tapped. And we are getting better - technically and environmentally - at tapping it every day."
Yet Matthew Simmons, one of America's top energy analysts, warns in his 2006 Outlook for World Oil that despite double-digit increases in exploration investments in recent years:
2005 will go down in history books as perhaps the poorest year for exploration success for both oil and gas since World War II. This dismal success was not for lack of effort. Record amounts of funds are being plowed into E&P [exploration and production] capital spending, which is why all the world's rigs are now in use.
The validity of the peak oil theory has been squabbled between two parties: with the extreme optimists and oil companies in the one corner and geologists, petro-physists and, the occasional energy analysts or economists, like the editors of Energy and Capital in the other.
The peaking of world oil production could create enormous economic disruption, as only glimpsed during the '73 oil embargo and the '79 Iranian oil cut-off. One thing, however, is quite clear - it's not going to be pretty.
Let me leave you today by taking one more swing at Exxon. Take a look at their company slogan:
The company claims that they are working hard to combat the world's energy challenges. Yet in their advertorial they claim that there is no problem.
This seems a little odd to me. But I'll let you decide.
- Luke Burgess
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