Another Hundred Years Of A World Fueled By Oil

Print Email

The head of Exxon Mobil (XOM), which from time to time is the most profitable and most valuable company in the world, told people attending the firm’s annual meeting that oil and gas will be the most widely used fuels for another hundred years. According to Bloomberg, Exxon CEO Rex Tillerson said “Petroleum-based fuels including gasoline and diesel, as well as hydrocarbons such as coal and natural gas will remain the dominant sources of energy for factories, offices, homes and cars for decades because there are no viable alternatives.”

Tillerson could be wrong and it is important to be suspicious about his motives. Exxon would not be much of a company if the world suddenly got most of its fuel from windmills and solar heat. Tillerson would be out of work and his company’s $333 billion market cap and $480 billion in annual revenue would go away.

The reaction of most energy analysts is that Tillerson has no idea what he is talking about. His college degree is in civil engineering which hardly makes him an expert on the future of alternative energy. But, the fact that he is undereducated does not make him wrong. Significant work on solar power began in the early 1970s, when the oil supply was tightened by OPEC and the search for alternatives to petroleum got real financial momentum. Thirty years later, with the applied ingenuity of scientists from all over the world, solar energy is still not a viable enough source to be anything more than a miniscule part of  the energy used by American consumers and businesses.

The progress of wind power as an alternative to fossil fuels has been no more encouraging. T Boone Pickens may want to set up wind farms all over Texas and the Administration may want to build a huge infrastructure grid to move solar energy around the country, but so far there is nothing to prove that these plans are anything more than dreams.

Exxon knows that the largest countries in the world will continue to rely on power from dammed up rivers, coal-fired generators, and oil-based products because alternative energy projects have been such miserable failures. Whatever promise nuclear energy has in the US has been damaged by concerns for public safety. Experts say that getting government approval for new reactors and then building them could take two decades.

Exxon may be right. What the oil company knows in addition to its analysis of alternative fuels is that the world’s crude reserves may not be large enough to last for another hundred years. What oil may be left in the next century will certainly be in short supply. The aging of oil fields has caused many analysts to say that world’s annual production of crude will peak in the next decade. The fear that oil prices could go to $200 will appear tame ten decades from now. Oil will be more valuable than platinum.

Exxon will probably still be in business in 2109. It just won’t have any place left to drill.

Douglas A. McIntyre