Building a world of
resilient communities.

MAIN LIST

 

Big Oil warns of coming energy crunch

International oil companies have advertising campaigns warning that the world is running out of oil and calling on the public to help the industry do something about it.

Most of the executives ofThe world's five largest energy groups generally maintain that oil projects are viable with the price at which they test a project’s viability is within the around $20 a barrel. range. But their advertising and some of their companies' own statistics appear to tell a different story.

ExxonMobil, the world's largest energy group, said in a recent advertisement: “The world faces enormous energy challenges. There are no easy answers.” And the companies' statistics back up the sentiment. In The Outlook for Energy: A 2030 View, the Irving, Texas-based company forecasts that oil production outside the Organisation ofthe Petroleum Exporting Countries, the cartel that controls three-quarters of the world's oil reserves, will reach its peak in just five years.

Chevron, the US's second-largest energy group, sends a similar message, but goes two steps further. “One thing is clear: The era of easy oil is over. We call upon scientists and educators, politicians and policy-makers, environmentalists, leaders of industry and each one of you to be part of reshaping the next era of energy. Inaction is not an option,” was the message in a recent advertising campaign.

The company has even set up a website, www.willyoujoinus.com, warning of the pressures of high demand and fewer fields and offering a forum of discussion.

One senior executive at an oil company not involved in the advertising campaigns speculated that his counterparts were attempting to buy themselves some slack to go after the messier, more expensive, dirty oil. Another executive said it may buy some sympathy for the difficulty many companies are having in growing developing their production and reserves.

Total, the French oil company, this week made the latest acquisition in theCanada's vast Athabasca oil sands, where companies are extracting extra tar-like bitumen from sand in an expensive and environmentally tricky mining operation.

Yves-Marie Dilibard, Total's director of communications, explaining the logic behind its campaign, said: “Tomorrow's energy needs mean developing new energy techniques, going further and deeper in the search of oil and gas. That's at the heart of Total's work today.”

Royal Dutch Shell and BP, Europe's biggest energy groups, have recently felt the effects of venturing into more difficult frontiers. Shell was forced by environmentalists to reroute a pipeline that threatened rare whales in Russia's arctic and last month warned of a $10bn (€8bn, £5.6bn) cost overrun at its Sakhalin project there. Meanwhile, BP battled with a platform in the deep waters of the US Gulf of Mexico that was severely bent by hurricane Dennis.

In its advertisements BP touts new energy alternatives, while ExxonMobil, which has unapologetically abandoned alternatives that have not been profitable, says in one advertisement: “Wishful thinking must not cloud real thinking.”

But answering the concerns of the consumer, even about the possible shortage of oil, is not the primary job of an oil company. Its most important stakeholders are its stock shareholders, some of whom have been left perplexed by the advertisements after hearing a very n altogether different message at last week's earnings conferences.

Neil McMahon, analyst at Sanford Bernstein, said: “We think these messages are at odds with the comments normally made to investors regarding future oil prices and the ability of producers to meet demand, and we wonder if perhaps those messages are actually a better indicator of the companies' thinking.”

Consumers are also not the primary concern of an even more important group: the national oil companies of producing countries, such as Saudi Arabia. The kingdom has as its first priority its growing population and the stability of the regime. This – together with the increased difficulty of finding new oil – is part of the reason for the capacity crunch, analysts and executives agree.
No amount of advertising is likely to change that dynamic.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

 

This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.


Europe Oil Consumption Peaked in 2005

Consumption peaked 7 years after the production peak and is falling now in …

Peak Oil Review - Aug 31

 A weekly roundup, including: -Oil and the global economy -The Middle …

Peak Oil Notes - Aug 27

A midweek update. Oil prices fell sharply on Monday in response to another …

Deflationary Collapse Ahead?

Both the stock market and oil prices have been plunging. Is this “just …

My Chicken of an EV

A little over two years ago, my wife and I entered a new phase of life in …

In Clash of Greens, a Case for Large-Scale Solar Projects

Weaning the U.S. economy off fossil fuels will involve the wide deployment …

Why the $20 Oil Predictions are Wrong

As the price of West Texas Intermediate (WTI) retests the $40 per barrel …