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The New World of Oil : In the 1970's, accepted wisdom held that the world would soon be running out of oil, and the Organization of Petroleum Exporting Countries would soon have a stranglehold on the developed nations as it pushed oil prices ever higher. Instead two decades later, oil and gasoline prices, adjusted for inflation, are at record lows, and oil reserves are far larger than ever anticipated. Meanwhile, OPEC has internal problems and is facing increasing competition. Here are some of the trends that have helped shape the world's new order in oil: : OPEC Wears New Image; U.S. Companies Get Lean; There's Bounty of Crude


As it has managed to do for more than a century, the global oil industry is adjusting to a vastly changed landscape.

Contrary to doomsday scenarios, and despite its critics, the oil business is by most accounts emerging from troubled times still solidly at center stage in the energy industry and with a supporting cast of increasingly flexible, lean, internationally competitive companies.

And there are more surprises in this new world of oil: a wiser Organization of Petroleum Exporting Countries cartel that yearns to be a dependable supplier; revamped oil companies that hope to earn profits whether crude prices are high or low, and a planet with far more petroleum than any wildcatter's dream.

Even the developed nations, which have long been haunted by fears of energy shortages because of their heavy reliance on Middle East oil, are resting easier after the Persian Gulf War. The true accomplishments of the war, from the industry's standpoint: The U.S.-led coalition responded to Iraq's invasion of Kuwait by sending in troops. And it sided with Saudi Arabia, the world's Ft. Knox of petroleum reserves.

"We've taken care of the security issues," says Joseph Stanislaw, managing director of Cambridge Energy Research Associates. "Now people have begun to focus on the strict fundamentals of the marketplace and the ability of the industry to invest for the future."

Certainly, most U.S.-based oil companies, battered by years of severely low prices and narrow profit margins, are still going through a painful restructuring, selling off assets and laying off workers.

And oil executives still growl bitterly about the constraints they feel in the birthplace of the petroleum industry, the United States. Topping these complaints are expensive refinery modifications to satisfy air-pollution rules and moratoriums on exploration in the most promising regions of Alaska and the U.S. outer continental shelf.

Most U.S.-based oil companies, in fact, are shifting their exploration efforts overseas.

"They're obviously going through a tough time at the moment," says Charles J. DiBona, president of the American Petroleum Institute.

Yet DiBona and most industry veterans agree that the oil business is poised for dramatically improved performance. "If this economy picks up and gains some steam," he predicts, "the companies will be a lot better off this year."

One perennial worry has subsided--fear over total world petroleum reserves. For decades, predictions have persisted that the world was running out of oil.

"And in some sense," says William D. Hermann, chief economist for Chevron Corp., "that is still undoubtedly true."

After all, oil is a finite resource. But large increases in the world's proven reserves give the industry cause for optimism--the inevitable oil shortage is far into the future. Hermann says that while the world consumed 200 billion barrels of oil during the 1980s, at the end of the decade "we had 50% more reserves than at the beginning."

Indeed, from 1970 to 1991, the world's proven oil reserves (oil known to be in the ground, not just estimated) nearly doubled, from 532.5 billion barrels to 1,003.3 billion barrels, according to a study by Cambridge Energy and Arthur Andersen & Co.

And a recent report in the American Assn. of Petroleum Geologists Bulletin raises the amount of oil estimated to be underground--beyond these proven reserves--from 1 trillion barrels to 3 trillion.

"So we have tripled the exploration potential," says Albert J. Anton, an energy analyst with Carl Pforzheimer & Co. in New York.

"Of course, no one has found this oil," he cautions, "and it might be in the Arctic below the Naval Petroleum Reserve or offshore Santa Barbara or under ANWR (the Arctic National Wildlife Refuge)"--areas now off limits to commercial oil exploration.

Even so, few doubt that improved research technology, expanded worldwide exploration and better oil-recovery techniques have virtually ensured that the world will not soon run out of petroleum.

That is, if the world wants to keep relying so much on oil.

Environmentalists have organized an international campaign to cut use of petroleum and other fossil fuels, which they blame for problems ranging from acid rain to global warming.

And the Union of Concerned Scientists and other groups have taken some encouragement from the fact that demand for oil has been flatter than expected in recent years, accounting for a shrinking share of growing worldwide energy use.

This shift partly reflects what many environmentalists consider baby-step turns toward auto and industrial energy conservation programs, as well as development of alternative fuels. Interest in energy alternatives has been spurred during times of high oil prices, especially during the OPEC embargo of 1973 and the panic of 1979 after the fundamentalist revolution in Iran.

From a 1973 peak of 48%, oil's share of annual world energy consumption fell to 39% in 1990.

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