The Market Itself Won't Curb Our Oil Addiction

It felt like I'd just walked onto the set of the sequel to Jurassic Park. There was an industry dinosaur who I'd thought was gone for good.

But no. Former ExxonMobil CEO Lee Raymond, and his colleagues at the National Petroleum Council, an industry committee that advises the Secretary of Energy on key issues of concern, released "Hard Truths: Facing the Hard Truths about Energy (a report about the future of the oil and gas industry) Monday at the American Enterprise Institute.

The report and numerous background topic papers are posted on a web page for all to review. It's 1,600 pages of impressive work.

And so, let me say up front: I came away from the event having to agree with Raymond on one thing -- that the magnitude and complexity of the challenges facing our country when it comes to energy policy are enormous. On that and much else (climate change aside, of course), I was surprised to agree with much of what he said.

Of course there was reason to be skeptical going in. Starting with the venue.

Who could forget that ExxonMobil had funded AEI to attack the Kyoto Protocol and other environmental regulations for years while its CEO -- Raymond -- sat on its board of trustees. ExxonMobil gave AEI approximately $925,000 between 1998 and 2003, according to Greenpeace. (Of course AEI was also a supporter of the war in Iraq, even hosting President Bush at a press conference less than one month before the invasion began.)

Now, was it just another coincidence that just hours before Al Gore and thousands of scientists represented by the International Panel on Climate Change were scheduled to receive the Nobel Prize for compiling the overwhelming weight of evidence about global warming, and the same week that the world's governments are poised to meet half way around the world to begin negotiating a new agreement beyond Kyoto, that the world's leading greenhouse gangsters decided to gather at a convenient location -- the American Enterprise Institute -- to grouse about how misguided the Norwegians (one of the few developed countries in the world that doesn't have to import oil, btw) were?

In fact, there was little mention of Gore. Instead, the suits had gathered to share Raymond's vision of oil and coal's inevitable domination of American energy policy for the foreseeable future.

It was somehow surreal. And thus also somehow appropriate that Raymond's interlocutor for the event was AEI fellow James Glassman -- the economist who years ago projected that the Dow would rise to 36,000. Not exactly the person I would've chosen to introduce a report about the future of any industry, if I wanted to be seen as credible, but perhaps that was the point: NPC's report tied the industry's future to the seemingly inevitable logic of conventional economics -- which, among other things, posits a world of virtually endless economic growth.

In explaining the methodology used in NPCs report, Raymond said that after looking at 25 or so supply/demand projections (including those issued by the EIA and IEA) the NPC decided there was no need for it to conduct another.

The stolid assertion was that demand would inevitably follow economic growth, which meant that it would take huge capital investments on a massive scale, and rigorous adherence to long-term planning to alter the inevitable current course. And so, unlike the wildcatters of yore, Raymond was a man only willing to bet on the status quo: There would be "no major changes" in how our energy needs would be met in the next 20 years, despite all the hype about "alternatives." The next cycle would inevitably be the same w/respect to supply/demand and price curves as the last six cycles, short-term hysteria about supposed inconvenient truths aside.

To Raymond, the issues and debates remain the same as they were after the 1973 crisis, when Exxon went down the other road and "spent" ("invested" is the wrong word" -- he interjected -- oleaginous laughs all around) 500 million dollars "looking at ALL the alternatives." The conclusion: "Nothing could compete with oil and gas."