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
Perhaps the most laughable of the newly sustainable corporations are the
oil companies. Although they laud the tax incentives to encourage oil and gas
exploration in the energy bill that Congress is expected to pass this week,
they are continuing to spin the idea that what they do is somehow sustainable.
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 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. (All data cited are from the federal
Energy Information Administration -- www.eia.doe.gov.)
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
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 -
- regardless of what is discovered in offshore oil and gas resources and the
lifting of the moratorium on drilling in U.S. coastal waters implied in the
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, according to the Energy Information Administration.
- 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 I. Burch was a senior staff scientist at Conoco until 2002 who now resides in Grand Junction, Colo. He wrote this for the Land Institute's Prairie Writers Circle in Salina, Kan.