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September 11, 2007 09:59PM
http://www.canada.com/nationalpost/financialpost/story.html?id=f228b07a-d334-463f-b4f0-4dc2694aaaf7

Beware the new world energy order

CALGARY - With crude oil prices strengthening and demand for oil continuing to rise, you'd expect three of the most powerful men in the global business to be thrilled with their good fortune.

Instead, Rex Tillerson, chairman and CEO of Exxon Mobil Corp., Jeroen van der Veer, chief executive of Royal Dutch Shell PLC, and Thierry Desmarest, chairman of Total S.A. -- brought together likely for the first time last Friday by Alberta utility magnate Ron Southern to address his Spruce Meadows Round Table -- are anxious about whether there's even a future for their business.

As Mr. van der Veer put it: "We got very serious problems."

Around the world, the rules of the game are changing and their business models become ineffective.

Meanwhile, the solutions are unclear.

Along with facing pressure in the developed world over climate change, from consumers outraged with high gasoline prices, from their respective governments for excessive profits, they're watching their investments evaporate as scores of host countries rip up deals, nationalize resources and seize the power of oil to exert political influence.

"The reality of high oil and gas prices has brought more national behaviors that are not always good for industry, while what is needed is a global approach, international co-operation," to ensure global energy security, Mr. Desmarest told the record crowd of international business leaders, including most of Canada's energy industry chief executives.

"If the IOCs (international oil companies) don't invest because they can't invest, then we made the world more dependent on national oil companies that have a national agenda as well."

In some countries, particularly in the Middle East, that are experiencing growing financial reserves because of the oil windfall, there's even discussion about reducing production to ensure there is continued wealth for future generations, rather than boosting it to meet global oil needs, he said.

Mr. van der Veer warned that national oil companies are more than ever under close political control, resulting in "a level of irresponsibility in making decisions for the business. Energy supply is becoming an important diplomatic tool." He complained that private oil companies are facing unfair competition from national oil companies like those from China that complement oil investments with large spending on infrastructure.

"For international oil companies, access to easy oil is very difficult," he said.

Mr. Tillerson, who agrees there's no shortage of resource around the world, said restricting access to private oil companies has ignored the progress made by industry to develop and produce energy under the most challenging conditions.

Already, more than 75% of the world's oil resources are controlled by national oil companies, said Mr. Tillerson, noting that Exxon Mobil, the industry's largest publicly traded corporation, accounts for only 3% of the pie...........

US Big Oil is in Big Trouble and thier problems will be going from bad to worse, and as a direct consequence of this changing reality, the troubles for the US economy will follow the same trend lines. The US who just little over a half century ago, supplied all its own oil, and, was the biggest exporter of oil, now, is close to importing 70% of the oil it uses to run its economy, and, this oil is coming from countries increasingly hostile to the US ambitions of empire. The remaining exporting nations of the world, also, are experiencing thier own internal growth to the extent that they are seeing thier ability to have excess oil to export decline at an increasing rate, such that there is now looming, a world crisis for nations that import oil, because of the declines of the oil exporting nations. This will also be coupled with the indisputable fact that worldwide new reserve finds have been declining since the mid sixties. Around 75% of the worlds biggest oil fields have peaked in production, and are in decline. Just today, the price for a barrel of oil reached a new all time record, $78.23, and this without even an major event on the world scene like a big hurricane in the gulf, or any major attacks on world wide oil infrastructure, and worldwide refineries are running at the breaking point. Set against this, the reality is that we live in a world that is seeing dramatic increases in the demand for oil. In late 2006, for the first time, worldwide demand for oil started outpacing worldwide supply. M. King Hubbert, and oil industry geologist back a half century ago predicted that US oil production would peak in 1970. He was off by one year, because it turned out to happen in 1971 and US oil production has be declining ever since. By his same formulas he predicted that worldwide oil production would peak, right about now. There are growing signs that he was right again. Mathew Simmons, Bush's energy advisor at the time he took office, told Bush of the hydrocarbon energy crisis that was coming. 9-11, Afganistan, Iraq, possible attacks soon on Iran, US military bases proliferating all over the middle east, its all wrapped around the reality of the US empire being faced with eminent dramatic declines in the energy source, which enabled it to achieve superpower status. There is no turning back the clock now to the times of cheap abundant oil, which the US had free reign to exploit. The lies by our politicians will get bigger, the US military will be used by the elites more and more in desperate, illegal and immoral moves to try and keep the oil flowing to the US economy. It is clear that even the US military efforts in Afganistan and Iraq have brought the US military it to its breaking point regarding ground operations. The rest of the countries hostile to US ambitions of empire see this reality clearly, and as a consequence, are much more inclined now to take actions adverse to US interest, since a tapped out US Military does not have the resources to address even more conflict situations ( excepting air operations or, nuclear capabilities ). Also declining oil availabililty for the US will soon begin degrading the ability of the US military. But I think the US military complex will see that its needs are met, as much as is possible, even while the US populations begin to flounder with Peak Oil realities hitting them hard. Its a complicated web for sure, and we will increasingly be experiencing the ill effects of all of this illustrated by the many negative changes in the quality of life we have become accustomed too.
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