228 PETROLEUM TECHNOLOGY, ECONOMICS, AND POLITICS
the increased emissions of carbon dioxide will be partly compensated for by a decline in emissions from oil.
8.4 Geopolitical Factors
The true picture of oil supply may never be known. Difficult as
it is because of a variety of factors, reporting data on oil production or oil reserves is a political act (Laherrère, 2001). The SEC, to
satisfy bankers and shareholders, obliges the oil companies listed
on the US stock market to report only proved reserves and to omit
probable reserves that are reported in the rest of the world. This
practice of reporting only proved reserves can lead to a strong
reserve growth since 90% of the annual reserves oil addition
come from revisions of old fields, showing that the assessment
of the fields was poorly reported. This reserve growth of conventional oil reserves is incorrectly attributed to technological progress. Technical data, on which development decisions are based,
exist but they are confidential. Reporting of production is not
much better and may give a false impression of oil abundance
(Simmons 2000).
The pricing for crude oil is generally politically determined.
Treated as a commodity, and hence traded for profit by private corporations and producing nations, crude oil has long been thought of
as subject to the free interplay of competitive forces, but is actually
influenced by political considerations. The modern oil corporation,
with assets greater than those of most countries, has maintained
basic surveillance over all energy development. A brief summary of
the history of oil (Chapter 1) will show the manner in which politics
enters into the oil picture.
The modern era of oil production and the ensuing age of petropolitics began on August 27, 1859, when Edwin L. Drake drilled
the first successful oil well 69 feet deep near Titusville in northwestern Pennsylvania. Just five years earlier, the invention of the
kerosene lamp had ignited intense demand for oil. By drilling an
oil well, Drake had hoped to meet the growing demand for oil
for lighting and industrial lubrication. Drake's success inspired
hundreds of small companies to explore for oil. In 1860, world
oil production reached 500,000 barrels; by the 1870s production
soared to 20 million barrels annually. In 1879, the first oil well was
drilled in California; and in 1887, in Texas. As production boomed,
the increased emissions of carbon dioxide will be partly compensated for by a decline in emissions from oil.
8.4 Geopolitical Factors
The true picture of oil supply may never be known. Difficult as
it is because of a variety of factors, reporting data on oil production or oil reserves is a political act (Laherrère, 2001). The SEC, to
satisfy bankers and shareholders, obliges the oil companies listed
on the US stock market to report only proved reserves and to omit
probable reserves that are reported in the rest of the world. This
practice of reporting only proved reserves can lead to a strong
reserve growth since 90% of the annual reserves oil addition
come from revisions of old fields, showing that the assessment
of the fields was poorly reported. This reserve growth of conventional oil reserves is incorrectly attributed to technological progress. Technical data, on which development decisions are based,
exist but they are confidential. Reporting of production is not
much better and may give a false impression of oil abundance
(Simmons 2000).
The pricing for crude oil is generally politically determined.
Treated as a commodity, and hence traded for profit by private corporations and producing nations, crude oil has long been thought of
as subject to the free interplay of competitive forces, but is actually
influenced by political considerations. The modern oil corporation,
with assets greater than those of most countries, has maintained
basic surveillance over all energy development. A brief summary of
the history of oil (Chapter 1) will show the manner in which politics
enters into the oil picture.
The modern era of oil production and the ensuing age of petropolitics began on August 27, 1859, when Edwin L. Drake drilled
the first successful oil well 69 feet deep near Titusville in northwestern Pennsylvania. Just five years earlier, the invention of the
kerosene lamp had ignited intense demand for oil. By drilling an
oil well, Drake had hoped to meet the growing demand for oil
for lighting and industrial lubrication. Drake's success inspired
hundreds of small companies to explore for oil. In 1860, world
oil production reached 500,000 barrels; by the 1870s production
soared to 20 million barrels annually. In 1879, the first oil well was
drilled in California; and in 1887, in Texas. As production boomed,