Roger Howard, Business Times 23 May 08;
AT A time of rapid price increases, our natural resources seem ever more precious and their future more uncertain. In particular, the arguments of advocates of 'peak oil', who assert that global oil production has now climaxed and will start to decline, appear increasingly plausible.
Fortunately, however, a coming centenary puts their claims into a timely and fitting perspective. Almost 100 years ago - on May 26, 1908 - British geologists, working in a remote Persian wilderness, first discovered oil in the Middle East.
Remarkable though it may now seem, almost all experts of the day felt that the Middle East was largely barren of oil.
True, there was limited evidence that some parts of Persia and Mesopotamia (later Iraq) had petroleum deposits, but there was no reason to suppose that these existed in commercial quantities. Several efforts had been made to discover deposits, but these failed explorations succeeded only in driving their sponsors into bankruptcy and even madness.
The failings of expert opinion were much more glaring in the case of other Middle Eastern countries. Several highly eminent British geologists had taken a close look at the region and typically concluded that Arabia did not 'present any decided promise for drilling on oil'. Not surprisingly, the top oilmen were very reluctant to invest in the region. In 1924, Charles Greenway, chairman of the Anglo-Persian Oil Company, pointed out that 'the geological data we possess at present does not indicate there is much hope of finding oil in Bahrain and Kuwait'. And one of his top advisers, Arnold Wilson, later argued that Arabia was 'devoid of all prospect', adding that 'we shall be compelled in practice to concentrate our efforts to find a fresh oil field in Canada and South America'.
It is significant that regional oil was discovered in the Middle East by several men - including William Knox D'Arcy and Frank Holmes - who were notoriously dismissive of expert opinion and worked almost entirely on gut feeling.
The truth is that the future of oil, more than almost any other substance, defies prediction.
Anybody's guess
This is not just because it is a liquid substance found in increasingly inaccessible places, such as deep ocean waters. It is also because, instead of being conveniently located in vast underground lakes or reservoirs, the substance is often absorbed into porous underground rocks in a way that makes accurate measurement virtually impossible. Many of these deposits also run so deep that, in the early stages of exploration, it is impossible to even hazard a wild guess about their whereabouts.
Such uncertainty can be heavily exploited by numerous vested interests. If they take a pessimistic view on the future, Middle East producers can justify high barrel prices that subsidise much-needed exploration and production, just as they make job cuts less likely within particular departments of regional oil companies.
Of course this fundamental uncertainty about oil data works both ways. Conceivably the future might be even more dire than the 'peak oilers' claim: Consider, for example, how in 2002, Shell scandalised the business world and hammered its share price by suddenly downgrading the size of its reserves by a staggering 4.8 billion barrels.
Sceptical though we should be about all such claims and statistics, there are several reasons why they should allow us to take heart about the future of oil. If in the years ahead there is a serious shortage of crude - leading to even more dramatic price rises than those of recent years - it is more likely to occur because of a disproportionate increase in demand rather than any diminution of supply.
To some extent, this is simply because there are still many areas of great promise that, for one reason or another, have remained largely unexplored. For example, whole areas of Russia and Iraq, particularly the latter country's vast desert regions, have been completely untouched by the latest sophisticated drilling techniques.
But the fundamental, underlying cause for optimism is the rate at which technology and scientific skills are advancing, thereby allowing existing reserves to be kept on tap for longer than anyone ever predicted and for new sources to be discovered in places where, not long ago, they were considered unreachable.
Of course, such relative optimism is no excuse for complacency. In an age of dramatic population growth and rapid industrialisation in the developing world, every finite resource is necessarily precious.
We must all urge our governments to sponsor scientific research into the development of more environmentally friendly fuels to replace those that are oil-based.
But let's take heart: The great pioneers who discovered Middle East oil a century ago would have been the first not to take expert opinion as the gospel truth. -- IHT
The writer is the author, most recently, of 'The Oil Hunters: Exploration and Espionage in the Middle East 1880-1939'
