Saturday, August 30, 2003

Matt Simmons, an oil industry expert who has advised the Bush administration on energy policy, has grown increasingly pessimistic about our chances of avoiding a major energy crisis, both in terms of natural gas and oil.

In a recent interview Simmons was asked what the solution was to the problem of natural gas supply. Simmons replied; "I don't think there is one. The solution is to pray. Pray for mild weather and a mild winter. Pray for no hurricanes and to stop the erosion of natural gas supplies. Under the best of circumstances, if all prayers are answered there will be no crisis for maybe two years. After that it's a certainty."

Commenting on world oil supplies, Simmons said; "I have for years described two camps: the economists who told us that technology would always produce new supply and the pessimists or Cassandras who told us that peak was coming in maybe fifteen or twenty years. We may be finding out that we went over the peak in 2000. That makes both camps wrong.

Over the last year. I have obtained and closely examined more than 100 very technical production reports from Saudi Arabia. What I glean from examining the data is that it is very likely that Saudi Arabia, already a debtor nation, has very likely gone over its Peak. If that is true, then it is a certainty that planet earth has passed its peak of production."

If an insider like Simmons believes this, it is certain that others in the industry and the administration are aware of the magnitude of the problem. It's an open question how much this has influenced administration policies, but it certainly must be in the background of all decisions about the Middle East.


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