Friday, July 20, 2007

Oil executives sound alarm about fuel use




July 19, 2007

OTTAWA -- When executives from the world's largest oil companies say
we need to cut back on our consumption, it should serve as the
ultimate wake-up call about a looming energy crunch.

Yesterday, the former chairman of Exxon Mobil Corp. and the current
chairman of Chevron Corp. led an urgent call for dramatic increases in
vehicle fuel mileage standards and the rapid adoption of ethanol and
other biofuels.

Without those measures and a host of others, the U.S. could face a
punishing energy crisis by 2030 that would spare no energy consuming

The call to arms was issued in Washington yesterday by a committee of
the National Petroleum Council, which was chaired by former Exxon
chairman Lee Raymond. He was joined on it by Chevron chairman and
chief executive officer David O'Reilly.

With U.S. Energy Secretary Sam Bodman in attendance, the council
released an exhaustive report on U.S. and global energy challenges
over the next 25 years, and offered a series of "hard truths" about
the massive investment, both public and private, needed to meet rising
energy demand.

The committee warned that there will need to be tremendous spending on
exploration, development and infrastructure to discover new reserves.
And it said that rising demand from emerging economies could drive
crude prices well above the current, near-record levels of about $75
(U.S.) a barrel.

"This demand may outpace timely development of new supply sources,
thereby pressuring prices to rise," the report said.

The petroleum council report said the consensus view among forecasting
agencies is that world energy demand will increase 50 to 60 per cent
by 2030. And it said the U.S. will become increasingly dependent for
its petroleum supplies on countries in the Middle East, Russia and the
other Asian states of the former Soviet Union.

The oil executives issued their standard call for more access to
potential U.S. reserves offshore and in protected wilderness areas.
But they also broadened their list of recommendations to include
venturing into areas far less typical for the conservative industry.

They urged the U.S. to moderate its own demand growth by increasing
efficiency in energy use, including new mileage standards for
automobiles, building codes for residential and commercial structures,
and energy consumption standards for computers and other digital

They called for a doubling of the fuel mileage standard on cars and
light trucks by 2030, a measure that would save five million barrels
of oil a day.

The report urged a rapid expansion of ethanol and biodiesel use,
saying the country will have to diversify its fuel mix to lessen its
dependence on imported oil.

The council also recommended the expansion of nuclear energy and
concerted government effort to develop clean-coal technologies.

It warned that growing resource nationalism around the world - and the
concentration of production in a few keys regions - could threaten
U.S. interests in the future.

"Many of the expected changes could heighten the risks to U.S. energy
security in a world where U.S. influence is likely to decline as
economic power shifts to other nations," the report concluded. "In
years to come, security threats to the world's main sources of oil and
natural gas may worsen."


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