Oil execs speak to the Senate today

More senatorial shenanigans, this time bipartisan! (Remember, in the past the Democrats have been most vocal on this issue.) Probably as I write, oil company execs are testifying in front of the Senate.

Oil industry executives summoned to Capitol Hill are expected to receive a grilling Wednesday -- perhaps unlike any they have faced before -- over their record profits at a time of high oil prices.

But the questions won't just be coming from the usual critics. Some of the industry's traditional Republican allies are eager to demonstrate that they too share their constituents' anger.

The hearing, ordered by Senate Majority Leader Bill Frist (R-Tenn.), illustrates the political pressure that is driving Republicans to make a show of getting tough on an industry that has been a major source of GOP cash. Beyond the Senate hearing, House Speaker J. Dennis Hastert (R-Ill.) is preparing to call oil company executives to a meeting to confront them on what they are doing to boost fuel supplies and bring down prices.

And lest you think this is just showboating, some senators actually have proposals for the oil companies to consider:

One Republican, Sen. Judd Gregg of New Hampshire, has joined Democrats in calling on Congress to consider a windfall profits tax. Another Republican, Sen. Charles E. Grassley of Iowa, wants to challenge industry executives to donate 10% of their profits toward home-heating subsidies for low-income families. Grassley does not serve on the committees that will hear from the oil industry but plans to ask colleagues who sit on the panels to relay his proposal.

Sen. Larry E. Craig (R-Idaho) said that Grassley's proposal might be a good idea for an industry "looking for some good PR at this moment."

Even better, they're still harping on the price gouging issue.

The Federal Trade Commission chairman and state attorneys general also will appear before the committees. They are expected to testify on the effectiveness of state anti-price-gouging laws. Legislation has been proposed to create a federal anti-gouging law.

When is someone going to explain to these people (or perhaps more importantly, their constituents) how the oil futures market works? Or the role of the refiners and distributors, not just the oil companies themselves? Is Valero being summoned to Congress? Or Byrd Oil Distributors? I'm just pointing out for the millionth time that oil production from start to finish is a complex chain, and price is not just determined at one end. This scapegoating is just silly, and I'm betting that targeting the oil companies will have absolutely no effect on either supplies or prices for Joe America Consumer. So yes, I realize that they're just putting on a show to make the constituents happy, but what's the constituent going to think when nothing changes after all of this?

(Also check out this CNN/Money article on the four questions the oil execs can be expected to be asked.)

It'll be a Dog and Pony show for sure. To appease the public.
I thought the senate was more concerned with illegal steroid use amongst sports players. I don't think the senate has a clue about oil futures market. They (congress) just passed the refinery bill to speed things up, then agreed to open ANWR. Little do they realize, that the energy extracted from ANWR could be used to cut timber, when we can't afford the price of oil. Full steam ahead......straight into a brick wall!


I just whent to google news and typed in "oil executives"
I have only partially quoted from it


In their opening remarks, Exxon Mobil CEO Lee Raymond and Chevron CEO David O'Reilly said their companies and others in the industry invest billions in developing new sources of energy no matter the market price of oil or the level of the industry's profits.

"Since 2002...we invested what we earned," O'Reilly said.

Raymond argued that industry profits as a percent of revenue were in line with other industries, adding that companies had to use earnings to invest in new sources of oil.

"In politics time is measured in increments of two, four and six years," Raymond said, referring to the terms of offices for members of the House, the president and senators. "In the energy industry, time is measured in decades, based on life cycle of our projects.

"History teaches us that punitive measures hastily crafted in response to short-term rises in prices will have unintended consequences and disincentives to investment," he added.

"In the midst of pain, in the midsts of suffering, the public sees headlines about record profits," Sen. Inouye said in his opening comment, although he stopped short of endorsing a windfall profit tax. "I have nothing against making profits, it's what makes capitalism live," he added.

I want to get this post out there since there was a question posted in a later thread about whether big oil is talking about Peaking.  I saw mention of non-OPEC peak is 10 years out from a 2004 article, however, in 2005:


This discusses an ExxonMobil report that has non-OPEC peaking in 5 years.  I have reason to believe through one of my connections that they (ExxonMobil) are quite serious about this.  I would like to see TOD feedback on this development.

 So yes, I realize that they're just putting on a show to make the constituents happy, but what's the constituent going to think when nothing changes after all of this?

I think you really put your finger on it. Here are my guesses:

A. Distracted by terror alert du jour
B. Gas prices are already below $2.50 - where is the nearest Burger King drive-thru?
C. As long as they repeal the gas tax they've done all they can do.
D. Vote on abortion/gay marriage/culture war topic du jour instead of energy.

i agree that the gridlock is immense.
Federal action is impotent, state authority is needed
unfortunately (states are) mostly /likely broker
and near financial bankruptcy.
Consensus points to a very near future restructuring of the continental U.S. Are there (all ready) plans to
establish a 5-7 district/regional U.S? Similar to
Canada. Thinking it will save lots of time, money and ENERGY!!!
Reality a more centralized FEDERAL REPUBLIC with
an easier to control union !>?
Govermental downsizing , ha, ha, ha.

There is a main feature event on the horizon.
I can't put my finger on it exactly. But every fiber
of my being feels (it) something is very near the
wisdom reveals desperate people will do desparate
It's comimg !!!


think small, think fast, peace

Assuming they do go ahead and do a windfall profits thing, or that the oil companies agree to fork over 10% of their profits. Let's just say one or both happen.

These monies will go into the general fund, where our esteemed and corrupt legislature can then fund whatever they wish to fund with the money. They may collect several billion - then they will vote a few hundred million for heating oil relief and retain the rest in the general fund.

This is how it works - find a business with money and shake them down, get more money, and vote ourselves additional raises. I just wish there were more options out there like Ron Paul in Texas...


Get 'em Ron!

I've tried to say this in several ways, but I'll give it another shot:

The oil industry is too big and too essential to exist separately from the US government.  The futures market may determine the price of oil.  The stock value may be determined by the stock market.  But the cost side of the equation is a made up number.  Over so many decades the taxpayers have had to pay for environmental clean up, military and intelligence efforts, use of public lands, etc.  Where do these costs show up on the P&L?  The US government needs the oil companies to succeed, and big oil needs the US government.  And the consumer has little choice but to buy the product, or much influence on the price - who does determine the price at the pump?  What part of this sounds like a free market?

I hear how these companies struggled during the lean years - sounds to me like they would have gone bankrupt had they been charged the full costs of what was borne by the taxpayers.  So why is it that now they're entitled to huge profits?  I think it is absurd to treat these entities as if they were separate from the US government, and equally absurd to pretend that they operate in a free market.  This is simply the wrong model to apply to this business.  And if the losses were limited at various times, what is wrong with limiting the profits as well?

Maybe this isn't so much right-and-wrong as practical. During the lean years, the government only did the bare minimum to avoid bankruptcies, and not enough - as we are seeing now - to maintain a robust industry with reserve capacity.

Now, on a percentage basis, the supposed monster profits still seem trivial and stingy compared to the 10-20% - and tax-free, mind you - that any Joe Doakes can make simply by sitting on his bottom snarfing Twinkies while hoarding oil-guzzling suburban real estate. So either one allows profits commensurate with the government-guaranteed returns and lavish tax benefits on real estate, or else one nationalizes the energy industry and has the government run it. In the latter case, I suppose, we will all soon travel by Cuban-style camello, or maybe just oxcart.

The third option is business as usual - investment only in energy consumption, and, Real Soon Now, massive shortages. Then again, for all I know, maybe the Great Shiftless Moron Mass really do want to spend their lives waiting in gas lines, as suggested by Tim Haab not too long ago.

Regardless of the option chosen, the politicians do not possess a Magic Money Tree. If oil products are getting more difficult to locate and extract and refine to ever-stricter standards, then Joe Doakes is eventually going to have to put the Twinkies aside, get off his bottom, and work more productively to pay the extra freight - or else he can do without. There is simply no avoiding it.

I have yet to understand why oil company representatives continue to allow the news to focus on their "record-breaking profit dollars and profit growth" rather pointing them to the annual profit percent.  No one ever seems to bring this up, even in a CNN interview with API a few weeks ago.

API knows better than anyone.  They post on their website a chart comparison of various industry profits, based on 2Q 2004 Fortune magazine reports. The average oil company profit sat at about 7.5% (in a massive profit $ year), while banking, software, and pharmaceuticals are up in the stratosphere around 17-20%.  If oil company profits dropped another few percent they would be considered almost stagnant by business standards.  

In a $600 billion (or so) global industry, any profit will result in huge dollars, while masking the huge operational and capital costs.  Addressing the profit percent would seem a straightforward way to tame some of the skewed perception.  

Is there a reason they don't discuss this on a regular basis?  What am I missing?

Solowriter and Greyzone,

The Return on Sales figures that you appear to be using are not the right indicators of profitability. "Profit", in this content, would be better compared on terms of return on invested capital (ROIC) or return on equity (ROE). This also ties the analysis more directly into the prospects for future investment in the sector.

If you compare two retailers, one high end (think Tiffany's) and one low end (Walmart), you would find that return on sales for WalMart would be very low because sales volume is huge and the margin is very low. The opposite would be true for Tiffany's. This does not mean that Tiffany's is more profitable. Return on Sales has a lot to do with whether the business model is high turnover or high margin.

A better question to ask is: How much profit is generated from each dollar invested. ROIC measures the return to all investors as a percentage of the capital invested to generate that return. ROE measures just the return to equity. In reality it is a bit more complex as single year measures are inadequate and the perceived risk of the asset plays a big role.

If you invested $100 in a business that had a single sale of $55 on a product that cost $50 to produce, you would have a return on sales of 10%, but a return on invested capital of 5%. If you made two sales, the ROS figure would remain the same, but ROIC would double. A companies making ten of these sales a year still have a ROS of 5%, but ROIC (profit) of 50% ($50).

Solowriter, would you provide the link to the API/Fortune data? I tried to find it on the API site, but couldn't. It's not clear from your post what data API is using.

I find this entire discussion rather absurd. ExxonMobil had what... roughly $90 billion in revenue for the period in which they posted $10 billion in profits? That's 11% profit roughly.

Meanwhile companies like Microsoft post $9.4 billion profit on $12 billion in operating systems (Windows) sales and $7.9 billion in profit on $11 billion in office software (MS Office suite) sales.

Now just who the hell is gouging who here? If the congresscritters want to learn what the word "gouge" means, they need to talk to Bill Gates.

I do think that financial support for the poor is a good idea though and either the oil companies do it themselves or the government does it for them. They can take their pick but if it was me, I'd rather I did it than some petty bureaucrat in Washington, DC.

I know this may sound sacrilegious to free market purists, but isn't the oil industry in the US so deeply imbedded in our overall infrastructure and the functioning of our government that it almost amounts to a de facto public utility?  On that basis, might not one consider that the oil industry be treated like one and be regulated as such?  

Foul! you may cry, but as pointed out in an earlier post, the oil industry benefits from all sorts of taxpayer subsidized assistance, the largest being that portion of our gargantuan defense budget that is devoted (supposedly)to  securing our supplies of oil in the Middle East and elsewhere.  

The problem is that the oil industry wants it both ways - to reap the profits from a free market, but at the same time to get free protection compliments of the US taxpayer.  On the principle that he who benefits should be the one who pays for those benefits, I would like to see some signficant fraction of the cost of the war in Iraq directly billed to Exxon/Mobil, et al.  While this will raise the price at the pump, I would also demand that my federal taxes be lowered by a proportional amount.

And I will throw this question out once again: When there is a summertime
draught in your area, would you object to your water company tripling the price of you drinking water as a response to the change in the supply/demand relationship? Hey, in a free market, why not!

This is the point I've been trying to make, but perhaps you've done a better job describing it.

And as for Microsoft, yes they are a monopoly too, with all that implies about subverting the free market system.  But their products are not AS essential as oil, in three ways:

  1.  There are other choices, both for operating systems and office software.
  2.  You do not need MS products to grow food or keep warm
  3.  You do not need to continually buy more - you could continue to use the system you have for quite a long time, unlike oil, which you can only use once.

Also, I don't think MS has been the recipient of quite so much taxpayer assistance.  So I think the analogy breaks down pretty quick.  Now, if there were a monopoly on toilet paper, that analogy would hold up better!
Twilight -

Yes, I think we are on the same wavelength on this point. Oil (as well as toilet paper) is a consumable, whereas the stuff Microsoft sells would be considered a durable good. By definition, one consumes consumables, and one keeps durable goods for an extended length of time.  As such, the economics of the two categories are markedly different and cannot be directly compared.

Furthermore, when one goes out to buy a new PC, one is shopping, in the true sense of the word (i.e., comparing features vs prices, etc). However, in the case of a high fungible commodity like gasoline or home heating oil, there is essentially zero shopping because each supplier's product is exactly the same, and the price differential within a given market area is probably less than one or two percent. So, when you fill up your car, you are not actually 'shopping' for gasoline, but rather you are paying what the market will bear for a basic commodity that is essential for your very existence, only a fews steps below drinking water.  

The only consumer decision to be made with regard to buying gasoline is
confined to how much discretionary driving you choose to do, or not do. Which is not much different from the decisions one makes in using public utilities (e.g., to keep your lights burning all night or not, or to water your
lawn this weekend or not).

(Though the decision as to how generously one uses toilet paper may be similar, I am not about to suggest that toilet paper also be regulated as a public utility, because you actually buy that product in a store and can choose between cheap but rough or soft but expensive.)

Although I agree with some of your premises, I must point out that only a very small amount of world oil production comes from the IOC's.  I don't have the numbers in front of me, but I depending upon who you include, I think the number is about 16 million barrels per day (out of 83 or so).  So to bring all of you consumers gasoline, diesel, jet fuel, etc., most of these companies have to buy considerably more oil on the "free" market than they actually produce.  So are you suggesting that they buy this at a loss?

Also, most of the crude that is produced in the US these days comes from land owned by either federal or state governments, so the public gets money in probably 7 different ways on each sale of a gallon of gasoline (lease bonus, royalty, severance tax, property tax, income tax, gasoline tax, sales tax).  I an a personal believer in high taxation of petroleum, but let's not kid ourselves here - the government take in the US is on probably on average about 50% of the cost of each gallon of gasoline.

Also, I don't have the number right in front of me, but I would submit that the average return on investment for the entire universe of publically traded oil companies between 1985 and 2004 would be well below 10% and certainly in the range of many utilities, but without the same regulatory protection of a utility.

Moreover, I would submit, that at least in the US, that oil and oil products (gasoline etc) are dirt cheap and that we as a nation just waste our endowment because they are so cheap.  Even at $3.00 per gallon or $0.20/cup, gasoline is cheaper in the US than almost any industrialized country on earth.

So what again is the complaint?  That these companies who invested hundreds of billions of investor dollars in extremely risky projects are actually making a reasonable return on their investment.  Or is it your problem that the public is not getting a big enough share of this bounty?  If you want more energy you have to make it worthwhile for investors to sink their money into the venture.  The reason why solar, wind, and other renewable sources have not taken off as major viable alternatives to fossil fuels is that no one can figure out how to make money on a big scale using these technologies.

The reason why solar, wind, and other renewable sources have not taken off as major viable alternatives to fossil fuels is that no one can figure out how to make money on a big scale using these technologies.

There is the truth staring us in the face.

What we need is:
"Throw out that old sustainable stuff. Girls with our In-for-Fall pink tint solar panels and our sexy turbines in that sleek chrome finish the guys will be all over your energy systems!" <g>

The US currently (or perhaps I should say pre-Katrina)  imports roughly 60% of it  oil - correct?  If so, then that means that 40% of our oil was produced domestically.

Would it also be safe to say that the cost to the oil companies of producing and distributing the domestic fraction of our oil did not appreciably increase in lock-step with the run-up in prices on the open world oil markets?  Why should it, as the oil companies who pump this domestic oil out of their own wells did not buy this oil, as they already own it. So then, unless I am seeing something wrong, the domestic fraction of US oil production is sort of getting a free ride due to the sharp price increases on the global markets.

Regarding profits: Of course the oil companies are entitled to a reasonable return on their investment. But what I find puzzling is that in other businesses, when the cost of raw materials for their product goes up, the business usually suffers rather than prospers, as they get squeezed between what it costs them to produce the product and what they can sell it for.

However, in the case of big oil, it seems that the worse the raw material supply situation gets, the more money they make. Why is that?  I supspect the reason, as I expressed in an earlier post, is that on the consumer level we don't really have a true market operating for refined products. It is more like an unregulated utility in which the supplier of the utility has far more control over the price of the product than does the consumer of the product. So, I don't think this is solely a matter of supply and demand and the workings of an 'efficient' market, but rather a reflection of the degree to which our vital resources are in the hands of a very powerful oligopoly.  

As far as gasoline at $3.00/gal being so 'cheap', as I pointed out earlier the true price of that gasoline is much higher, largely because of free subsidies to the oil companies (such as the military costs of securing the oil supply) that is not included in the price at the pump but rather shows up elsewhere, i.e., the
taxes we pay.  I'd like to see the price even higher .... IF the oil companies were made to pay for these subsidies themselves and our taxes lowered accordingly. (This will of course never happen.)

Then we have the other question:  how much of the huge pile of cash the oil companies are now happily sitting on is likely to be invested in new capital for energy production, or alternative energy?  I suspect the answer is: very little, as most of it will probably go toward more attractive investments,  such as buying back stock, acquiring other businesses, or a variety of other ventures. For that reason, I am very skeptical of the private sector being willing to provide the enormous capital required get alternative energy going in any  significant way.  

I am very skeptical of the private sector being willing to provide the enormous capital required [to] get alternative energy going in any  significant way.

Actually, Joule,
Expect "them" who sit at the top of the oil-wealth harvesting pyramid to provide enormous capital for brainwashing people into believing that alternative energy will not work.
Well if you were sitting at the top of the pyramid with all that money funneling in from the gas-guzzling suckers below up to your position at the top of the pyramid, what would you do? Tell them to find alternatives?

But Mr. Wineland says he does not expect the majors to sit on their hands as the world runs out of oil." Most of these companies will identify themselves as energy companies, not oil companies," he predicted. "They are all aware that they will have to move over time slowly into other things. All the majors will be involved in whatever comes next - fuel cell technology, hydrogen. The infrastructure involved in moving us down the highway - as it evolves, these companies will evolve with it."

Today's Energy Stocks May Well Be Tomorrow's www.nytimes.com/2005/11/0...06oil.html

It is still not nearly enough and no amount of investment will let us just carry on with the pattern of energy usage we have to day let alone let the rest of the world join us. but according to a Reuters report:-

Global investment in renewable energy hit a record $30 billion last year, accounting for 20-25 percent of all investment in the power industry, and with solar power the fastest-growing energy technology, a Worldwatch Institute report released on Sunday said.

 The Worldwatch Institute, a Washington-based organisation working for environmental sustainability, said the renewables sector was growing as a result of government support and increasing private sector investment.

"Policies to promote renewables have mushroomed over the past few years. At least 48 countries worldwide now have some type of renewable energy promotion policy, including 14 developing countries," the report said.

Most countries with renewable energy policies are targetting 5 to 30 percent of their electricity production by 2012, the end of the first phase of the Kyoto Protocol on reducing emissions of greenhouse gases.

Exactly! If you have a good thing going, then what incentive do you have for redically changing it?  

While people in Big Oil talk about planning for the future, I think most of that talk is just lip service. Example: How much did Big Oil invest in new refining capacity over the last 30 years?  

There is also a time-scale problem inherent in the running of any corporation. The mentality of management at Big Oil is not appreciably different from that at any other major corporation: concentrate all your efforts on having a good next couple of Quarters so that your stock options increase in value. And as far as the long-term problems are concerned: the current management expects to be long retired by the time the proverbial sh*t hits the fan.  

No, I don't trust Big Oil to do the right thing when it comes to planning for the future.

I'm sure you're right about the tax subsidies for oil.  Alternatives do not receive anything like the same level of subsidy, which is why we don't have serious private investment to ditch oil (and also why we waste so much of it).

Shifting taxes from income to fuel was part of my SinceSlicedBread proposal for exactly that reason.

EP: Your sliced bread post is excellent. Many good ideas there. The hard part is manipulating other people (other members of our vast sheeple herds) to begin to start accepting your concepts.

On the electrified railroads concept, I think we can do better than merely returning to 19th century technology. Surely there must be a way electro-magnetize our roadways in a safe way rather than forcing all vehicles into a single guage format (a single roadway width that accepts only one kind of wheel and wheel format).

Keep up the good work.

Converting to a magnetic-levitation system is a can of worms I'm just not willing to propose for the next 10 years.  The problems begin with the inconvenient fact that we have no infrastructure and go from there.

A freeway has a capacity 1500 to 2000 vehicles per hour per lane.  A single "lane" of rail moving at 55 MPH with 5 foot separation could move 3400 80-foot semi-trucks per hour or 11,600 20-foot cars per hour.  I think that would keep us long enough to invent and test some ideas for the thing to replace it.

Actually Microsoft breaks it's old software as a matter of policy. You can't run old software on new hardware after about three years. The bios for the new hardware is made to be incompatible with the old software.
Sorry, but I do it all the time.  It's usually 3 yrs until I even try one of their new operating systems, and most of my PC are old junk I've put together.
You just agreed with me. You run old software on old machines with old bios, which works. It's just running old software on new machines with new bios that doesn't work.
You're right, I did!  But I've done the opposite as well, at least if you include WinME as old.  Win95 will not run on some newer hardware, but mostly because it does not recognize what any of it is, and of course no one is bothering to write drivers for new hardware that run on old OS.  

My original point was that, given the dramatic advances in processor speed, RAM, and hard drive storage size that occured recently, most garden variety PCs produced recently are actually very powerful.  Probably way more powerful than most any truly essential application requires.  Therefore, if times get tough, most of us can hang on to our old hardware and software for a very long time while still being productive.  Therefore, we can skip new PCs and MS products, but we'll still need oil.

A little off-topic, but right on schedule:

Largest Maker of Luxury Homes Cuts Forecast

Published: November 8, 2005

The nation's largest maker of luxury homes (Toll Brothers) said today that the era of soaring home prices might have ended and that price growth could be reverting to more historical patterns.


Kunstler oughta be all over this.

I reckon the senators should also get Matthew Simmons and Daniel Yergin to come and testify.  

Let both of them be asked the question "How much oil have we got left".

It would then be interesting to see how Yergin side-steps the answer with lots of if's, but's and maybe's.

I think Matt would tell it like it is, given the facts he researched for his book.

Aside: Does anyone know if these two guys have read (and even publicly commented on) each others publications?

sort of!!
todays guardian, one of englands better papers


Running on empty

Jeremy Leggett explains how a bid to defuse the coming global peak-oil crisis was sidelined

Tuesday November 8, 2005

History shows that James Schlesinger, a former director of the CIA, is not a man to mess with. As secretary of defence during the first oil shock in 1973, he threatened to invade the Arabian peninsula if the Saudis didn't reopen the oil pumps they had shut down in ire over the October war, thus precipitating the crisis.
In an interesting contrast with the US's current professed intentions in Iraq, Mr Schlesinger was on record then as saying: "Militarily we could have seized one of the Arab states. And the plan did indeed scare and anger them. No, it wasn't just bravado. It was clearly intended as a warning. I think the Arabs were quite worried about it after 73".

So it was with some surprise that participants in last week's oil summit in Rimini, Italy, heard Mr Schlesinger give a speech warning of a grave threat to the world economy from a coming peak in oil production.
Addressing a select audience that included oil ministers and senior officials from the oil cartel Opec, the energy watchdog International Energy Agency, and the UN, plus advocates of a premature oil peak such as the former British cabinet minister Michael Meacher, Mr Schlesinger offered a graphic analogy.

The peak-oil threat and the response to it are reminiscent, he said, of the rumbles under Vesuvius and the reaction to them of its hapless residents. "The peak or plateau is coming," he said.

He's right. We don't know exactly when, but the probability is sooner rather than later. When it comes to oilfield discoveries these days, oil companies are finding small deposits, in contrast with the massive oilfields of old. In fact, 80% of global production today still come from the oilfields discovered before 1970, and these are being rapidly pumped towards exhaustion.

Yet demand is soaring. "Political systems do not deal easily with long term threats, even if they have a probability of 100%," Schlesinger warned.

His message was clear: economic horror will descend on the world if we do not plan ahead, and the time to start is now. We are asleep at the wheel, like the citizens of Pompeii and Herculaneum were, looking up at their volcano and thinking that its dormant state would be destiny. They ignored the rumbles, and ended up buried under ten metres of ash.

Mr Schlesinger threw a barb at the detractors he knew would follow him at the podium. Most people, and all governments, are in denial, he intimated. "Every time someone says the peak is far off, there is an audible sigh of relief."

He cited Daniel Yergin, the chairman of the influential oil industry consultancy Cambridge Energy Research Associates. "When Daniel Yergin said the peak wouldn't be until 2020 in a recent report, it was greeted with elation," Mr Schlesinger said.

This is what people in denial want to hear, Mr Schlesinger implied, and people like Mr Yergin are happy to say it. Somewhat appropriately, Mr Yergin gave the last speech in the main plenary. "I don't see why human genius can't meet the challenge," Mr Yergin said. He recited a long litany of the oil industry's technical prowess, and the scope for all the kit and fine minds to find new oilfields in deep water, enhance recovery from existing oilfields, and the like.

Moreover, he said, his company had access to a proprietary database run by the US-based IHS Energy group that backs the case for optimism.

Ordinary mortals can buy access to that database for a million dollars or more. Or they can talk to the geologist who worked on it in its early years, Colin Campbell, for free. Working on the early version of the database, and keeping his own version of it updated since, Mr Campbell has become the lead architect of peak-oil whistleblowing in and around the oil industry.

Mr Campbell was at the Rimini event, and had with him the draft of a protocol written in the language governments would need if they wanted to defuse the peak-oil crisis. Advocating the simple and achievable expedient of demand management at the same rate as global depletion, it was to be called the Rimini protocol.

Mr Campbell's understanding, along with fellow advocates like Mr Meacher, was that the launch of the protocol was to be a main feature of the summit. Indeed, the organisers told him that Mikhail Gorbachev was due to launch the protocol in a plenary speech.

Mr Meacher had earlier appealed publicly for the organisers to give the protocol maximum publicity, saying that the peak-oil crisis would unleash an economic apocalypse if governments didn't act.

It was not to be. Mr Gorbechev didn't show up and Mr Campbell was not allocated a slot to speak in the main plenary. Somewhere, somehow, amid all the machinations involved in persuading the oil industry's glitterati to turn up at the event, the Rimini protocol had become sidelined.

The summit was entitled "The Spirit of the Empire," and that spirit - exemplified by Daniel Yergin's bravura performance - expressed itself in accordance with current global form. The rumblings below the Vesuvius of the hydrocarbon age could be heard loud and clear in Rimini. And the citizens of Pompeii elected to dream on.

· Jeremy Leggett's book on peak oil, Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis, is published this week by Portobello Books.

Let both of them be asked the question "How much oil have we got left".

It is important for TOD new comers (and even oldies) to understand that this is a bogus question. It's sort of like asking: "Exactly how flat is our flat Earth?"

The mere fact that you can string a bunch of words together into what appears to be a legitimate question, does not make it a legitimate question.

I'm hoping that Bubba will post a discourse at some point on what the phrase, "proven reserves" means.

In terms of Peak Oil though, it is somewhat irrelevant how much oil is left "down there".

The real question is the daily rate, world wide, at which we can suck it up from down there for use up here. Right now we are at about 85mbd. If in hindsight it turns out that was the best rate we ever achieved, well then, that was our peak production rate.

maybe the government should have been investigating why no new refineries have been built in this country since 1976.  why the number of refineries dropped from 282 to 153 between 1977 and 2002.  why refining capacity has increased a measly 2.4% when gasoline demand has lunged ahead 27%, over this time period.  or documents by Chevron and Texaco (in the mid 90's when they had not yet merged) that said they needed to decrease gasoline supplies and refining capacity to increase profit margins.

2004 Report by Senator Wyden

of course this is all just a show.  neither the republicans or democrats have cared about these issues (except for helping the majors and their refining buddies extract ever greater profits at the citizen's expense) until their jobs started to become uncertain.  

The reason given is that environmentalists and
the EPA prevented the oil companies from building
new refineries.  I find it hard to believe that
oil companies couldn't even pull a permit under
Reagan, but that's what is claimed.
of course that is the claim of neo-cons and corporate oil PR.  look at the source.
Let us keep in mind that the fundamental purpose of an oil company is not to produce oil, but to produce money for its stockholders and employees. It just happens to do that by producing (actually, mining) oil.

Perhaps at one time it was true that 'What's good for General Motors is good for the US, and vice versa', but in today's world, what's good for Exxon/Mobil is NOT necessarily good for the US oil consumer, nor vice versa.

So let us not be so naive as to believe that Adam Smith's  'invisible hand of the market' is going to watch over us and make everything alright. A huge oligopoly, intimately connected to an increasingly overreaching federal government, now has control over how we get our energy and how much we have to pay for it. From a consumer's standpoint, this is a 'market' in name only.

hello ... helloooo...
test, test...
testing 1,2,3...
This thing on?

I'm a large mammal in the White House.

I can remember as a kid I use to love the
smell of gasoline. Not like you know cologne or
air freshner but, I don't know -my grandpas garage or
the lawnmower.(after i spilt it)
Sure gonna miss it.
So whats the boo who, Every dinosauer has its day.
let it go. Get me a pocket knife and learn how to whittle.
make me a set of false teeth like the father of the country had. And a bunch of tooth picks, maybe a back scratcher and a pair of shoes ...like those kind from Holland.
Live off the land i will. I 'll pack up the little
ones and whittle me some wooden nickles catch a
ride on a passing buffalo herd. think about back in the
day when ole boy could take a hot shower after an
all nighter with some bar maid floozie.
nah i ain't crazy i'm a politican.
I really don't want your vote, it's the money.
According to a new official governmemt poll
Three quarter of the nations population make up
75% of the countries populace.
This here is sh@t
This here is shinola
there you go...
now you know...

bored people do boring things

think small, think fast, peace

You also need to learn how to turn off your caps lock.
ditto on that. it is impolitely loud.

we welcome your thoughts but not the high volume.

It seems impolite to criticize a guy who freely admits he's often wrong. There's no sport in it.
you could get lucky & hit him on a just-right day
The question to be asked is not if a windfall profits tax should be enacted but why taxes on all business is effectively so low. Back in the 60s and 70s the feds got 70% of their revenue from business and 30% from individuals. Now the ratio is reversed and the federal debt has doubled in less than 5 years.