National Public Radio’s coverage of oil hitting $100 a barrel this week has uncovered another underreported angle to oil profits: funding future explorations.
“Companies often use fatter profits to search for new deposits, or to go back and suck the last drop from retired wells,” said Joyce.
Those $100 bills are going to search for new deposits in places like the Gulf of Mexico, where drillers must drill in deeper water and farther out at sea – making exploration more expensive.
According to Joyce, companies are also investing in new resources like heavier oil from tar sands or shale. He pointed out that higher prices can also help pay for the most current technology needed to squeeze more oil out of those old wells.
Paul Henshaw, a geologist and former Chevron employee, told Joyce that when oil prices rise it can suddenly become economical to go back to the abandoned oil wells.
"When we leave an oil field, there can be 20 to 80 percent of the oil left," Henshaw told Joyce. “A lot of us geologists have some area where we've said, 'Oh boy, if the economics are right, we should go for that.'”
Although Zarroli put the economic news in context, reporters in past years have commonly failed to show the big picture of oil profits.
On “CNN Sunday Morning” Oct. 30, 2005, hosts asked viewers to respond to the question, “Who do you hold accountable for high gas prices?” Ignoring market forces that set prices in favor of playing a political game, anchor Tony Harris also rephrased the question: “Who are you blaming?”
CNN’s Miles O’Brien framed a report about high third-quarter oil profits as “something to get your blood boiling” and “get you a little outraged” on the Oct. 28, 2005, “American Morning.”
In 2004, Exxon reported that it had new capital investments approaching $15 billion, which went toward new exploration and production as well as refining capacity and research for new energy technologies.
Also, Exxon spokesman Mark Boudreaux told the Business & Media Institute that “ExxonMobil has added 384,000 barrels per day of refining capacity in the United States through expansions, technology, and operational improvements over the last 10 years.”
“The average refinery size in the U.S. is about 125,000 barrels per day [Oil & Gas Journal numbers],” Boudreaux said. “So that means we have in effect built the equivalent of three new grassroots refineries over the last decade.”