poor oil companies

One Vijay Vaitheeswaran speaks to public radio's Marketplace about ExxonMobil. He asserts that ExxonMobil has 3 problems:

1. resource replacement
2. unfriendly governments
3. climate warming

Regarding the first, there's a lack of recognition that it's a global problem affecting producer and consumer (i.e. everyone) alike. Vijay is the author of:Power to the People : How the Coming Energy Revolution Will Transform an Industry, Change Our Lives, and Maybe Even Save the Planet. If the book is serious, the title obviously is not.

Here's an in-depth Bloomberg piece about the current state of the oil industry. It begins with an example of how difficult oil production has become and includes:

ConocoPhillips CEO James Mulva says his company is spending as much as it can on searching for oil and developing new wells. Mulva, 58, says investment is being constrained after 147 years of exploration as companies struggle to find deposits large enough to produce sufficient profits. In the past four years, the average discovery outside of North America was the equivalent of 38.6 million barrels. That's less than half the amount of oil burned every day around the world and the lowest average for a four-year period since 1901, Chew says.

All the signs point to a depleted finite resource, yet again and again the analysts presume that if only the oil companies would invest more in exploration and production, there would be enough supply to meet demand.

There are two ways to get new reserves,'' says Robert Kaufmann, director of graduate studies at Boston University's Center for Energy and Environmental Studies. ``Go out and drill for them or buy someone else's. They are increasingly doing the latter, and the problem with that approach is it doesn't add any new barrels of oil. It's just a reshuffling of the cards in the deck.

What do they say about shuffling deck chairs on the Titanic?

I see the scenario playing out over and over:

1. oil gets scarcer
2. market prices rise to reduce demand (government controls are anathema)
   
3. oil companies and traders make tons of money
4. consumers fume
5. Congress hems and haws (raising taxes is anathema)
   

But somehow I doubt that we'll call a spade a spade. Introspection is not our strong suit.

The people who explore for and produce the oil we consume deserve our appreciation for their talent and effort; they have been doing our bidding after all.