STAFF NEWS & ANALYSIS
Exxon Mobil Makes $30 Billion Bet
By Staff News & Analysis - December 16, 2009

Exxon Mobil Corp plans to buy XTO Energy Inc for about $30 billion in stock, in a move that thrusts the U.S. energy giant to the forefront of North America's fast-growing natural gas industry. With the buy, Exxon, the largest publicly traded energy company, will become the top U.S. natural gas producer as it bets on natural gas expanding its share in the world's largest energy market. "This deal provides Exxon with some domestic momentum it didn't have," John Olson, a fund manager at Houston Energy Partners, said. "They are getting a huge acreage spread, with lots of shale gas plays." The bid, announced on Monday, spurred expectation of a wave of consolidation in the energy industry as cash-rich companies such as Exxon move to snap up smaller players with attractive assets. "There will be more of these deals, and it will make the industry more resilient to volatility in natural gas prices," said Fadel Gheit, an analyst at Oppenheimer & Co.- Yahoo

Dominant Social Theme: Thank goodness for natural gas.

Free-Market Analysis: It is our opinion that Peak Oil is a promotion of the powers-that-be, a positioning of energy resources so that the most power and wealth can be extracted from the least amount of product. Consider that in America especially – where we believe the promotion is most aggressive – much oil comes from overseas and a good deal of the rest comes from offshore. Meanwhile something like 60 percent of available land for prospecting is locked up by the federal government.

This is no coincidence in our humble opinion. If you want to take a resource and create demand for it as an expensive substance the first thing you need to do is make it scarce. And if you can't make it scarce, at least make it expensive to produce. This Big Oil has been able to do, it seems to us. It can't legislate scarcity but it can surely raise the barriers to entry. Want to drill for oil? Sure, but not in my backyard, or yours.

If you want to legislate scarcity, you first need a bogeyman, and we would argue that Big Oil has been an enthusiastic contributor to the Green movement, financially and legislatively, as a way to ensure that domestic drilling in the West and especially in America is wrapped up in red-tape and public disapproval. And of course, again in America, once public opinion has turned against energy rapine, it is not difficult to promote the idea that government ought to buy up land to make sure nasty local prospectors don't defile it.

Now the options are limited. But oil must still be produced, and yes it is – in the sea, in the Middle East or, now, several miles down where gas deposits are trapped. Thank goodness for corporate innovation! And if you are tempted to be an American domestic prospector … well, it is a free country after all, so long as you don't try to drill the lower 48.

So … what you will need to do, if you are serious about participating in the American oil industry, is to pony up a couple of billion to build an offshore rig, and then a couple of hundred million more to fight off the endless litigation that comes with such massive undertakings. Alternatively, you can fly over to the Middle East and cut a deal there. But that's expensive, and may involve an insurgency or a small war. Therefore, make sure your lobbying can muscle the Pentagon.

And then there is natural gas. The logic of this escapes us, actually, since much natural gas is a BYPRODUCT of oil – thus it is difficult for our smallish brains to encompass the idea of LESS oil and MORE gas. But let us accept this as reality anyway. What we are left with are THREE forms of energy acquisition in the oil/gas realm – offshore, Middle East and deep drilling for natural gas.

You, dear reader, are welcome to consider this a coincidence. We have a hard time doing that. Does it really just-so-happen that all the sources of energy in the world are in the Middle East, in the sea or a couple of miles down in gaseous form? In all of Canada and the United States is there no alternative? Is all the oil truly gone?

For those who believe in Peak Oil, of course, such a conclusion is almost pre-ordained. Peak Oilers ignore the inconvenient fact that the creator of the mythos of Peak Oil – or at least the individual who wrote the definitive initial book on the subject – was former president George Bush's BEST FRIEND. Yes, Matthew Simmons, oil entrepreneur and Texas investment banker, was said to have had an office a few doors down from the Oval Office, but he didn't use it much as he was too busy traveling around the world flogging the idea of Peak Oil.

And Bush, we think, did his part, with a couple of wars in the Middle East that forced up the price of oil a good deal. And just the other day it was announced that eight big oil companies were bidding for the rights to produce oil in Iraq. So all these wars were just about oil! It's obvious! Oil is such an incredibly rare and wonderful commodity that lives are worth sacrificing for it – the lives of thousands of American boys and girls. Black gold!

No, we don't believe it. Oil's value has been endlessly inflated in the past century by the sort of manipulation described above. In fact, we've argued for the past umpteen years that oil is probably abiotic, the product of natural geological forces. Thus, we were interested to read the following article:

Fossils From Animals And Plants Are Not Necessary For Crude Oil And Natural Gas, Swedish Researchers Find

What would happen if it were proven that "fossil fuels" weren't the result of decaying plant and animal matter, were actually created within the Earth due to simple chemistry and you could not be scared into believing that we were "running out" of oil and natural gas? …

There have always been those who claim that oil is a natural substance that forms automatically in the Earth's mantle. They say that it is virtually everywhere, if you can drill deep enough to tap it. Proponents of so-called "abiotic oil" claim that the proof is found in the fact that many capped wells, which were formerly dry of oil, are found to be plentiful again after many years, They claim that the replenished oil is manufactured by natural forces in the Earth's mantle. …

Until now these believers in "abiotic oil" have been dismissed as professing "bad science" but — alas — a new study has proven them correct! Reported in ScienceDaily, researchers at the Royal Institute of Technology (KTH) in Stockholm have managed to prove that fossils from animals and plants are not necessary for crude oil and natural gas to be generated. The findings are revolutionary since this means, on the one hand, that it will be much easier to find these sources of energy and, on the other hand, that they can be found all over the globe.

"Using our research we can even say where oil could be found in Sweden," says Vladimir Kutcherov, a professor at the Division of Energy Technology at KTH. Together with two research colleagues, Vladimir Kutcherov has simulated the process involving pressure and heat that occurs naturally in the inner layers of the earth, the process that generates hydrocarbon, the primary component in oil and natural gas. According to Vladimir Kutcherov, the findings are a clear indication that the oil supply is not about to end, which researchers and experts in the field have long feared. – ViewZone.com

We have long noted how the industry's preferred term for oil is "fossil fuel." Do you think it is possible that a few – a relative handful of top Big Oil geologists – had an INKLING that oil is a naturally occurring geological phenomenon. Is it just possible that even the LABELLING of oil as a "fossil fuel" is a part of the promotion. After all, if oil has been created by liquefying dead dinosaurs sooner or later we're bound to run out given that there is not an endless supply of dead dinosaurs. But if oil (and gas) is a naturally occurring phenomenon then it is not something we'll run out of, or not quickly anyway.

After Thoughts

Now, dear reader, maybe you are sitting back in your chair and shaking your head. How is it, you mumble, that we have read about this astounding abiotic breakthrough (assuming you do not already know) in this most modest of alternative electronic newspapers, the Daily Bell. Shouldn't this be front-page news in The New York Times and the Wall Street Journal? This is big stuff, that our everyday energy is naturally produced and does not come from the geological renderings of large cold-blooded creatures. Why, oh, why haven't I heard of this, you wonder.

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