BP Energy Outlook: why the oil giant's forecasts are flawed
The BP Energy Outlook 2030 is not a statistical or scientific document, Cobb writes, but rather a political one. It is not a statement about the way the world is so much as about the way BP wishes it to be over the next 20 years, he adds.
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Lest you think BP is alone, read to the entire article. ExxonMobil’s conventional crude production is down 27.5 percent since 2007. French oil giant Total’s oil production (reported as crude and natural gas liquids production) declined by 18.8 percent between 2007 and 2011. Among the top four oil companies in the world only Shell seems to have sidestepped the decline for the present.Skip to next paragraph
Kurt Cobb is the author of the peak-oil-themed thriller, 'Prelude,' and a columnist for the Paris-based science news site Scitizen. He is a founding member of the Association for the Study of Peak Oil and Gas—USA, and he serves on the board of the Arthur Morgan Institute for Community Solutions. For more of his Resource Insights posts, click here.
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The strategy for most of the majors now is to replace their reserves with something called “barrels of oil equivalent.” In essence, this means natural gas on an energy equivalent basis. (Approximately 6,000 cubic feet of natural gas contain the same energy as a barrel of oil.) But to admit the ongoing decline in their oil production capacity and then also to admit that there is little chance of turning that trend around would be tantamount to corporate suicide—at least if the objective is to collect the largest possible quarterly bonus and stock options payoff.
But there is something else at work here, namely, the credulity of the media and of public policy makers. It would be easy to ferret out a few facts that would cast serious doubt on BP’s forecast—for example, that world oil production proper has been flat since 2005 despite record prices and record investment in new production. If the record prices and record investment of the last seven years can’t lift world oil production significantly off its current plateau and if the supposedly revolutionary technology that is being deployed can’t either, then what is going to happen between now and 2030 to change things?
So, the explanation for this credulity and the oil industry’s ability to exploit it must lie elsewhere. Here’s my attempt to explain. First, most people don’t know that long-term forecasts are almost useless except as ways to explore various scenarios. The margin of error quickly escalates just a few years out and becomes incalculably large when the forecast is stretched to decades. In fact, previous long-term oil supply forecasts from government and international agencies and from ExxonMobil have been considerably wide of the mark. All of them were too optimistic about supply and wildly low on prices. (This is another one of those facts that would be easy to check.)
And yet, because the forecasts come from official agencies and the industry itself, people believe that these experts can somehow discern the future clearly. Well, clearly they cannot. But, most people never go back to check.
Second, the stability of global society depends entirely on the continuous flow of energy and materials into that society. More particularly, we have now become addicted to uninterrupted growth in those supplies. It is simply unthinkable to most people—even ones in high places who ought to know better—that this growth could come to a halt and indeed go into reverse.
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If such a reversal were sustained, the consequences would be outside our experience within that last 150 years which have seen nothing but rapid economic expansion. When something is outside one’s experience, it’s easy to classify it as simply “not possible.”