Reports of the oil industry’s imminent death are greatly exaggerated

Every year more barrels are added to the world’s reserves than are used up, says Peter Odell

I am utterly perplexed by Jeremy Leggett’s attempt to foretell the impending demise of the oil industry (The great fuel folly, February 5). Unless, of course, he contemplates such a development as being highly favourable to his Solarcentury company. I am one of the economists who, he claims, “tend not to see the problem”. But Leggett seriously understates the ability of the many oil-producing countries to sustain provision of oil and natural gas.

“Why have the big five oil companies cut exploration spending in real terms?” he asks. While he correctly states that Shell and Exxon have had opportunities for making record profits in recent years, he is quite wrong to suggest that they, together with the other major oil-producing companies, “are supposed to be expanding their production”. It would not be in their interests to do so, as such action would undermine the market value of oil, and thus reduce their profits.


Countries outside the Organisation for Economic Cooperation and Development, together with the OECD members Norway, Italy and Austria, are now at the forefront of the world’s oil and gas industries. Between them they account for almost 95% of proven oil reserves and thus dominate the supply side. They already supply more than 65% of total production, and this figure is set to rise.

And countries outside the Organisation of Petroleum Exporting Countries – such as China, India, Brazil and Malaysia – not only have large proven and probable reserves, but are intent on enhancing production at as high a rate as possible. There is a similar situation in some of the former countries of the Soviet Union – most notably Russia, Kazakhstan and Azerbaijan, all of which are already significant exporters and which have great potential for increased production.

Guardian