Great article from Charlie Cray in the Huffington Post:”It felt like I’d just walked onto the set of the sequel to Jurassic Park. There was an industry dinosaur who I’d thought was gone for good.”

He continues: “But no. Former ExxonMobil CEO Lee Raymond, and his colleagues at the National Petroleum Council, an industry committee that advises the Secretary of Energy on key issues of concern, released “Hard Truths: Facing the Hard Truths about Energy (a report about the future of the oil and gas industry) Monday at the American Enterprise Institute.

The report and numerous background topic papers are posted on a web page for all to review. It’s 1,600 pages of impressive work.

And so, let me say up front: I came away from the event having to agree with Raymond on one thing — that the magnitude and complexity of the challenges facing our country when it comes to energy policy are enormous. On that and much else (climate change aside, of course), I was surprised to agree with much of what he said.

Of course there was reason to be skeptical going in. Starting with the venue.

Who could forget that ExxonMobil had funded AEI to attack the Kyoto Protocol and other environmental regulations for years while its CEO — Raymond — sat on its board of trustees. ExxonMobil gave AEI approximately $925,000 between 1998 and 2003, according to Greenpeace. (Of course AEI was also a supporter of the war in Iraq, even hosting President Bush at a press conference less than one month before the invasion began.)

Now, was it just another coincidence that just hours before Al Gore and thousands of scientists represented by the International Panel on Climate Change were scheduled to receive the Nobel Prize for compiling the overwhelming weight of evidence about global warming, and the same week that the world’s governments are poised to meet half way around the world to begin negotiating a new agreement beyond Kyoto, that the world’s leading greenhouse gangsters decided to gather at a convenient location — the American Enterprise Institute — to grouse about how how misguided the Norwegians (one of the few developed countries in the world that doesn’t have to import oil, btw) were?

In fact, there was little mention of Gore. Instead, the suits had gathered to share Raymond’s vision of oil and coal’s inevitable domination of American energy policy for the foreseeable future.

It was somehow surreal. And thus also somehow appropriate that Raymond’s interlocutor for the event was AEI fellow James Glassman — the economist who years ago projected that the Dow would rise to 36,000. Not exactly the person I would’ve chosen to introduce a report about the future of any industry, if I wanted to be seen as credible, but perhaps that was the point: NPC’s report tied the industry’s future to the seemingly inevitable logic of conventional economics — which, among other things, posits a world of virtually endless economic growth.

In explaining the methodology used in NPCs report, Raymond said that after looking at 25 or so supply/demand projections (including those issued by the EIA and IEA) the NPC decided there was no need for it to conduct another.

The stolid assertion was that demand would inevitably follow economic growth, which meant that it would take huge capital investments on a massive scale, and rigorous adherence to long-term planning to alter the inevitable current course. And so, unlike the wildcatters of yore, Raymond was a man only willing to bet on the status quo: There would be “no major changes” in how our energy needs would be met in the next 20 years, despite all the hype about “alternatives.” The next cycle would inevitably be the same w/respect to supply/demand and price curves as the last six cycles, short-term hysteria about supposed inconvenient truths aside.

To Raymond, the issues and debates remain the same as they were after the 1973 crisis, when Exxon went down the other road and “spent” (“invested” is the wrong word” — he interjected — oleaginous laughs all around) 500 million dollars “looking at ALL the alternatives.” The conclusion: “Nothing could compete with oil and gas.”

And to the industry, that was no short-sighted conclusion: The real price of oil and gas kept declining for 20 years, making it more and more economically difficult for the alternatives.

And so, you ask, what about now that oil is $80/barrel? Does he expect the price will continue dropping from the $100 high? Yes. Why? Supply? Speculative bubble? Raymond: “Yes.” (No more comment).

Put another way: ExxonMobil does a continuously rolling 25 year outlook. Raymond hasn’t been involved in that for years, but “I’d be amazed if companies like Exxon used numbers well above $40/barrel for their 20 year forecasts.”

Conclusion: There is little chance the market itself will effect major changes.

So, despite recent spikes in the price of oil, we are advised to look elsewhere if we really want the kind of significant change that many believe will be necessary to stave off a crisis.

The impetus for change will not come from any shift in the cost of oil or gas, except in the unlikely event of a carbon tax. But to Raymond, that won’t fly easily either: “The demand response to the increase in (gas) prices in last 3 yrs shows how weak that approach is.” But, then, “although to be fair, it might work over the long haul.” (You mean, like over the course of 8 years?)

There should be at least one sobering lesson here that we call agree on: There are no easy fixes. Just as the industry has to plan far in advance, so must the rest of society if it wants to get serious about energy policy.

Yet Raymond and his colleagues in the industry roll their eyes when it comes to Washington “getting serious” about any long-term industrial policy. Indeed, their friends at AEI and other places will do their best to make sure the government doesn’t go that far. Of course, given the current condition of the Congress, I’m inclined to agree that it wouldn’t happen anyway. Until there’s a major crisis.

And so, there are few surprises in NPC’s report, and perhaps that’s the problem. Despite having received input from over 1,000 people, including some of the tamer environmentalists, Raymond was alarmingly nonplussed by what otherwise are perceived to be unique new challenges facing not only the industry, but the entire world.

(The NPC claims its report “doesn’t take a position on climate change,” but rather outlines potential scenarios.)

Even then, the sense was projected at the event at least, that crisis is not inevitable. Those who believe so are alarmists, whose assertions have to be tempered by faith in technological prowess. (As the person who managed the greatest market cap growth in corporate history, Raymond’s faith in industrial adaptability is of the highest order. Yet there are few industrial leaders like him today, who have stayed on at one company for over 40 years. At least that’s true in the “hard core” industries.” As Lee Iacocca’s has asked, “Where have all the leaders gone?” )

On the other hand, there is also the sense here in all this that even if the worst case scenarios are plausible, they might not be solvable anyway. So that, the great chemical engineer’s stolid optimism would not be wasted in even trying. Hence the reversion to total denial.

At the end of the session, Raymond was confronted with the question. And blunt in his reply: He still remains “unconvinced” about climate change.

It’s an answer that reveals a significant flaw in the oiligarch’s character. It’s almost as if his dated belief that other sciences besides geology and chemical engineering are not “hard” sciences, the sciences that made America so powerful. Any kind of so-called “science” having to do with ecology and “soft” energy was suspect for being inherently critical of American industry.

In a way, it reflects a philosophy of science at the service of industry, a philosophy directly opposed to the kind of open-ended inquiry that led Gore to connect the dots. The opposite of what Barry Commoner called the first law of ecology: “Everything is connected to everything else.”

It is also, in the end, deeply cynical.

And yet, you have to give Raymond credit for stating the obvious, and for providing baseline realities. The energy industry is so huge that no major shifts can take place in energy policy unless they are capital intensive, rigorously followed, and come with a long-term commitment. (He didn’t say it, but in effect, we’re talking about something bigger, even, than an Apollo Project or Marshall Plan, and Raymond seems confident that no one in Washington has the kind of stamina necessary to sustain such a project).

And the report itself recommends the development of “an effective global framework for carbon management incorporating all major emitters of C-O2 and focusing particularly on opportunities for U.S.-China cooperation.”

Moreover, the report also concludes that the U.S. needs to “develop legal/regulatory framework for carbon capture and sequestration.”

In an indirect sense, these are admissions that the debate is about over. That Gore and the progressive scientific community have won. And that we need to move ahead.

It’s about as much of a shift in thinking as one can expect from those who remain “unconvinced” about climate change. That the oil industry is now talking about carbon sequestration must be viewed as a monumental shift in thinking: they are ready to admit the obvious, to take the first step: to admit that we as a nation are addicted to oil and that our policies have become unmanageable.

Of course, the oil industry is probably only willing to point out the need to develop carbon sequestration because the coal industry has the greater burden to bear in that regard. (It took years for the industry front group, the Global Climate Coalition, to crack. Now it looks like the culpable industries are starting to point the finger at each other.)

Raymond alluded to the enormous scale of what would be required even if we could do it. E.g. a 1 gigawatt power plant alone will generate 150,000 barrels of supercritical carbon dioxide per day. “If we do that for all utilities would have more liquid than the entire oil and gas industry moves around today.” Another hard truth: The cost to electricity consumers would be enormous.

Although Peak Oil has become another inconvenient issue for Raymond and the folks at the National Petroleum Council, they also give it indirect weight in the report by pushing the government to “assist markets” (trans.: prepare big corporate welfare packages) in expanding and diversifying production from “clean coal” and “unconventional oil and gas” (e.g. Canadian tar sands).

Put another way: “The issue isn’t whether we have resources,” Raymond explained, “but whether we have access to them. It is a not a resource question, but a question of availability and timely development.”

(At this point it would have been inconceivable that someone in the audience would have asked if by “access” he also meant twisting some arms to extract the oil so inconveniently located under the blood-saturated sands of Iraq.)

And what about natural gas, the so-called “bridging fuel”? NPC did a study 5 years ago and the numbers are still solid: “If we don’t get caught up in the short-term issues” regarding natural gas supplies, then North American supplies are headed to where NPC predicted. It’s a rapidly declining resource. We will really begin to import when there’s a winter demand shock. But it raises another infrastructure question: Regasification terminals exist, but the owners are in a position to “control the supply.” (A reference to potential antitrust concerns?)

What about wind and solar: “The dirty little secret is” that if utilities have solar and wind in the mix, they will need a larger peak load reserve. The problem is, if they build an additional reserve, then it becomes more economical than wind and solar to begin with. That said, a minor concession: solar can be more attractive in remote locations.

When Glassman asked Raymond what did surprise him in the report, overall, he began to describe “the huge demands on infrastructure facing the country.” Not, of course, merely in replacing rusty old oil/gas industry pipelines and overcoming the opposition that has kept any new refineries from being licensed since the 1970s. But there is also a coming shortage of engineers to replace wave of incipient retirements in the industry.

Moreover, few had considered the massive infrastructure that will be necessary if we want to get serious about new energy sources. For example, “no one” seems to have thought about how much road-building would be required for transporting the materials for cellulostic ethanol. (Of course, how convenient to point out that example. Just as it would be hard to imagine the NPC estimating how much gas it would take for the American military to maintain those “enduring” bases in the Middle East).

You can always count on one industry rep. to point to the need for standards in another industry. E.g. at one point Raymond suggested that it might make sense to establish energy efficiency (tax?) policies in building construction. “You can say you don’t need earthquake construction standards unless you are standing right under a building in California.”

So that begs the question: What makes him think we’re not all standing with a climate crisis hanging overhead?