Daily Kos: Countdown to 100$ oil (10) - Simmons says 300$ soon - and more

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Countdown to 100$ oil (10) - Simmons says 300$ soon - and more
by Jerome a Paris
Thu Aug 18th, 2005 at 08:24:21 CDT

This is a repeat diary. SteveLCo wrote about this yesterday and I am going to use the same source that he pointed us to, an fascinating interview with Matthew Simmons on financialsense.com on the occasion of the publication of his book, "Twilight in the Desert" (helpfully subtitled "The Coming Saudi Oil Shock and the World Economy").

SteveLCo pointed out an extract where Simmons says emphatically that he expects oil prices to rise 5-10 fold in the very near future:

MATT [Simmons] (...)oil demand globally could easily go to 86-88 million bpd during the Winter, and that could easily exceed supply by 2-5 million bpd.

JIM: If that was to happen we would almost be looking at $75-80 oil, I suspect.

MATT: No, no, no. Oil prices could easily go up 5-10 times.

I'd like to summarise his arguments below. But do go read the whole interview. It is very easy to read and it is an absolutely extraordinary document.

* Jerome a Paris's diary :: ::

If you are not familiar with Matt Simmons name, here's his short biography:

Matthew Simmons. He's Chairman and Chief Executive Officer of Simmons & Company International, a Houston-based investment bank that specializes in the energy industry. Mr. Simmons serves on the boards of Brown-Forman Corporation, The Atlantic Council of The United States, he's also a member of the National Petroleum Council and The Council of Foreign Relations. He has an MBA from Harvard University.

His bank has been active for at least 20 years with the Texas oil industry, and he worked on the Cheney energy task force and has been received by Bush a few times. So he is definitely not a marginal or someone with an axe to grind.

I decided it would be interesting and educational to see if you could actually put together a list of the top 20 oil fields by name. And I thought somebody must have done this before, and the more I dug the more I realized that no one ever had. So I basically decided - arbitrarily - 100,000 barrels per day [bpd] production was my cutoff of what constituted a giant oil field and all Fall of 2000, I believe this was, I basically took data from various areas and kept trying to hone in on the total list (...)

What I came up with was finding that there are about 120 oil fields in the world that still produced over 100,000 bpd, and that they collectively were 49% of the world's oil supply. What I also found is that the top 14 fields that still produce over 500,000 bpd each, were 20% of the world's oil supply, and on average they were 53 years old. The next thing I found was that in the Middle East you had basically, somewhere between 3-5 oil fields in each of the major Middle East oil producers that made up about 90% of their supply.

His book, and all his earlier speeches and papers, come form that exercise, apparently the first of its kind, to simply list the oil fields. This had never been done before! So his information comes from the actual exhaustive study of oil fields, one by one. The fact that he was the first one to do this does not make his data suspect, it makes it all the more useful.

Daily Kos: Countdown to 100$ oil (10) - Simmons says 300$ soon - and more


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