So I'm reading this BusinessWeek article titled Why Exxon Won't Produce More and thinking, "Man, these guys can't even bring themselves to mention peak oil! Is the concept really that scary for business?" But peak oil is exactly what the article is describing. I'll quote from the article below and offer my own commentary.
"Even with prices at the pump near all-time highs, Exxon isn't planning on producing any more oil four years from now than it did last year. Imagine a chief executive of another growth company making a similar announcement ... What if Steve Jobs said Apple (AAPL) wasn't going to sell any more iPhones than it did in 2007?"
Basically, why isn't Exxon increasing production to meet demand, and thereby increasing revenues? The explanation is because Exxon is having to invest more capital to produce more oil--exactly what peak oil forecasts.
"[Exxon's Chairman Rex Tillerson's] team examines the available investment opportunities, figures out what prices they'll likely get for that output down the road, and places their bets accordingly. "We don't start with a volume target and then work backwards," Tillerson explained. 'It really goes back to what is an acceptable investment return for us.'"
The article then details why even maintaining current levels is difficult.
"But how could oil production be flat? Peer into Exxon's historical numbers and you see the problem Tillerson faces. Since 2000, Exxon's oil output from two of its largest regions, the U.S. and Europe, declined a startling 37%. That's 500,000 fewer barrels a day in just seven years. ... Exxon plans on bringing new fields online in Russia, the Middle East, and Africa over the next four years but they won't be enough to generate growth beyond what the company is losing due to the maturation of its fields in the North Sea and Alaska, the nationalization of its fields in Venezuela, and volumes lost due to those production sharing agreements with other countries."
Scared yet? Maybe you ought to be. If you aren't just do a Google search for peak oil.
1 comment:
Hello. This post is likeable, and your blog is very interesting, congratulations :-). I will add in my blogroll =). If possible gives a last there on my blog, it is about the OLED, I hope you enjoy. The address is http://oled-brasil.blogspot.com. A hug.
Post a Comment