Interesting article from a Canadian journalist...
The big myth about Big Oil
NEIL REYNOLDS
Globe and Mail Update
May 9, 2008 at 6:00 AM EDT
Quick quiz: Name the top three oil-producing countries in the world.
For some reason, few people get this one right. The supplementary question is why? Could it be that popular mythologies make the correct answer appear impossibly wrong?
Yes, Saudi Arabia is No. 1 (with total oil production of 10.66 million barrels a day). Yes, Russia is No. 2 (with 9.67 million barrels). Nigeria, however, is not No. 3. Venezuela is not No. 3. Kuwait is not No. 3. The United States is No. 3 (with 8.49 million barrels).
Although Canada now regards itself an energy superpower, we produce only slightly more than one-third as much oil as the United States. (With production of 3.36 million barrels a day, we rank a lucky No. 7.)
Ironically, many people who minimize American domestic oil production exaggerate the global influence of Big Oil - especially of Exxon Mobil, Chevron and ConocoPhillips, the big U.S. companies. Exxon, the largest, is the world's biggest non-government company in the energy industry - yet it produces only 3 per cent of the world's oil. In a world that requires 87 million barrels of oil a day, Exxon delivers 2.61 million barrels. Ranked against government-owned oil companies, Exxon doesn't make the top 10.
Big Oil is big in one particular sense - when compared with Small Oil. Put the 10 largest U.S. oil companies together and you get 47 per cent of domestic American oil production. Add the next 10 largest U.S. oil companies and you get 57 per cent. Add the next 80 largest U.S. oil companies - altogether, the top 100 companies - and you get 75 per cent. Thus the 100 biggest U.S. oil companies produce only three-quarters of domestic American production. Add the next 400 largest U.S. oil companies and you get 90 per cent. The U.S. Energy Information Administration (EIA) stops counting at 500, attributing the final 10 per cent of domestic American oil production to "other companies."
Beyond the top 500, hundreds more small oil companies, many with fewer than five employees, contribute disproportionately to domestic U.S. oil production. The U.S. has 510,000 field wells, more than half of all such wells in the world. (Russia has 110,000.) But it's Small Oil, nimble and savvy, that keeps striking oil again and again - frequently in abandoned and depleted wells. The field wells produce only a few barrels of oil a day; but - at $120 (U.S.) a barrel multiplied 510,000 times - it adds up.
This portrait of a competitive, innovative and highly democratized U.S. oil industry differs radically from the popular misconceptions - many of them reiterated endlessly in TV newscasts, radio talk shows and the populist press. The Virginia-based Business and Media Institute notes that, in the past year, the NBC, CBS and ABC networks broadcast 43 reports on Big Oil profits and just four on OPEC profits - although Big Oil earns profits in the tens of billions and OPEC in the hundreds of billions. (As The Globe and Mail reported Wednesday, the EIA calculates that OPEC will make more than $1-trillion in profits this year.)
Lou Dobbs, CNN's "rantconteur," remains the single biggest spinner of oil industry mythologies, insisting that a poor, suckered and downtrodden United States has impoverished itself by foolishly sending off its wealth to Saudi Arabia (which is, in fact, merely one of 35 countries that sell oil to the U.S.). You would never know from most media reports that the United States collects the same per-barrel profit from high oil prices that other producing countries collect - meaning that windfall benefits get paid by Americans to Americans rather than by Americans to foreigners.
It isn't only American oil companies that benefit. Property owners in the United States have property rights - unlike people in some oil-exporting countries where royalties flow exclusively to governments. For a proper appreciation of these rights, catch a rerun of the first (1962) episode of The Beverly Hillbillies. An oil company, probably an independent, would have paid Jed Clampett, Ozark farmer, a couple of dollars a barrel for the right to enter onto his land and to drill for oil. Now it would pay $25 a barrel or more. Windfall benefits, greater by far than Mr. Clampett's, flow to lucky Ma and Pa property owners across the United States to this day.
It isn't only strident American talk show hosts who spread energy mythologies. Michael Harris, the articulate and well-informed Canadian author, journalist and broadcaster, told his audience on Ottawa's CFRA all-talk radio station the other day that Canada provides the U.S. with "half of its energy." This is preposterous. The U.S. is the world's No. 1 producer of primary energy, cranking out 70 quadrillion BTUs a year - more than three times as much as Canada's production of 19 quadrillion BTUs.
By the way, how did you do on the quiz?
http://www.theglobeandmail.com/servl...bColumnsBlogs/
The big myth about Big Oil
NEIL REYNOLDS
Globe and Mail Update
May 9, 2008 at 6:00 AM EDT
Quick quiz: Name the top three oil-producing countries in the world.
For some reason, few people get this one right. The supplementary question is why? Could it be that popular mythologies make the correct answer appear impossibly wrong?
Yes, Saudi Arabia is No. 1 (with total oil production of 10.66 million barrels a day). Yes, Russia is No. 2 (with 9.67 million barrels). Nigeria, however, is not No. 3. Venezuela is not No. 3. Kuwait is not No. 3. The United States is No. 3 (with 8.49 million barrels).
Although Canada now regards itself an energy superpower, we produce only slightly more than one-third as much oil as the United States. (With production of 3.36 million barrels a day, we rank a lucky No. 7.)
Ironically, many people who minimize American domestic oil production exaggerate the global influence of Big Oil - especially of Exxon Mobil, Chevron and ConocoPhillips, the big U.S. companies. Exxon, the largest, is the world's biggest non-government company in the energy industry - yet it produces only 3 per cent of the world's oil. In a world that requires 87 million barrels of oil a day, Exxon delivers 2.61 million barrels. Ranked against government-owned oil companies, Exxon doesn't make the top 10.
Big Oil is big in one particular sense - when compared with Small Oil. Put the 10 largest U.S. oil companies together and you get 47 per cent of domestic American oil production. Add the next 10 largest U.S. oil companies and you get 57 per cent. Add the next 80 largest U.S. oil companies - altogether, the top 100 companies - and you get 75 per cent. Thus the 100 biggest U.S. oil companies produce only three-quarters of domestic American production. Add the next 400 largest U.S. oil companies and you get 90 per cent. The U.S. Energy Information Administration (EIA) stops counting at 500, attributing the final 10 per cent of domestic American oil production to "other companies."
Beyond the top 500, hundreds more small oil companies, many with fewer than five employees, contribute disproportionately to domestic U.S. oil production. The U.S. has 510,000 field wells, more than half of all such wells in the world. (Russia has 110,000.) But it's Small Oil, nimble and savvy, that keeps striking oil again and again - frequently in abandoned and depleted wells. The field wells produce only a few barrels of oil a day; but - at $120 (U.S.) a barrel multiplied 510,000 times - it adds up.
This portrait of a competitive, innovative and highly democratized U.S. oil industry differs radically from the popular misconceptions - many of them reiterated endlessly in TV newscasts, radio talk shows and the populist press. The Virginia-based Business and Media Institute notes that, in the past year, the NBC, CBS and ABC networks broadcast 43 reports on Big Oil profits and just four on OPEC profits - although Big Oil earns profits in the tens of billions and OPEC in the hundreds of billions. (As The Globe and Mail reported Wednesday, the EIA calculates that OPEC will make more than $1-trillion in profits this year.)
Lou Dobbs, CNN's "rantconteur," remains the single biggest spinner of oil industry mythologies, insisting that a poor, suckered and downtrodden United States has impoverished itself by foolishly sending off its wealth to Saudi Arabia (which is, in fact, merely one of 35 countries that sell oil to the U.S.). You would never know from most media reports that the United States collects the same per-barrel profit from high oil prices that other producing countries collect - meaning that windfall benefits get paid by Americans to Americans rather than by Americans to foreigners.
It isn't only American oil companies that benefit. Property owners in the United States have property rights - unlike people in some oil-exporting countries where royalties flow exclusively to governments. For a proper appreciation of these rights, catch a rerun of the first (1962) episode of The Beverly Hillbillies. An oil company, probably an independent, would have paid Jed Clampett, Ozark farmer, a couple of dollars a barrel for the right to enter onto his land and to drill for oil. Now it would pay $25 a barrel or more. Windfall benefits, greater by far than Mr. Clampett's, flow to lucky Ma and Pa property owners across the United States to this day.
It isn't only strident American talk show hosts who spread energy mythologies. Michael Harris, the articulate and well-informed Canadian author, journalist and broadcaster, told his audience on Ottawa's CFRA all-talk radio station the other day that Canada provides the U.S. with "half of its energy." This is preposterous. The U.S. is the world's No. 1 producer of primary energy, cranking out 70 quadrillion BTUs a year - more than three times as much as Canada's production of 19 quadrillion BTUs.
By the way, how did you do on the quiz?
http://www.theglobeandmail.com/servl...bColumnsBlogs/
