Shell and BP: Still Drilling

By George Monbiot, AlterNet. Posted June 14, 2006.

For a company that claims to have moved "beyond petroleum," BP has managed to spill an awful lot of it onto the tundra in Alaska.

Last week, after the news was leaked to journalists, it admitted to investors that it is facing criminal charges for allowing 270,000 gallons of crude oil to seep across one of the world's most sensitive habitats.

The incident was so serious that some of its staff could be sent to prison. Had this been Exxon, the epitome of sneering corporate brutality, the news would have surprised no one. But BP's rebranding, like Shell's, has been so effective that you could be forgiven for believing it had become an environmental pressure group.

These companies have used the vast profits from their petroleum business to create the impression that they are abandoning it. Shell's advertisements feature photos of its technologists in open-necked shirts and showing perfect teeth (which proves they can't be real greens). They tell stories of their brave experiments with wind power, hydrogen, biofuels and natural gas. The chairman of Shell UK was one of the 14 signatories to a letter sent by businesses to Tony Blair a week ago, calling for the government to exercise "bold leadership on domestic climate change policy" in order to speed "the transition to a low carbon economy."

BP's advertisements tell the same story, illustrated with its logo -- a kind of green and yellow sunflower that looks rather like the Green Party's. So what on earth was it doing in Alaska, messing around with crude oil? Don't its filling stations now dispense pure carrot juice? Admittedly BP's latest campaign, "Exploring new ways to live without" oil, was prefaced with ads boasting about its new means of finding the stuff: "By developing innovative technology like BP's Advanced Seismic Imaging, we've been able to make discoveries that were unthinkable only a decade ago."

But even this campaign seeks to answer an environmental concern. For the past two or three years, environmentalists (myself included) have been publicizing the idea that global oil production might soon peak and then go into decline. This possibility helps to demonstrate, we argued, that our dependence on oil is unsustainable, and we must find means of giving it up. The oil companies have seized our arguments and are using them for the opposite purpose: If oil supplies are in danger, they must be permitted to prospect in new places. Whatever happens, they can't lose. If they invest in new exploration and production, they secure lucrative control over a diminishing asset. If they fail to invest, as they have done over the past 10 years, the price rises and they do even better. In either case they make so much money that they can throw a few billion into developing alternative technologies without gulping, thus cornering the future energy markets as well.

Please don't misunderstand me. I am glad they are spending some of their money this way. They are among the few companies able to achieve the economies of scale required to bring down the price of expensive new technologies, such as solar power and hydrogen fuel cells. The problem is that they are developing these new capacities not in order to replace their production of oil, but in order to supplement it. Their share price depends on the current and future value of their assets. To sustain the future value, they aim for a "reserve replacement rate" of 100 percent.

In other words, however much oil they produce, they seek to replace it with new discoveries. BP has -- so far -- managed to meet this target. Shell's desperation to do the same led to the scandal two years ago over the misstating of its reserves. The impression they have created in some of their ads -- that they are seeking to move out of petroleum and into other products -- is misleading. And though they have become more transparent, more responsive, less aggressive in their engagement with the public, the impact of their core business is much the same.

George Monbiot is the author of 'Poisoned Arrows' and 'No Man's Land' (Green Books). Read more of his writings at Monbiot.com. This article originally appeared in the Guardian.

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