More great analysis from our friend, Chris Nelder. Chris tries to break through the persistent denial that we can "drill our way out of the problem."-Maltok 5
Peak Oil Consequences of Bush's Failed Energy Policies
Illusions of Candor
By Chris Nelder
Wednesday, May 21st, 2008
Rising oil prices just seem unstoppable.
Even I was amazed to see crude pushing $130 on Tuesday. Not because it had gotten to that price, but because it got there so fast. That's 30% over where it was at the beginning of the year.
The peakers (or, if you like, the "peak freaks") have won the debate about oil supplies, and it was the price shock that ended it. I'd still prefer that the discussion revolved around flow rates—that is, whether we can really get from 85 million barrels per day (mbpd) today to 116 by 2030, as the IEA has predicted—but I'll settle for not having to see some "expert" on TV predicting that oil is going back to $45, or $25, or whatever, anymore.
At least the message that oil prices are never going back to those levels seems to have gotten through.
Last July, the National Petroleum Council joined the chorus predicting that oil supply would reach 115-120 mbpd by 2030. I lambasted them for it, along with many other knowledgeable observers.
One of those observers was Matthew Simmons, the world's top oil investment banker, who remarked, "We don't have any idea where those reserves are going to come from or how we are going to get them out of the ground. The odds of this ever happening are zero."
Simmons had argued for years that oil was far too cheap, and would soon go into triple digits. He saw $150 oil not too far into the future, and eventually perhaps $300 oil, but in mid-2007, he was widely ridiculed for it.
Well, Simmons was right. He wasn't the only one, either.
Legendary oil investor T. Boone Pickens agreed with Simmons, and placed his bets accordingly, which made him a fortune. Pickens' latest bet is that we'll see $150 oil by the end of this year.
Goldman Sachs is another. They were the only investment bank to correctly predict today's oil prices last year. Their latest prediction? $148 a barrel this year.
I think that's about right. It might even be a bit on the conservative side.
But not everyone in the oil and investing business has had the vision to see the future of oil clearly, or the guts to make such bold predictions.
Unfortunately for America—indeed, for the world—our president, with all of his experience and knowledge of the oil business, has been one of the last to come around.