Maxwell reiterated his view at the symposium that non-OPEC oil production would peak in 2006 or 2007. Citing former Secretary of Energy James Schlesinger, who observed that if OPEC hadn't been created in the 1960s we would have to invent it to ration oil, Maxwell is convinced that that after 2007, OPEC will be in a position to charge what it wants for every marginal barrel of oil. "This current system has 20 years to go, and crises could accelerate that," he told attendees. Those in the government and oil industry "who say there is plenty of oil left are deceiving the public. Whenever you hear that the world has 39 or 73 years of oil left, what they don't tell you is that production will peak in 13 years and it will take another 300 years to [extract] the rest."
Top executives in the upper echelons of the oil industry are in denial, Maxwell told attendees. "If you had stock options that run for five years, you'd be in denial too," he quipped. "A CEO like [ExxonMobil's] Lee Raymond can't say they are in a sunset industry. But when you ask a CEO how much oil a certain field has and then you go out and tell the people running the field what the CEO said, they'll say,'He said that?'"
Major non-OPEC oil exporters like Mexico are likely to see their production peak later in this decade, while nations like Brazil and Angola will see their output start to decline in about nine years, Maxwell said, and even oil-rich Khazakstan is likely to reach its highest output in 15 years or so. Maxwell believes that only when the oil-consuming Western democracies have their backs to the wall will they be able to muster the resources to develop viable sources of alternative energy. And that could take 10 to 15 years, putting OPEC in the drivers' seat for at least a decade.
The looming oil shortage is likely to increase geopolitical tensions far beyond the Persian Gulf. "Can Russia hold onto their far Eastern provinces when China is desperate for oil?" Maxwell asked. Indeed, if one looks at how China is defining its underwater boundaries in the Pacific and South China Sea, where there is thought to be vast potential oil reserves, the prospects are alarming.
While international law typically recognizes a nation's underwater borders as extending only 10 miles from its shores, China, in some situations, defines its South Pacific underwater rights as reaching anywhere that isn't within 10 miles of another nation. Since the people of Siberia may have more in common with the Chinese than the Russians, the opportunity for the Chinese to fan the anti-Russian separatism north of Mongolia is apparent.
In North America, Maxwell believes the most significant untapped oil reserves lie in the tar sands of Western Canada. These reserves have the potential to last well into the 21st Century, long after oil fields in many non-OPEC nations run dry.
That's why his favorite energy pick is Suncor Energy, a Canadian concern that is 85%-leveraged to the tar sands of the western provinces. Maxwell's projected long-term earnings growth for Suncor is 20%. For other Canadian oil producers like Petro Canada, he anticipates a 16% growth rate. The first U.S. company to make his list is Phillips Conoco, which he believes can generate a 13% growth rate. Giants like BP, Royal Dutch Shell and ExxonMobil may be able to increase their bottom lines at rates of 11%, 10% and 9.5% respectively. In an era of modest economic growth, that ain't chopped liver.