[FoRK] "For all the oil in Arabia"

Russell Turpin deafbox at hotmail.com
Thu Feb 26 09:07:46 PST 2004

Matthew Simmons gave this presentation:


Which earned this not unexpected response
from Saudi Aramco:


Some other interesting facts. (1) Oil looks high
right now, at $35/bbl, but its price increase is
almost entirely due to the fall in the dollar. Its
price in Euros has not changed that much.
(2) OPEC recently cut production quotas.
There are continuing rumors that it will set
price targets in a basket of currencies, rather
than the dollar.

Several interesting factors complicate the issue
of peak oil and what effect it might have
economically. First, the global market has
a fairly inelastic demand curve (now), as
Simmons notes. Second, producers have
significant SHORT-term control over production
rates, but short-term tactics that increase
production risk greatly increasing the cost of
future extraction and limiting future production.
Third, timing is everything. IF we are now
experiencing peak oil, things are going to get
real interesting real fast. If it occurs in 2050,
likely it doesn't matter much. As usual, my
crystal ball has static. This will all be an
interesting discussion, because it could well
happen that Arabia increases its production
just fine for the next few years, oil drops to
and stays at $25/bbl (causing me to grumble
about my lousy energy investments), everyone
discards the peak oil meme as a piece of
silliness that went around during the Bush
years, and then in 2012 supplies are short,
prices quadruple, and everyone recognizes
that we are facing the downside of the
peak. Maybe I'll get my crystal ball working
sometime before then. ;-)

Stay informed on Election 2004 and the race to Super Tuesday. 

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