Oil Companies Discover 'Sustainability'
by Charles I. Burch    Prairie Writers Circle
Entered into the database on Tuesday, August 02nd, 2005 @ 00:50:28 MST


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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.