Really interesting article in Business Week entitled “Why You Should Worry About Big Oil”. Big Oil, says the article, has big problems.
One of the main problems is finding enough oil. With soaring worldwide demand, we are consuming oil at twice the rate of discovery of new supply. “Overall production at the oil majors is struggling to keep up with demand, and the reserve replacement ratio, the measurement of how well they are replenishing their supplies, is slipping,” argues Business Week.
Why are the majors having problems finding new oil? The first is that many of the “mature” fields such as the North Sea and Gulf of Mexico are running out. Many of the remaining reserves are politically off-limits. In the 1960s 85 per cent of reserves were open to the majors, today the figure is only 16 per cent. Nearly two-thirds of reserves are owned by national oil companies. A further 19 per cent are seen as having “limited international access”.
So – let’s stay with this for a while. At the time of unprecedented global demand for oil, the oil companies can’t replace the stuff fast enough. Because they can’t replace it the price goes up, as the price goes up they make more money. Now, they could invest this money in renewables, but instead are giving it back to investors who are profiting from big dividends so invest more in big oil who can’t find oil fast enough and off we go again. And all the time the climate stews.. Does this make sense to you?