Oil Companies Discover 'Sustainability'

By Charles I. Burch, Prairie Writers Circle. Posted July 30, 2005.


The companies have yet to admit that no scheme for providing
sustainable energy can rely on petroleum.


Sustainability is big in corporate America today. The word, that is.
Once an arcane term used chiefly by foresters and agricultural
researchers, "sustainable" has become the label of choice that
executives use to describe their businesses.

Perhaps the most laughable of the newly "sustainable" corporations are
the oil companies. Pumping a finite resource like oil out of the
ground must be one of the least sustainable endeavors on the planet.
But this doesn't bother the oil industry, which knows a powerful
public relations word when it sees one.

The most recent ConocoPhillips annual report has a section titled
"Technology Achieving Long-term Sustainability," and the CEO writes of
the company's "sustainable growth plan." Annual reports from
ChevronTexaco and ExxonMobil speak of "sustainable development." And
BP and Shell issue reports on the sustainability of their operations.
There are even auditors willing, for a fee, to vouch for the
statements in these "sustainability" reports.

All this when Arthur R. Green, lecturer for the American Association
of Petroleum Geologists and former chief geoscientist of ExxonMobil,
says world oil production is nearing its peak.

The history of U.S. oil production is instructive.

Domestic oil output steadily rose until it peaked in 1970. Since then
production has declined despite the technological know-how of domestic
oil companies and the considerable incentive of high prices. Domestic
oil production in 2003 was less than 60 percent of its 1970 level.

To meet our demand we import foreign oil. More than 56 percent of what
we used in 2003 came from other countries, and the proportion
increases every year.

Increase, taper off, then decrease -- world oil production will follow
the same pattern. Some experts think world output is very near its
peak already, while others say the peak will arrive sometime between
now and 2050.

Five complications make this grim picture even bleaker.

First, the world's largest oil reserves tend to be in countries with
unstable governments. Unrest can disrupt supply.

Second, insiders have been suspicious for some time about oil reserve
figures claimed by certain Middle Eastern countries. In 1987 the
United Arab Emirates claimed reserves of 33 billion barrels; in 1988
they claimed 98 billion barrels, according to the U.S. Department of
Energy. Iraq and some other Middle Eastern countries also reported
similarly implausible sudden increases. These figures probably owe
more to politics than sound science.

Third, China, until 1993 a net oil exporter, now imports more than 40
percent of its oil and is the world's third largest importer, after
the United States and Japan. With 1.3 billion people, one-fifth of the
world's population, and an economy that has quadrupled since 1978,
China is developing a world-class thirst for oil. China and the rest
of Asia now consume about as much oil as the United States.

Fourth, as demand climbs past supply, already high oil prices will
rise even higher. The "energy crisis" of the 1970s showed how
sensitive overall inflation, interest rates and the stock market are
to increased oil prices. The oil squeeze will not just raise the cost
of energy. It will affect the entire economy.

Fifth, even as oil becomes more scarce, development of replacement
fuels remains on the back burner. Do not expect the oil companies to
do more than token research on other fuels. True, they do have
experience taking on large projects and have sophisticated ways of
analyzing risk. But their investment and expertise are in petroleum.

If an oil company makes a genuine sustainability breakthrough --
figuring out, for example, how to make hydrogen efficiently with solar
power -- you can be sure the company will publicize this rather than
promote the pleasant fiction that its current operations are
sustainable. The reality is that no scheme for providing energy
sustainably can rely on petroleum.

But do not expect to hear that from oil executives.

Charles Burch was a senior staff scientist at Conoco before retiring
in 2002. He wrote this essay for the Land Institute's Prairie Writers
Circle, Salina, Kan.