Natural gas is the fossil fuel du jour. At Davos, BP CEO Tony Hayward described unconventional natural gas as a 'complete game changer'. The rest of the panel agreed. In December Exxon Mobil (XOM) bought XTO Energy for $41bn to access its resource base of 45tcf (trillion cubic feet) of unconventional natty. Some see this as Exxon pivoting away from difficult to find oil into where the future fossil fuel growth will be. America is now apparently awash in a 100 year supply of nat gas. Why not use that for transport and stop the annual outflow of some $300bn out of the American economy, much of it to supposed enemies, all while creating those elusive green jobs?

Seeking Alpha author Michael Fitzsimmons has for a long time been passionately advocating natural gas as a panacea for the prospective peak oil problem. Many here agree, decrying Secretary Chu's "agnostic" stance towards its use for transport. T. Boone Pickens, in his Pickens' Plan redux, suggests that by transferring 18 wheelers and buses to natural by 2020 we could cut OPEC import dependence in half. I decided to take a quick look under the hood myself. My straw man will be that the US can stop all oil imports by 2035.

”Endless Oil” is the title of a piece in BusinessWeek (Jan, 18, 2010) that was written by Stanley Reed. It was interesting for me because I remember a time when BusinessWeek would not have published a tissue of nonsense like that article. Perhaps even more important, I was surprised when I saw the names of some of the persons whose opinions were cited. All I can say is that my dream tonight might involve encountering them in a seminar room or conference; then they would find out the true state of the world oil economy.

Let me begin with the narrative that all of my energy economics students must know perfectly after my second lecture. The Russian oil output is probably close to peaking, and in any event the director of one of the largest Russian firms says that his country will never produce more than 10 million barrels per day (= 10mb/d). This number may be slightly wrong, but it happens to be one-tenth of the amount (= 100 mb/d) that the present CEO of Total (the French oil major) says is the absolute maximum for world production. (Another Total executive recently suggested 95 mb/d).