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Threatened by exploration of alternative energy sources in the wake of high fuel prices and the increasing consensus that global oil production may be getting ready to peak, Saudi Arabia, Exxon Mobil and other oil industry players are going on the offensive (subscription required.)

At an OPEC seminar yesterday, Saudi oil company Aramco’s CEO claimed that there is plenty of oil left to guzzle, and that we have only gone through 18% (1 trillion barrels) of the world’s total supply of 5.7 trillion barrels. The remaining 4.7 trillion should be enough to supply the Earth with oil for more than 140 years at current consumption rates, he said.

There are a lot of problems with Aramco’s assertions:

• If ARAMCO is so confident that it still has so much oil to provide, why won’t Saudi Arabia allow independent geologists to assess the true amount of reserves in the ground? In his book, “Twilight in the Desert,” oil insider Matt Simmons lays out a compelling case for why he believes that Saudi oil claims are preposterous and politically motivated. The fact that Saudi Arabia has been unable to increase its oil production in the last two years (and has in fact suffered a decline this year over last) really makes one wonder what’s going on. What Saudi Arabia says doesn’t match what it is doing, and it is extremely dangerous for the world to rely on its bold assertion of huge oil reserves remaining based on faith alone.
• 3.5 trillion out of the 4.7 trillion supposedly left: a) depend on assertions of “as yet undiscovered” oil fields (which by definition can’t be measured; b) depend on greater extraction from new and existing oil fields based on as-yet unavailable new technology that may or may not happen; and c) factor in 1.5 trillion from unconventional and difficult-to-produce sources like Canada’s tar sands. The first two conditions speak for themselves as for how foolish we are to depend on them. As for the last, it takes large amounts of energy and time to extract oil from unconventional sources, such that it is unreasonable to expect that they would substitute for the cheap, readily available oil we have today.
• The 140-year assumption is made based on existing production and demand levels, but the world will not stand still for 140 years. Demand continues to increase, especially with India and China guzzling ever more oil every year. There’s also the issue of practical limits to oil production given available technology, which many analysts peg at about 100 million barrels a day–a level that could be reached as soon as 2015.

Concerned about the possibility of peak oil (the theory that oil production will plateau and then begin an irreversible decline), the Department of Energy has asked the National Petroleum Council to conduct a study to investigate peak-oil claims. NPC turned around and appointed none other than Lee Raymond, retired Exxon CEO, as the study’s chairman.

Isn’t that kind of like putting the fox in charge of the henhouse? Here’s what he had to say about his “unbiased” position on the issue in the WSJ article:

“I think there’s a lot of misconceptions of what peak oil is,” Mr. Raymond, who is leading the U.S. oil study, said in an interview last week. “The resource base is continually changing, driven by economics and technology.” But he said his views won’t dictate the study’s results. “I may learn something.”

I’m not getting warm fuzzies about Raymond’s ability to look at the issue fairly. He, like Saudi Arabia, insists that technology will save the day by making existing oil wells more productive and allowing discovery of new fields. Unfortunately, 36 years’ worth of technology has done nothing to slow the US’s inexorable slide in oil production since its peak in 1970–despite the large find in Prudhoe Bay. Why should we believe “new technology” will help us now?

When we live in a world where new oil finds rely on five-mile-deep wells in ocean water and where nations’ stated oil reserves are nothing but a political game with no independent verification, we are taking a big risk of a huge shock to our energy infrastructure should these claims dissolve under the harsh light of reality.

These countries and oil companies have a strongly vested interest in letting the world believe there’s plenty of petroleum left. We shouldn’t take their word for it.