dailyimpact | Arthur Berman is perhaps the most credible debunkers of oil hype on the
planet because he is a highly qualified petroleum geologist and a
longtime, top-tier employee of the oil industry. In a presentation early
this year, he made an offhand remark in answer to a question about
Exxon Mobil CEO Rex Tillerson. “Oh,” Berman responded, “Rex knows his
company is in liquidation and he’s terrified his stockholders are going
to find out.” I don’t know if anyone else heard a thunderclap at that
moment. The discussion moved quickly onward, but I sat stunned (as I
listened to the tape). It seemed to me I had just heard spoken aloud the
essential truth of our industrial age: it’s in liquidation, and the
people in charge are terrified we are going to find out.
Liquidation, also known as a going-out-of-business sale, is a
stunning word to use about the oil industry, unless you think about it
for a minute. A company in liquidation stops
making or buying its product and keeps selling until its inventory is
gone, then turns out the lights and locks the doors. Oil companies don’t
make oil, they have to find it, and they aren’t finding any. What’s
more, take a look at their capex (capital expenditures for exploration
and development) numbers and you see that after a decade of increasingly
frenzied and expensive searching for new oil fields, with
ever-diminishing returns, the industry has virtually stopped looking. Which brings us once again to the shoals of peak oil.
Oil hypists have been declaring the “theory” of peak oil to be dead
since the phrase was first used. Never more enthusiastically than when
the shale oil “revolution,” a.k.a. the fracking boom, took hold in
America five years ago. The assault on logic and uncommon sense was
massive, well funded and for a time successful: for a while, the term
“peak oil” became synonymous with “loser.” Not any more. Peak oil is
back, and Rex Tillerson is, if anything, more terrified than he was at
the beginning of the year.
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