“This is an industry in crisis,” Amy Myers Jaffe, the associate director of Rice University’s energy program in Houston tells today’s New York Times.
“It’s a crisis of leadership, a crisis of strategy and a crisis of what the future looks like for the supermajors” Jaffe adds. “They are like a deer caught in headlights. They know they have to move, but they can’t decide where to go.”
In a comprehensive article, today’s NYT looks at the declining influence of the international oil majors: companies like BP, Shell and Exxon.
The issue is not so much the fact that we have reached peak oil, but that the last remaining oil reserves are increasingly in the hands of state oil companies so outside the control of the oil majors.
Where they do have assets, in countries such as Venezuela and Russia, the companies are being forced to renegotiate contracts with recently emboldened national oil companies. The result is that the oil majors may be awash with cash, but they are not awash with oil.
As late as the 1970s, Western corporations controlled well over half of the world’s oil production. These companies — Exxon Mobil, BP, Royal Dutch Shell, Chevron, ConocoPhillips, Total of France and Eni of Italy — now produce just 13 percent.
“It has become really, really difficult to grow production,” Paul Horsnell, an analyst at Barclays Capital tells the NYT. “International companies have a portfolio of assets in areas of significant decline and no frontier discoveries to make up for that.”
Today’s 10 largest holders of petroleum reserves are all state-owned companies, like Russia’s Gazprom and Iran’s national oil company. “There is still a lot of oil to develop out there, which is why we don’t call this geological peak oil, especially in places like Venezuela, Russia, Iran and Iraq,” said Arjun Murti, an energy analyst at Goldman Sachs. “What we have now is geopolitical peak oil.”
The bottom line is that the oil majors are in real trouble.
The NYT is avoiding the important issue here.
According to energy investment banker Matthew Simmons and most independent analysts, global oil production is now declining, from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 14%.
This is equivalent to a 33% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted.
Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.
We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from “outside,” and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.
This is documented in a free 48 page report that can be downloaded, website posted, distributed, and emailed: http://www.peakoilassociates.com/POAnalysis.html
I used to live in NH-USA, but moved to a sustainable place. Anyone interested in relocating to a nice, pretty, sustainable area with a good climate and good soil? Email: clifford dot wirth at yahoo dot com or give me a phone call which operates here as my old USA-NH number 603-668-4207.
Mr. Clifford if your prediction is correct, I can’t wait to start cycling on a highway.
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