He singles out Daniel Yergin’s Foreign Policy article, Michael Lynch’s very hotly-debated oped in the New York Times, a study from Rice University on the role of speculation in oil markets, and an article by Ed Morse in Foreign Affairs.
Simmons characterises their arguments for the assured supply of oil as collectively boiling down to about four points: oil demand is not going anywhere; oil markets are liquid and transparent and therefore help keep prices low; oil reserves are known to be massive; and new technology will help extract them further.
He reserves his strongest criticism for that last point: that technical advances will enable the extraction of much greater amounts of oil in the future:
In fact, the seeds of this so-called technological revolution — the ability to exploit oil from deep water or drill horizontally — were first developed 40 years ago. I personally raised a great deal of the venture capital that helped implement some of the most important technical advances in the industry. Our firm, through advising on mergers, consolidations, reorganizations, and bankruptcies, helped save the oil-service companies that created these great technological advances that help us find and commercially exploit oil and gas.
None of this technology is new — in fact, it is now quite mature. Sadly, there are few new ideas in the oilfield pipeline to replace advances that were made decades ago.
And, unsurprisingly for the person that wrote the book on the opaque state of Saudi Arabia’s oil reserves, Simmons believes that audited data from the world’s biggest oil producers would settle the argument – and prove peak oil once and for all.
Oil Spin (Foreign Policy, 04/09/09)
The not-so-bullish case for energy prices (on Ed Morse) (FT Alphaville, 20/08/09)
Speculators driving up prices? Use the SPR! (On the Rice University paper) (FT Energy Source, 28/08/09)