Last week the New York Times, a newspaper not normally considered a big supporter of US oil interests, published a pretty insightful article covering the conundrum faced by the major Western oil companies - falling production during a period of record high prices. As the article points out, most of the world’s oil is not controlled by big Western oil companies; in fact, over the last 30 years, these companies’ share of global production has fallen from over 50% to around 13% this year. The other 87% is controlled by national oil companies, those government owned entities that are much less responsive to the needs of the global markets and much more concerned about their own local interests.

As noted in the article, Western oil companies are being pushed out of many of the most lucrative and promising exploration areas as the state owned entities (SOE’s) and their national leaders are seeking to take a larger slice of the profits and gain more control over an increasingly scarce resource. While that behavior may be understandable and possibly even expected, in most cases these SOE’s are less technologically advanced than western companies and are controlled by political appointees who are, in turn, directed by politicians or dictators - leaders whose primary interest is advancing their own geopolitical goals, not meeting the energy needs of the world.

The Times article puts it this way…

But many energy experts say these "peak oil" theories are misplaced. They say the world is not running out of oil -- rather, the companies that know the most about how to produce oil are running out of places to drill.

"There is still a lot of oil to develop out there, which is why we don't call this geological peak oil, especially in places like Venezuela, Russia, Iran and Iraq," said Arjun Murti, an energy analyst at Goldman Sachs. "What we have now is geopolitical peak oil."

Western companies are far better than most national oil companies at finding and extracting petroleum, experts say. They have developed advanced exploration technologies and can muster significant financing to develop new fields. Many of the world's exporting states, however, have spurned their expertise.

You can read the article in its entirety here.

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