Another oil industry lie

Last night, I was reading an old Harvard Business Review article, “Marketing Myopia”. It was written in 1960. The article discusses management which doesn’t recognize what they really provide to their customers and therefore miss opportunities.

The author is especially critical of the oil companies. He talks about the ratio of oil reserves to demand keeping the cost of oil down. 20 to 1 in 1950, rising to 42 to 1 after mid-east oil is discovered in '52 and he cites predictions of 45 to 1 in 1970.

That made me think…what’s the ratio today. We’ve heard about peak oil, increasing demand from China and India, etc. Oil is at $78 (today). Down from the highs of $120, but well above the sub-$40 barrel before 2004.

Here’s the numbers:

Current reserves (from a Wikipedia page): 1243 billion barrels

Demand from 2009: 85 billion barrels a day

That calculates to 32.025 billion barrels a year. Compared with reserves that’s a ratio of 40:1. In other words, pretty much exactly where it was in 1952.

http://www.casadogalo.com/marketingmyopia.pdf