Oil Spin
BY MATTHEW R. SIMMONS
FOREIGNPOLICY.COM
SEPTEMBER 4, 2009
Last week, four of the world's most outspoken oil aficionados waded into the controversy of peak oil, publishing articles packed with myth and distortion. This "Gang of Four" all claimed the issue was silly, moot, or simply a myth. The four pieces were Pulitzer Prize-winning author Daniel Yergin's seven-page article in Foreign Policy, energy analyst Michael Lynch's three column op-ed in the New York Times, analyst Edward Morse's essay in Foreign Affairs, and scholar Amy Jaffe's paper published by the Baker Institute at Rice University.
Here is a quick synopsis of the views expressed by all four writers:
1. Oil will remain an extremely important part of the world's economy throughout the next century as its main base of users shifts from prosperous countries to the teeming mass of humanity in Asia that previously used only tiny amounts.
2. Oil markets are now far more transparent and far more liquid given the fact that existing oil contracts allow investors to trade three to five times more oil than the world uses every day. This transparency will flood capital into oil markets, keeping the price low which, in turn, will encourage even greater demand.
3. The world's endowment of oil has never been so large, despite 150 years of constant oil use coupled with the fact that the world now consumes more than 85 million barrels of oil daily. This "fact" is why all four authors took aim at the Peak Oil worry-warts who they feel are intent on trying to convince the world that it is running out of oil.
4. The emergence of spectacular new technology will enable the supply of oil to flow far easier than ever. And, this new technology boom is just getting started. Over time, it will improve by leaps and bounds.
Thus, these four global oil authorities mused that oil, celebrating its 150th birthday last week, has never been in better shape. How terrific the world's outlook would be if these four myths had even a touch of reality! Sadly, if one ignores opinion and simply adheres to a body of well-documented -- if ugly -- facts, it quickly becomes clear that these four assertions are utterly without substance.
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Comment
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Comment by Paul on September 7, 2009 at 1:49pm -
Sorry Scott,
Any plan that calls for taxing undeveloped resources stinks! You may mean well, but the execution of such a plan is morally and ethically bankrupt from square one.
BTW whether the peak was 2 years ago or the peak is 20 years from now, in the long run there is *zero* difference. We have to get off oil as a primary energy source and we have to do it ASAP. Oil, petroleum, is too valuable to be burned for energy. It should be reserved as a raw material for goods and other products. If we used it that way we'd have plenty for decades or centuries even. It order to do that we *must* switch our energy supply over to renewable sources.
I favor CSP-DG as it extracts energy from an inexhaustible supply -- sunshine. And is converts that sunlight into the most desirable commodity, second to none -- money.
The Light is Green!
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Comment by Dr. CHARLES W. Barker on September 7, 2009 at 8:42am -
ALL WELL AND GOOD .....BUT WOULDNT IT BE REALLY GREAT IF OUR DEPENDENCY ON FORIEGN OIL COULD BE REDUC BY AT LEAST 50 TO 60 % EVEN LESS????? IT CAN BE DONE AND I KNOW HOWMR. PICKENS, PLEASE GIVE ME A 5 MOMENT PHONE CALL``Dr. Charles Barker (580) 726-3623 WHAT THA HELL HAVE YOU GOT TO LOOSE???????
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Comment by Scott Baker on September 7, 2009 at 3:25am -
See my petition to do what I said above:
http://www.change.org/actions/view/a_new_form_of_capitalism_geonomics
Taxing away the raw cost of oil is good for consumers, good for America, and good for the planet.
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Comment by Scott Baker on September 7, 2009 at 3:23am
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Unfortunately, if people are expecting peak oil to conveniently dovetail with peak worry over Greenhouse gases, they will be disappointed. Just off the top of my head, and space constraints, here are some reasons we have to move away form imported oil despite it not peaking for decades:
1. The USGS says as much as 25% of the world's undiscovered oil may lie in the arctic. Russia, among others, is already scrambling to get it while the pole melts or is shoved aside by icebreakers (no research is being done on the effects of icebreakers, scientific experiments, arctic tourism on polar ice caps).
2. Iraq, currently 6th in production, may move up to 3, even 2nd, if it ever gets its act together. Iraq has NEVER been fully exploited for oil.
3. 85-90% of the world oil is controlled by mostly inefficient, even corrupt, underfunded state oil industries, whose aim is to keep the price high to benefit their host countries, instead of spending expensively to find more oil -Saudi Arabia & Brazil are exceptions.
4. America, home to just 3% of the world's oil, yet manages to be the 3rd largest producer of oil, ahead of Iran! Why? Because American companies are the most efficient in the world at finding it, even WITH the highest environmental standards. If the whole world operated with such efficiency, oil would be priced at $30, not $70.
5. The oil speculation-driven market SLOWS the extraction of oil by introducing uncertainty into pricing. It exists only to make Wall Street speculators rich as they profit from long or short positions.
6. It is FAR more profitable for oil companies to sit on high-priced oil reserves than to spend millions digging dry holes trying to find more. We could end this by taxing away the price of raw oil in the ground, then letting oil companies profit form actual production & sale.
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Comment by Paul on September 6, 2009 at 11:30pm
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Unfortunately there is no method that I know of that would allow me to profit from being on the back-side of the peak oil curve; I'm simply not that devious.
I want to profit from the upwards curve of the CSP-DG market. Anyone want to join me?
The Light is Green!
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