Chicken Little here, reporting for duty. As we reach the final days of August, with the Congress doing whatever Congresspeople do during their recesses (perhaps we're better off not knowing), I'm flapping around wondering about the near-total contradiction between the world of energy as I see it and the parts of the 2007 energy bills now gathering dust on Senators' and Representatives' desks.
The real world of energy today involves a daunting decline in production from oil fields across the world. Companies like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), and oilfield service companies such as Schlumberger (NYSE:SLB) and Halliburton (NYSE:HAL), must range ever wider in their search for new hydrocarbon reserves. And all too often, once they locate those reserves, they must contend with governments that are hostile, four-flushing, or both.
Those conditions are overshadowed by our need to move from 85 million barrels a day of worldwide production today to an expected demand level of about 120 million barrels daily, all in just the next couple of decades. Given the factors mentioned above, and the "normal production declines" reported by all the integrated companies last quarter, it seems to Mr. Little here that 120 million barrels a day is little more than a pipe dream.
As such, I find it somewhat disturbing to examine what passes for the parts of an energy bill that Congress has left idling in Washington. The Senate is concerned about fuel-efficiency standards, biofuel requirements, price-gouging at the gas pump, and loan guarantees for the building of new nuclear reactors.
House initiatives thus far lean mainly toward boosting taxes on the oil companies. That body has also passed measures dealing with appliance efficiency, incentives for the building of ethanol cars, and renewable energy.
All these considerations would be commendable if, collectively, they were capable of even putting a dent in our looming energy crisis. Indeed, I also have difficulty putting much stock in the President's two primary energy recommendations: that a far higher level of renewable fuels be used in the next 10 years, and that gasoline consumption be reigned in by 20% in the same timeframe.
I'd really like to see our leaders in Washington form a serious -- the operative word -- study group from members of Congress and the industry, constituting something of a new Manhattan Project for energy. Such a task force would, it seems to me, be a crucial first effort toward moving us away from our excessive and dangerous dependence on fossil fuels. In the meantime, because it's unlikely that such a radical step will occur, Fools would be wise not to underweight the energy sector in their investment portfolios.
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Alas, Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He does welcome your communications. The Motley Fool's disclosure policy will never run out of juice.
