Oil Producers Urge Realism, not Rhetoric
The World Economic Forum played host to a forum of the oil industry’s leaders. (image: eyeofdubai.com)
A day after Barack Obama’s State of the Union address, in which the president somberly admonished the United States for its dependence on Middle Eastern crude, an assortment of oil executives convened at the World Economic Forum in Davos, Switzerland, to pronounce their own thoughts on the matter of energy policy and, with thumbs to their noses, toast the continued predominance of fossil fuels.
According to CNNMoney.com, the forum was attended by top executives from oil giants like BP, Saudi Aramco (the national oil company of Saudi Arabia), and Royal Dutch Shell. Displeased with President Obama’s vocal endorsement of alternative fuels, and worried by Congress’s consideration of a cap and trade bill that would effectively limit demand for oil in the United States, the CEOs hoped to dispel what they consider a fanciful notion of an oil-free world. Rather, these men described a bright future for crude, which, they said, would continue to dominate energy markets for decades to come despite interference from the Obama administration.
Tony Hayward, group chief executive of BP, announced that regardless of lower demand for oil in developed countries, BP is forecasting a 40 percent increase in energy consumption among non-OECD nations over the next 20 years. He added that despite developments in alternative energy, he believes that oil and gas will remain the preeminent sources of fuel. “Even in the most aggressive climate change legislation perceived, hydrocarbons will represent 80% of energy consumption over next 20 years,” Hayward said, briefly outlining BP’s plans to boost production in their Iraqi oil field from 1 million barrels a day to 3 million barrels by 2020.
Representing Saudi Aramco, Khalid Al Falih declared the debate concerning “peak oil” to be no longer worth mentioning—an opinion common among oil executives. He dismissed the goal set by President Obama to reach energy independence as “unachievable and misleading to the public,” complaining that while Saudi Arabia continues to invest in oil production, “we don’t see reciprocal assurances from customers, by which I mean policy makers, to signal to us a long-term commitment.” Al Falih’s comments are rather more severe than those he made only a month ago, when he conceded that alternative fuels will ultimately displace crude and that, while sometimes exaggerated, the theory of peak oil was in fact supported by evidence.
Peter Voser, CEO of Royal Dutch Shell, hoped to offer a more “realistic” view of the energy industry, arguing that should alternative fuels come to replace fossil fuels, it will not be anytime soon. “It takes 25 to 30 years to gain 1% of global market share from the moment we start investing in a major project,” he said. In recent months, Shell has faced a number of challenges, including setbacks in their Nigerian operations caused by attacks by local militants and slumping third quarter profits, which forced the company to slash its workforce in December.
Amidst the oil executives, Andrew Liveris, chairman and CEO of Dow Chemical, elected himself to speak on behalf of US energy consumers. Noting that Dow has recently suffered under rising fuel costs, Liveris declaimed both the proposed carbon tax, which he said would simply pass on costs to consumers, and cap and trade system, which rewards speculators rather than energy providers. It is debatable whether Liveris, the wealthy head of the largest chemical company in the United Sates, is in fact representative of energy consumers, but his distrust of government interference in matters of energy production certainly reverberated at the World Economic Forum.
