Why energy coverage sucks
Chris Nelder, a columnist at SmartPlanet.com, writes about the problems he sees when journalists cover energy and provides some suggestions when reading such coverage.
1. Be skeptical. You will have to make up for the missing skepticism and curiosity of the journalists you’re reading. If the article is all sunshine and roses, and includes no caveats or alternative views, it will be more useful to you as fishwrap than information.
2. Discount the sources. If the cited authority represents the oil and gas industry, you should view their forecasts as propaganda, not truth. Particularly when the authority is from an OPEC producer. OPEC (like the IEA) is a fundamentally political organization, and everything they say in public has a political calculus behind it. For example, I read the unconventional oil optimism expressed by the Saudi official cited at the top of this piece as their way of jawboning down peak oil fears, and throwing analysts off the scent of a trail which leads to serious questions about whether Aramco can increase spare production capacity, and whether the world’s most productive oil field, Ghawar, has indeed gone into decline.
3. Do the math. If the numbers cited don’t add up, then you would be wise to question the validity of what you’re reading. Most of the time it’s simple arithmetic you can do in your head. More ambitious readers will want to bust out a spreadsheet and have a go at the details.
4. Look for context. If the article only talks about resources or reserves, and doesn’t mention production rates, you can safely ignore it. Yes, America may have 1.5 trillion barrels of oil shale (not shale oil, which again is an entirely different thing), but right now we’re producing exactly zero barrels of it, and for good reason: it’s a highly marginal source of hydrocarbons, and too expensive to produce with today’s technology. Remember this: Only flow rates matter, not how much is in the ground.
Read more here.