Original Source
WASHINGTON: It started with a simple question by
Samuel Bodman, the energy secretary: "What does the future hold for oil
and natural gas supply?"
The query was made in October 2005 in a one-page letter sent to Lee
Raymond, the former chairman of Exxon Mobil and head of the National
Petroleum Council, a federal advisory group representing the oil
industry.
After nearly two years, Raymond has finally delivered his answer.
The result is a colossal 476-page study entitled "Facing the Hard
Truths About Energy" that involved 350 participants, suggestions from
over 1,000 people, submissions by 19 foreign governments from Australia
to Saudi Arabia, and dozens of subcommittees.
The report, which was made public in Washington on Wednesday, was
billed as one of the most comprehensive analysis of the global energy
challenge.
In answering Bodman's question, it also provides a sobering picture
of the energy problem facing the United States and the world. Most
strikingly, some of the recommendations adopted by the petroleum
council also probably far exceed what Bodman had in mind, or what the
Bush administration is prepared to endorse.
Because the world's population is growing and living standards are
rising worldwide, energy consumption globally is expected to jump by
more than 50 percent over the next 25 years. But finding supplies to
match that growth is going to be increasingly tough, and will require
massive new investments in coming decades.
The council's report warns of "accumulating risks" to energy
production, including rising geopolitical barriers, inflation in costs,
dwindling petroleum engineers and growing constraints on carbon dioxide
emissions. Although it does not say so explicitly, the subtext of the
council's study suggests that high energy prices might be here to stay.
The study's release comes as frustrations grow over high energy
costs and questions are raised over the security of U.S. energy
supplies. Congress is currently considering a new law to bolster the
development of alternative fuels and increase vehicle fuel efficiency.
Unlike the Bush administration's energy task force, which was led by
Vice President Dick Cheney in 2001 and fought efforts to disclose whom
it met with, the petroleum council's study makes no secret of who
participated in its mammoth effort.
The list of contributors to the report is a roster of top industry
leaders and consultants, including senior executives from Exxon and
Chevron. But the council also enlisted the help of private think tanks,
academic institutions, banks, governmental agencies and a handful of
nongovernmental groups, including the Alliance to Save Energy and
Resources for the Future.
"It really reflects the zeitgeist of the times," said Daniel Yergin,
the chairman of Cambridge Energy Research Associates and an energy
consultant who participated in the council's study.
Given that the report reflects the views of the oil industry, some
of its conclusions would seem hardly surprising, for example in
dismissing predictions from so-called peak oil theorists that the
world's oil deposits are on the decline. Quite the contrary, the
industry's view is that the world's resources remain abundant.
"Fortunately, the world is not running out of energy resources," the
report says in a 40-page summary. "Coal, oil and natural gas will
remain indispensable to meeting total projected energy demand growth."
But while the council calls for expanding and diversifying
traditional energy supplies - oil and gas, coal and nuclear power - it
is also backs the development of alternative fuels, including biofuels
like ethanol or gas-to-liquids.
"There is no quick fix" to the energy challenge, Raymond said at a
press conference Wednesday. "To assume that we have the option of not
pursuing one of the sources of energy is a fake choice."
There were other surprises. The petroleum council said that the U.S.
government should take steps to reduce oil consumption. In fact, the
report's first recommendation is a call for the U.S. government to
moderate energy demand by increasing vehicle fuel economy standards,
the main sources of growth in oil demand around the world, and improve
energy efficiency at buildings and homes.
"The world will need better energy efficiency and all economic,
environmentally responsible energy sources available to support and
sustain future growth," the petroleum council's report says.
Perhaps the biggest surprise is that Raymond, who was well known for
his skepticism of the causes of global warming when he was chairman of
Exxon Mobil, has given his backing to a report addressing how oil
companies should deal with carbon emissions on a global level. The
report said oil companies and governments need to address carbon
emissions and offers some suggestions for how the industry can help
trapping carbon dioxide in underground reservoirs.
"It is a hard truth that policies aimed at curbing carbon emissions
will alter the energy mix, increase energy-related costs and require
reductions in demand growth," the report said. It said the U.S.
government should establish a regulatory framework for managing carbon
emissions, but did not recommend any specific policy.
Still, the bias toward the industry's view is not a surprise given
the history of the council. It was created by President Harry S. Truman
in 1946 to represent the position of the oil and gas industry to the
federal government and recommend policy options, after their successful
wartime collaboration.
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