Getting tougher to find oil

Those people worrying about rising gas prices might be interested in the following article. Courtesy of the Globe and Mail, it is revealed that Exxon Mobile, the world’s largest oil company, announced its intention to spend a whopping $150 billion over the next five years to find oil and gas. From the article:

In a statement issued ahead of a presentation at the New York Stock Exchange, ceo Rex Tillerson said huge investments are needed to expand the supply of traditional fuels like oil and gas while also advancing new energy sources. Exxon, the world’s largest publicly traded energy company, expects global energy demand to increase 30 percent by 2040, compared with 2010 levels.

Notice that Exxon expects global energy demand to increase by 30 percent by 2040. In light of that, notice this next startling statement by the Globe.

Exxon Mobil Corp., Chevron Corp., bp plc and Royal Dutch Shell all produced less crude last year than in the prior year. They’re struggling to tap new sources of oil fast enough in an environment where big finds are rarer and costlier to exploit. Potential fields lie deep under the seabed, or in shale rock formations that require expensive technology to crack open. When Exxon can’t find oil fast enough, it is stuck with existing fields where production is declining.

Four of the world’s biggest oil companies have falling production profiles. They each produced less oil last year than the year before.

The price of oil may be set to skyrocket over the next few years. Energy demand, especially from the developing world, is skyrocketing, while oil production is flat at best or falling.

Since gasoline prices are linked to the price of crude oil, and crude oil is sold on the international market, expect gasoline prices to follow the price of oil. And that is not good news for consumers, or the global economy.