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The Oil Patch Insider So what’s all the fuss over $40 oil? Gary Park Petroleum News Calgary correspondent
As the world reels from oil prices of more than $40 a barrel, consumers squawk about what they pay at the gas pumps and politicians go into a tizzy, it’s worth remembering that the current values are chicken feed alongside those of 25 years ago.
Earl Sweet, an assistant chief economist at the Bank of Montreal, told the Globe and Mail that “we’re very far away from oil shock territory.”
He was referring to the late 1970s and early 1980s when the price of crude (allowing for inflation) was the equivalent of $80 a barrel in 2004 dollars.
Even more crippling to global economies, it had more than doubled from the $40 average that lasted through the previous five years in the wake of the first OPEC oil embargo.
And OPEC’s debut on the world stage in late 1973 triggered a four-fold surge in oil prices.
The reliance on oil by modern economies is far less than it was in the early 1980s: the energy needed to achieve $1 worth of gross domestic product is about half what it was then.
The International Energy Agency has calculated that oil has to climb by $10 to trim 0.5 percent off the world GDP growth over the net year, while the International Monetary Fund estimates the potential cost at 0.6 percent.
Even at that size, such an impact would create only a modest ripple if GDP is growing by 5 percent a year. Hansen leaves Alaska DNR after 24 years Jim Hansen, the Alaska Department of Natural Resources Division of Oil and Gas leasing manager, attended his last lease sale as a state employee May 19. Mark Myers, director of the Division of Oil and Gas, said before the lease sale that Hansen, who as worked for DNR for 24 years, “first as the manager of resource evaluation, but now as the leasing manager.” Myers said “Jim was sort of our icon of leasing — he is the one responsible for implementing the areawide leasing that’s been so successful since ’98.”
Hansen said that he’s been on the leasing side for about 12 years, and said he would miss the lease sales. “It’s been a great ride. As of August first I’m a free man,” and said he might be sitting in the back, watching next fall’s lease sales. Queen of the oil patch called to head office She came, she saw, but she didn’t quite have enough time to conquer.
Barely a year after taking over the helm at Shell Canada, Linda Cook is now packing her bags to assume control of Royal Dutch/Shell Group’s global natural gas and power unit and join the committee of managing directors.
The appointment must still be ratified at the annual shareholder meeting on June 28.
But if Cook leaves she will be replaced at Shell Canada, which is 78 percent owned by Royal Dutch/Shell, by Clive Mather, a 35-year company veteran who is currently chairman of Shell UK.
Kansas-born Cook, 45, was the first woman to head a major Canadian oil and gas company and seemed destined to spend several years in the Calgary head office steering the company’s fortunes in the Mackenzie Delta, Alberta oil sands and Nova Scotia offshore.
All that was before the parent company was dragged into a reserves-accounting scandal that claimed the jobs of Chairman Philip Watts and exploration head Walter van de Vivjer, among others.
Cook, who has yet to comment on the promotion, said recently that the scandal “impacts all of us when there’s a hit on your reputation like that. It will take years now to restore our reputation to the place we think it should be and the place where we would all want it to be.”
Cook herself caught some of the backwash from the parent company’s troubles. She was a member of the exploration and production executive committee in 1998 and 1999 and was director, strategy, business development, responsible for the reserve reporting process.
But a spokesman for Royal Dutch/Shell said she “bore no responsibility for the difficulties created by the reserves issue.”
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