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VK2AAB > FUEL 03.04.08 03:06l 115 Lines 6173 Bytes #999 (0) @ WW
BID : 11130_VK2WI
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Subj: Matthew Simmons on depletion
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Sent: 080403/1641Z @:VK2WI.#SYD.NSW.AUS.OC #:11130 [Sydney] $:11130_VK2WI
From: VK2AAB@VK2WI.#SYD.NSW.AUS.OC
To : FUEL@WW
Hello All,
Matthew Simmons is considered to be the best authority on
Saudi Arabian oil reserves. His book Twilight in the Desert caused
a sensation in oil industry circles. I have a copy of his book and while
it is heavy going with lots of statistics on Saudi oil fields it is now
considered to be the best source available due to the intense research
that went into the book.
The following is an interview with Matthew Simmons.
73 Barry VK2AAB
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The Accidental Environmentalist
An oil man reconsiders the future of black gold.
Words By Evan Hughes
Matthew Simmons, head of the Houston-based investment firm Simmons and
Company, has made a fortune by investing billions of dollars in the oil and
gas industry. Increasingly, though, Simmons has been telling the industry
what it doesn't want to hear-that our planet's oil is in short supply. Now
considered one of the world's leading experts on the theory of peak oil-which
says we are near or have already reached the peak capacity for oil production
worldwide-George W. Bush's former energy advisor foresees a steep decline in
oil output and profits. His predictions, outlined in his book Twilight in the
Desert: The Coming Saudi Oil Shock and the World Economy, took the industry
by storm, naming names and contending that Saudi Arabia doesn't have as much
oil as it claims. With barrel prices passing the hundred-dollar mark at the
beginning of this year, Simmons's predictions seem to have more gravity than
ever. But, unlike many like-minded thinkers, Simmons believes that current
alternative energy strategies are pipe dreams, environmentalists are deeply
misguided, and global warming is nowhere close to our largest problem. GOOD
sat down with him on the porch of his stately Maine home to get his take on
the future of the energy business.
GOOD: You're making money servicing oil rigs while you're foreseeing the
industry drying up. Is that bad for business?
MATTHEW SIMMONS: Whether my company's opinion is good or bad for the industry
is neither here nor there. Even though theoretically we're set up to do
business with the major oil companies, they think we're a wacky firm, and we
think they're wacky. They've never figured out where the industry is. In the
40 years I've been studying this they've been wrong every single time. They
don't seem to ever read books.
How did you get into the energy business?
While at Harvard Business School I met a man whose company was providing the
diving services for offshore platforms and rigs. He was about to sell the
company and I said, "What if you raised some venture capital?" He said "Can
you do that for me?" By the end of five years my company had pretty well
established itself as the experts in the oil-services industry, because
nobody else understood it.
Have you been politically involved? You did some consulting for President
Bush before he was elected.
I made the mistake of pulling aside President Bush's first cousin in early
March of 2000. I told him about a conversation I had with Secretary [of
Energy] Bill Richardson's assistant, who had just visited the OPEC countries
to see exactly how much spare [oil-production] capacity they had left. I
said, "When you have someone who is the head of U.S. oil policy call you and
[say 'shit!'] about five times in 20 seconds, this is so much worse than what
they've warned us about." I said, "Between now and the election, if this all
breaks out and Bush is misinformed, he can mispronounce every head of state
in the world, but this, this will sink you." And that dragged me into helping
create the comprehensive energy plan put forth by Bush when he was running.
"The major oil companies have never figured out where the industry is. In the
40 years I've been studying this, they've been wrong every single time. They
don't seem to ever read books."
You grew up in a Republican family. Who are you backing in the 2008 election?
One of my political heroes was George Romney, whom I got to know well. That's
why I'm a big supporter of his son, Mitt Romney. But I'd say that over the
years in the energy business I got as disgusted with some of the mistakes the
Republican Party was making as well as the Democratic Party.
When you consulted for the Bush campaign, were you making dire predictions?
They were dire enough to scare some people. I didn't even understand at the
time what the term "peak oil" meant. What I did understand was how our spare
capacity was evaporating. We needed to start diversifying our supplies. The
mindset at the time was that technology had driven down extraction costs and
that we would have a long era of overcapacity, and my views just could not
have been any sharper that these guys didn't have a clue what they were
talking about.
Was there a point where you realized you had to get into alternative energy?
No. Every once in a while I have run into somebody who peddles the beauty of
wind or solar or fuel cells or the deregulation of electricity, and so often
these people are almost gleeful that their invention would finally rid the
world of that awful oil and gas. And I kept thinking, "What a stupid thing to
say." Because it won't ever happen.
So, what would you like to correct about alternative energy?
I think that what people need to appreciate is that the miracle of modern
energy created virtually everything that's good about how we live. And if you
go back to 100 years ago, we were a filthy society. ... But the odds are
exceedingly high that we're nearing or maybe even past the largest
sustainable oil output, and the world is assuming we can grow at least
another 50 percent. Probably my single biggest epiphany, going from being a
concerned observer to saying this is really a serious problem, was the two
and a half years I spent analyzing the oil fields of Saudi Arabia, and it
ended up in this book, Twilight in the Desert. ... Until I came out with this
book, literally almost no one had ever even raised the question What if they
don't have the oil?
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