Grist Interviews Matthew Simmons on Peak Oil

Matthew Simmons, an ex-energy adviser to U.S. President George W. Bush and author of the book "Twilight in th Desert: The Coming Saudi Oil Shock and the World Economy", has been spreading the peak oil gospel with conviction for a little while now (for those who don't know what peak oil is, here is a primer). Grist Magazine interviewed him last week and it is an essential read to anyone not yet familiar with peak oil.Some choice cuts:

I believe we are either at or very close to peak oil. If I'm right, then we have to assume that five or 10 years from now we'll be producing less oil than we are today. And yet we have a society that is expecting, under the most conservative assumptions, that oil usage will grow by at least 30 to 50 percent over the next 25 years. In other words, we would end up with only 70 percent of the oil we have today when we would need to have 150 percent. It's a problem of staggering economic proportions -- far greater than the temporary setback of a terrorist attack on energy infrastructure -- that could end up leading to more geopolitical fistfights than you can ever imagine. The fistfights turn into weapon fights and give way to a very ugly society. [...]

I've spent years poring over hundreds of papers from the Society of Petroleum Engineers that have revealed fascinating clues. First I took an inventory of the top oil fields in the world, field by field. I was aghast to find that nobody had ever listed even the top 20 oil fields by name. I found that there are only about 120 oil fields in the world that produce half of the world's oil supply. The top 14 fields, which make up 20 percent of global supply, are, on average, over 53 years old. In Saudi Arabia, which harbors a quarter of the entire global supply, there are only five key fields producing 90 percent of their oil. They're all old.

Naturally I was very curious to find details on the condition and productivity of these fields. Two years ago I took a trip to Saudi Arabia on a government tour for business executives. They plied us with various data points that just didn't add up, even vaguely. I've since found evidence in the engineering papers indicating that the major Saudi fields are seriously at risk of reaching their peak, at which point they will begin to see their output decline. [...]

Oil price will ultimately be set by demand and supply. Current oil prices are ridiculously cheap. People find that hard to believe, particularly now, but consider this: $65 a barrel translates to 10 cents a cup. Ten times cheaper than bottled water. People who think that this is a really high price need to have their heads screwed back on. [...]

Q: You have an enormous amount, professionally, riding on the prediction that peak oil is nigh.

A: I'm basically betting my entire career.


::An interview with peak-oil provocateur Matthew Simmons, ::The Effect Of High Oil Prices On People, ::Peak Oil – The Lessons of Y2K