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International Herald Tribune: Oil report’s conclusion: Broad effort needed to satiate energy demand

By Jad Mouawad
Wednesday, July 18, 2007

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. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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