Are Big Oil’s Tanks Running Dry?

As President Bush called for the US to reduce its “addiction to oil”, Exxon reported the highest net profit of any US company ever – about $36 billion. A public backlash has greeted the record profits by the oil industry. As early as last October, Congress pressed “Big Oil” to defend itself on charges of profiteering. Anticipating more consumer fury, Democrats and Republicans have united to call for a windfall tax on the industry, and trade-union leaders demand new taxes to provide assistance to pensioners. In truth, though, the real challenge to the oil industry comes not from public outrage, but from recent declines in production and dwindling reserves. Exploration in West Africa, the Caspian Sea, Russia, and other more remote regions poses a range of challenges - demands from human rights groups, new technological requirements, costly capital investment and hostile policies of foreign leaders – that will only increase the cost of finding oil. Add to this the growing competition from Indian and Chinese firms that enjoy state-backing, and the days of record-setting profits in the US could be numbered. – Yale Global