American Petroleum Institute officials have said for several years that the public doesn’t understand how the oil and gas industry works. Now they have figures to back up their statements.
In a May 29-June 3 online survey of 1,333 Americans, Harris Interactive found that most US adults “have a fundamental lack of knowledge regarding energy supplies and demand, and the role of America’s oil and natural gas companies,” API said. “In fact, when presented with 20 multiple choice questions, on average more than 25% of respondents said they were ‘not sure,’ and in many cases people chose the response that is farthest from the correct answer.”
Respondents overestimated US oil imports from the Middle East. When asked which country was the biggest foreign supplier, almost 60% chose Saudi Arabia, which actually is No. 6. Only one in 10 correctly chose Canada as the largest foreign supplier.
Perceived profits
Responses indicated that the public overestimates US oil and gas companies’ profits and doesn’t recognize their investments in emerging energy technologies. The survey found that 42% believed oil companies earned 16-20¢ on every dollar of gasoline sales during 2006. In fact, said API, the amount was 9.5¢, within a range (6-10¢) that only 14% chose.
Only 7% correctly said that US oil and gas companies invested almost $100 billion in emerging energy technologies in North America alone from 2000 through 2005. More than a third estimated less than $25 billion, the lowest possible choice.
The survey also indicated that the public overestimates the size of publicly traded oil companies relative to competitors owned by foreign governments. When asked what percentage of the world’s largest oil firms are state-owned, only 2% knew that this describes all of the top 10 companies.
Most respondents also didn’t know that ExxonMobil Corp., the largest US oil company, was not among the world’s largest reserves holders. Thirty-six percent placed it among the world’s three largest oil firms, API said.
Fossil fuels’ role
Respondents also underestimated the role fossil fuels must play in meeting global energy demand in the next 25 years. Only 14% agreed with the International Energy Agency’s estimate that fossil fuels will meet 81% of demand in 2030. Most respondents thought it would be 61% or less. Similarly, more of the survey’s participants (34%) thought that renewable sources would account for 20% of total supplies in 2030. Only 5% agreed with the US Energy Information Administration’s projection of less than 10%.
In a teleconference with reporters, API Pres. Red Cavaney explained that the trade association has been concerned that inaccurate information in legislative debates could lead to bad policies.
“The challenge for us is to communicate more broadly and meaningfully to help people understand their frustrations over energy. Some policy options have unintended consequences, particularly for an industry with high capital requirements and long lead times,” he said.