Later On

A blog written for those whose interests more or less match mine.

Oil: $500/barrel. Soon

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Fortune magazine article by Brian O’Keefe, Senior Editor, begins:

Matt Simmons is as perplexed as anyone that it has fallen to him to take on OPEC, Exxon, the Saudis, and all the other misguided defenders of conventional wisdom in the oil patch. Why should one investment banker with a penchant for research be required to point out what he regards as the obvious – that from here on out, oil supplies can’t meet demand, and if we don’t act soon to solve this crisis, World War III could be looming?

Why should a man who scorns most environmentalists have to argue that locally grown produce and wind power are the way of the future? Why should a lifelong Republican need to be the one to point out that his party’s new mantra – “Drill, baby, drill!” – won’t really fix anything and that his party’s presidential candidate is clueless about energy? That the spike in oil prices earlier this year wasn’t a temporary market anomaly and the recent retreat in prices is just a misleading calm before a calamitous storm? That we’re headed toward $500-a-barrel oil?

“I find it ironic that here we have the biggest industry on earth, and I’m one of the few people to figure out that we have a major problem,” he says, in his confident if not quite brash way. “And I did it all in my spare time. How stupid and tragic is that? I shouldn’t be one of the only folks that actually has a handful of ideas of how we can keep from blowing each other up and get through this.”

Indeed, Simmons isn’t the obvious candidate to be the bearer of bad news about oil. He’s spent his career working in the business, has lived in Houston for decades, and is such an industry insider that he helped edit the Bush campaign’s comprehensive energy plan in the 2000 election – the document that was ultimately more or less rubber-stamped by Vice President Dick Cheney’s infamous secret Energy Task Force. Over the past 35 years, his boutique investment bank, Simmons & Co., has helped finance and shape much of the country’s existing oil-services business. With profits gushing, you might expect him to be celebrating.

Not to mention that the 65-year-old banker doesn’t have the personality of a prophet of doom. He has a puckish wit, a relentlessly cheerful and enthusiastic demeanor, and the appearance of a rosy-cheeked cherub in a navy blazer. He routinely refers – in earnest – to his daily experiences as “tremendous fun.” His closest business associates have a hard time recalling him ever showing anger. But when it comes to oil and gas, his message is downright scary. …

Continue reading. And click the link for some sobering graphs. Like this one:

Rate of discovery of new oil

Rate of discovery of new oil

Written by Leisureguy

23 September 2008 at 10:53 am

Posted in Daily life

One Response

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  1. I write as a Brit recently moved to the US, and I work in the oil industry. This is not news. We have been saying this for years, but everyone in government has had their head in the sand with their populist gas holidays etc.

    More investment is needed now in not only exploration but more importantly fuel efficiency and alternative fuels (not bio-fuels that starve the poor so the rich can drive their SUVs).

    More drilling off the US coast will solve nothing (and certainly not the quick solution McCain thinks it is) if America doesn’t wean itself off its oil addiction. If the price of gas doubles to $8/gallon, then this would approach European pricing and force people to really consider if they need the status symbol on their drive or a normal car.



    23 September 2008 at 12:47 pm

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