40 comments on New SEC Oil Accounting Rules
Comments can no longer be added to this story.
| Show without comments | PDF version
40 comments on New SEC Oil Accounting Rules
Comments can no longer be added to this story.
| Show without comments | PDF version
Search The Oil Drum with Google
Support The Oil Drum
Recently on TOD:World
TOD:Campfire
- Thanksgiving Open Campfire Thread
- How Relocalization Worked
- How to Set Up and Run a Bicycle Repair Company
TOD:Europe
- Unique Times -- and the Future
- Peak Gold, Easier to Model than Peak Oil? - Part I
- Carbon Capture and Storage
TOD:Canada
- In this house, we obey the laws of thermodynamics!
- The Round-Up: October 24, 2008
- Compressed Air Energy Storage - How viable is it?
TOD:Australia/NZ
- The Bullroarer - Friday 27th November 2009
- International Energy Agency calls 'Peak' on OECD Oil Demand
- Australian Senate: Peak Oil motion defeated 31:6
TOD:Net Energy
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- David Strahan
- Early Warning
- The Energy Blog
- European Tribune
- GraphOilology
- Health After Oil
- jeffvail.net
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Finance & Economics Blogs
- The Big Picture
- Calculated Risk
- The Crash Course
- Ecological Economics
- Econbrowser
- Environmental Economics
- Infectious Greed
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
Organizations
Peak Oil Primers
Beware email scams!
Beware email scams claiming to be from this site. We do not have any job openings. If anyone contacts you about a job at The Oil Drum, do not reply to them, and definitely do not give them any personal information or send them money. Read more here.
“What gets us into trouble is not what we don't know, it's what we know for sure that just ain't so.”
—Mark Twain
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Nate Hagens, Gail the Actuary, Prof. Goose
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Heading Out, jeffvail, JoulesBurn, Sam Foucher, Robert Rapier
- TOD:Campfire: Glenn, Jason Bradford
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
- Emeritus: Stuart Staniford
- Technician: Super G
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Thanks for posting that Gail,
I'm pretty pessimistic about the outcomes of this change. It really opens the door wide open for a ponzi scheme to develop in this industry. Essentially Madoff was reporting to his clients that they had nice sized deposits when in fact they weren't there. The Oil companies would now be allowed further latitude for valuing their reserve assets without having to prove that they truely exist. This leads to overvalued companies and the financial decisions that are made because of that.
While there may be some benefit if the companies stay in the spirit of the law with this new rule change, I can't say that I have much faith that they will. It's pretty well known that all the OPEC countries have overstated their reserves because it means more money to them. There's plenty of financial motivation for Oil companies to do the same.
I'm not a fan of this change at all.
TS
I told my husband at dinner about the new rule change (he teaches computer science, so is not really involved with this), and his reaction was much the same as yours. If a company does't have to actually prove that it can get the oil out, there is a lot more room for games-playing, especially when the oil is in very deep locations or other technologically challenging locations.
With more flexible rules, it is a lot easier to assume that if oil or gas can be seen with imaging techniques, it must be economically possible to get the oil out. The surprises come later, when one discovers the oil is mixed with a toxic substance that is difficult to remove, or reservoir pressure is very low, or some other unforeseen problem arises.
I've heard some very unfavorable opinions of the SEC's work, for instance in this FSN interview with Bud Burrell; also from Bud (pdf): Has Naked Shorting Gone So Far Out of Control, It Could Meltdown the Financial System? That was written in 2004, btw.
If a company does't have to actually prove that it can get the oil out, there is a lot more room for games-playing
Exactly. And with the American public becoming aware that the US only has ~3-4% of the world's oil supply, raising reserve levels (and announcing probable and possible reserves additionally) seems intended to give the US citizen a false sense of security that maybe the oil reserves in the US aren't declining like some of those kooks say.
If oil shale is somehow included in this rule change (as possible or probable, for example), then that would skew perceived reserves by such a margin as to completely bamboozle the average American.
I think your are right that the changes could act to bamboozle the average American. I hadn't thought about oil shale. It is hard to imagine how one could consider it to be economically recoverable.
you are correct, gail.
oil shale deposits would only be considered reserves if and when they are demonstrated to be economical to produce.
What is the basis for that statement? What price point would be used to determine if it were 'economical to produce'? Where in the rule change is this stated, especially in light of probable and possible reserves?
"Where in the rule change is this stated, especially in light of probable and possible reserves? "
this is not stated in the rule change, but is in the basic definition of proven reserves. wrt possible oil shale reserves i suppose someone could call them possible reserves, based upon estonia, but imo, that is even a stretch. i dont think anyone gives any credibility to possible reserves anyhow.