Big Oil in a Blue Suit
Will, George F., Newsweek
Byline: George F. Will
The energy future will look familiar.
Irving, Texas--Published at the apogee of Barack Obama's apotheosis, the April 2009 issue of Conde Nast Portfolio, a business magazine, faulted ExxonMobil for not joining the green parade, for not investing more in alternative energies, and for not understanding oil's eclipse as humanity emancipates itself from carbon-based energies. The magazine said "the company's prospects for the next decade or two are starting to look shaky."
Later that month, the magazine died. ExxonMobil lives.
It has surpassed Walmart as the U.S. corporation with the largest revenue. Its placid CEO, Rex Tillerson, is Big Oil in a blue suit, his serenity grounded in a certainty: His company can continue providing fossil fuels for a world that for the foreseeable future--at least 20 years--will demand them in ever larger quantities.
"You can't rise above the facts," says Tillerson, who was born in Texas's oil patch: Wichita Falls. His foundational fact is that his company will be "not much different" in 20 years because the energy mix over that span "is not going to be markedly different." Eighty percent of the world's energy comes from oil, natural gas, and coal.
When the first commercial incandescent lightbulb was produced in 1879, 75 percent of U.S. energy demand was supplied by burning wood. In the 1880s, coal surpassed timber; in the 1950s, oil surpassed coal. "Once we started using oil seriously," Tillerson notes, "it still took 75 years to replace half of coal's portion" of the energy mix.
What about the "peak oil" theory--that we have passed the point of maximum production? "We are," he says, "very good at [predicting] demand" but regarding supply "we have blown it every time." He estimates that the world has used "probably well less than half" the recoverable oil. In fact, he says, "we'll probably never exhaust the world's supply" of oil because recovering the last, say, 10 percent would be so costly that alternative energy forms would make economic sense.
Herewith a recapitulation of the recalculations: In 1914, the Bureau of Mines said U.S. oil reserves would be exhausted by 1924. In 1939, the Interior Department said the world's petroleum reserves would last 13 years. …