海角大神

鈥淟ike dreams, statistics are a form of wish fulfillment,鈥� French philosopher聽Jean Baudrillard聽once said.聽 Substitute 鈥渇orecasts鈥� for the word 鈥渟tatistics,鈥� and you鈥檒l have a good understanding of the public reaction to the recently released聽BP Energy Outlook 2030.

The psychoanalytic definition of wish fulfillment is聽鈥渢he satisfaction of a desire, a need, or an impulse through a dream or other exercise of the imagination.鈥�

The oil giant鈥檚 long-term forecast鈥攔eally an 鈥渆xercise of the imagination鈥濃�攚as greeted with a sort of breathless astonishment by the media who took it for a statement of fact concerning the one thing about which we cannot know anything for certain: the future.

My first response to the coverage was: 鈥淲ell, what did you expect the company to say?鈥� This is the world鈥檚 third largest oil company. Of course, its forecast through 2030 is that the world will remain hooked on fossil fuels, particularly oil which, BP tells us, is going to be plentiful despite what those peak oil killjoys are saying.聽

To admit any near-term limitation would have meant that the company鈥檚 business model wasn鈥檛 just flawed, but about to be revealed as a sinkhole for long-term investors as its main business winds down. That would have led to an immediate downward valuation in the stock price and a considerable hit to the wealth of the company鈥檚 managers due to the effect on their stock options and holdings.

Once again, I say, 鈥淥f course, they鈥檙e telling everyone they鈥檙e optimistic about oil supplies.鈥� And yet, a look at the company鈥檚 actual situation ought to lead to a much different conclusion.

BP鈥檚 oil and natural gas production combined has declined about 15 percent since 2009. (The linked article is in French, but Google Translate does a pretty good job of rendering it intelligible for those who can鈥檛 read the language.) And, it鈥檚 not just the 2010 Gulf of Mexico oil spill that鈥檚 been plaguing the company. The oil giant鈥檚 production is declining in the North Sea, in the United States and in Africa. Even in Central Asia where BP has dominated production in Azerbaijan, it is losing production volume.

Lest you think BP is alone, read to the entire article. ExxonMobil鈥檚 conventional crude production is down 27.5 percent since 2007. French oil giant Total鈥檚 oil production (reported as crude and natural gas liquids production) declined by 18.8 percent between 2007 and 2011. Among the top four oil companies in the world only Shell seems to have sidestepped the decline for the present.

The strategy for most of the majors now is to replace their reserves with something called 鈥渂arrels of oil equivalent.鈥� In essence, this means natural gas on an energy equivalent basis. (Approximately 6,000 cubic feet of natural gas contain the same energy as a barrel of oil.) But to admit the ongoing decline in their oil production capacity and then also to admit that there is little chance of turning that trend around would be tantamount to corporate suicide鈥攁t least if the objective is to collect the largest possible quarterly bonus and stock options payoff.

But there is something else at work here, namely, the credulity of the media and of public policy makers. It would be easy to ferret out a few facts that would cast serious doubt on BP鈥檚 forecast鈥攆or example, that聽world oil production proper has been flat since 2005聽despite record prices and聽record investment in new production. If the record prices and record investment of the last seven years can鈥檛 lift world oil production significantly off its current plateau and if the supposedly revolutionary technology that is being deployed can鈥檛 either, then what is going to happen between now and 2030 to change things?

So, the explanation for this credulity and the oil industry鈥檚 ability to exploit it must lie elsewhere. Here鈥檚 my attempt to explain. First, most people don鈥檛 know that long-term forecasts are almost useless except as ways to explore various scenarios. The margin of error quickly escalates just a few years out and becomes incalculably large when the forecast is stretched to decades. In fact,聽previous long-term oil supply forecasts from government and international agencies and from ExxonMobil have been considerably wide of the mark.聽All of them were too optimistic about supply and wildly low on prices. (This is another one of those facts that would be easy to check.)

And yet, because the forecasts come from official agencies and the industry itself, people believe that these experts can somehow discern the future clearly. Well, clearly they cannot. But, most people never go back to check.

Second, the stability of global society depends entirely on the continuous flow of energy and materials into that society. More particularly, we have now become addicted to uninterrupted聽growth聽in those supplies. It is simply unthinkable to most people鈥攅ven ones in high places who ought to know better鈥攖hat this growth could come to a halt and indeed go into reverse.

If such a reversal were sustained, the consequences would be outside our experience within that last 150 years which have seen nothing but rapid economic expansion. When something is outside one鈥檚 experience, it鈥檚 easy to classify it as simply 鈥渘ot possible.鈥�

And so, our system is utterly reliant for its stability on the presumed correctness of optimistic long-term supply forecasts for finite fossil fuels, particularly oil, put out by BP and others. These fuels are the backbone of the world economy supplying more than 80 percent of our energy with oil supplying about a third of the total. We know鈥攚e are certain, in fact鈥攖hat based on previous experience with oil wells, oil fields, and oil-producing countries, worldwide oil production will someday decline. And yet, even with the fabulously faulty record of long-term forecasts, we still put our fate into the hands of self-interested parties who tell us not to worry. We do this because somehow many of us cannot face a future which would require deep structural changes in our lives.

As it turns out, the聽BP Energy Outlook 2030聽is not a statistical or scientific document, but rather a political one. It is not a statement about the way the world is so much as about the way BP wishes it to be over the next 20 years. Naturally, that includes BP continuing as one of the world鈥檚 largest and most influential corporations.

In short, the聽BP Energy Outlook聽is an exercise in wish fulfillment. The company and many who read its forecast think that if we dress up our wishes in the form of color graphs and charts, those wishes will come true鈥攐r possibly they have already come true because BP conveniently tells us so in advance.

Certainly, one of the world鈥檚 major oil companies wouldn鈥檛 mislead us on a matter as grave as the future of oil, would it?

________

P.S. For your edification here is the disclaimer on page 2 of the聽BP Energy Outlook 2030:

In other words, you shouldn鈥檛 really count on any of what you read in the forecast turning out the way BP says it will. It鈥檚 boilerplate, I know. But there is more truth to this boilerplate language than the rest of the report. Should we really be basing our energy policy on information this shaky and uncertain? The risks are wildly asymmetrical. If BP is right, then it鈥檚 business-as-usual. If they鈥檙e overly optimistic then we could be in for a period of turmoil that could destabilize the entire global economic system which will be unprepared for the consequences of a persistent decline in oil supplies. Why? Because BP and other major forecasters told us we don鈥檛 have to prepare.

P.P.S.聽Another astute reader聽of the聽Outlook 2030聽noticed that at the end of BP鈥檚 cheery presentation, the company wrote that if its forecast comes true, we will be faced with a climate catastrophe. The forecast didn鈥檛 put it that way; but, that鈥檚 the implication of this language:

It turns out then that if the BP forecast comes true, it is actually a doomsday prophecy. Not so cheery after all.