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EV WORLD EXCLUSIVE ARTICLE |
Stirring up a veritable hornet's nest; Matthew Simmons is the founder of Simmons and Company International, a Houston-based energy investment banking firm. Despite having more than 30 years experience in the oil industry, his research into the state of Saudi Arabia's oil fields was a revelation into the phenomenon of "peak oil', the point in human history where global demand for oil outpaces supply.
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Part two of interview with Matthew Simmons on the myth of everlasting Saudi oil and the scandal that should have overshadowed Watergate
Open Access Article Originally Published: August 13, 2005
To Part One
"It should have been a big deal back in 1974 and 1979," Matt Simmons said, referring to a pair of Senate closed door hearings into the state of Saudi Arabia's oil fields.
But it wasn't. Had it been, America and the world might be a lot more prepared for "peak oil" than we are. Instead of Saudi Oil-gate, we got Watergate.
In researching his book, "Twilight in the Desert", Simmons came across a short article written in early 1979 by famed New York Times investigative reporter, Seymour Hirsch. According to the Houston investment banker, it "described these secret 1974 Senate hearings when, behind closed doors, the Senators were told that Saudi Arabian oil fields were being intentionally over-produced and they were going to have to cut back, anyway, so even if there hadn't been an [OPEC] embargo there would have been a necessity to cut back the oil".
Simmons assumed that because the hearings had been secret, there was little chance he'd learn more about what the Senators had been told thirty years ago. Instead, he discovered a two-page executive summary of a Senate Foreign Relations subcommittee staff report from April, 1979.
"It indicated that they'd just written a lot off [Saudi Arabia's] proven reserves and they had significantly changed their minds about what was sustainable peak production going down from 25 millions a day to maybe 9.8 million barrels a day".
When Simmons and his executive assistant, Judy Cristwood, attempted to find the complete report, the Senate librarian told them that the library doesn't keep copies because of space considerations, However, Simmons might try his local university, the librarian suggested. As fate would have it, a part-time employee who was also attending the University of Houston at the time, checked with the University library and found the complete 32-page staff report.
"When I read through this, it also referred to the '74 hearing and it gave the reference number".
That led Simmons to inquire with a friend at the New York Times, who was also an investigative reporter, as to whether it would be possible to track down the papers from the 1974 hearings. The reporter told him, "whatever they got, they've put under lock and key for the next fifty years".
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Reader Comments
13 comments so far...
15-Aug-2005
8892
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Implementing conservation policies of the type Simmons mentions are not in the best interest of oil producers, since these policies would hold down costs by drastically increasing efficiency of goods transport. Read your market basics: information asymmetry is a key indicator of 'market failure'. If the buyer doesn't know how to prepare for what's coming the seller has all the long-term power in the transaction. Think of it as the ultimate in insider trading..."
Posted by: Ron Fischer
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16-Aug-2005
8900
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Some might be interested in the draft study done by the International Energy Agency, entitled Saving Oil in a Hurry: Measures for Rapid Demand Restraint in Transport, February,2005. It discusses the potential savings from several measures that could be implemented quickly and quantifies them, using EU data and practices. Rationing has been under study in the U.K. for years now: see www.dtqs.org
Posted by: Jerry Schneider
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17-Aug-2005
8909
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We need to stop beating around the bush and just say what we mean. These capitalist pigs are ruining our environment. We want a communist country damnit!
Posted by: John Adams
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17-Aug-2005
8910
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Come on, John... no one is arguing for a 'communist' state. Russia proved that didn't work. If you're referring to Mr. Simmons' -- who has to be considered a poster boy for the capitalist dream -- remarks about the changes he thinks need to be made in the event 'peak oil' surprises us by being here already -- bought gasoline lately? -- he is only being realistic. About the time we experience a shortages again, the hammer is going to come down very hard on this country and you'll probably think we're living in a 'communist' state, but it will be your government and mine responded in a very pragmatic and likely painful way. Let's hope the Saudis are right and that we can move fast enough -- using good ole capitalism -- to buffer the blows when they come.
Posted by: Bill Moore
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18-Aug-2005
8920
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All governments are communal in most respects. I think the word has gotten way too much bad press.
What we need is a firewall between the corporation
and the government. All funding for office seekers should not be funded in anyway shape or form by corporations or any shell group. The only way to do this is to have a government agency fund all office seekers and their media needs. Money is free speech according to the Supreme Court which is probably one of the worse decisions they have ever made. I am a living breathing voter, but there is no way I can have as much clout as a corparate enity with millions to donate through their lobbyist even though they have no vote.
Posted by: John Gilkison
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19-Aug-2005
8937
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There is an ancient proverb: "those who have power make the rule." Well, the more things change, the more things stay the same. Those with power are still making the rule in our democratic society, through their influence in our legislators, our President and our judges. Along with the laws of gravity, electromagnetism, and thermodynamics, the proverb above is observation of another inevitable law of nature.
In order to realize our collective ideal of energy conservation and environmental protection, we must try to SELL OUR IDEA TO THE RICH AND THE POWERFUL who can make the most difference, and NOT trying to humiliate them, discredit them or trying to reverse the social order, because in so doing, we will be inadvertently creating social tension, unrest and class struggle that will setback humanity for another 100 years. Nearly 100 years of communism was bad enough. We all will need to unite together to achieve our eventual INDEPENDENCE from dirty fossil fuels and dangerous nuclear energy. Recalling the spirit of 1776, gentlemen, we shall now fight together for our INDEPENDENCE from petroleum, coal, gas and nukes.
Posted by: Roger Pham
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29-Aug-2005
9144
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Messr. Hoffman, Watts and whatshisname are history. Thanks for the detective work on this, but just FYI.. I don't monitor these continually, so if you see this kind of abuse happening, send me a email.
Posted by: Bill Moore
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07-Sep-2005
9348
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Bill, I agree with your article. I think we have found a common ground.
Posted by: Ryan Moore
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25-Aug-2005
9057
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Im not sure who Mr. johnson and Hoffman are, but the web sites they reference are pure hokum to elicit investments from gullible people. The 'inventions' have been around for at least 100 years always being touted as an energy producer that gives out more than you put in. There is always a lot of hocus-pocus about how it dose not violate any principles of physics or get around them. A good salesman may be able to talk money out of the unsophisticated, but people with a good background in physics will find that the salesman can't talk the mathematics of his 'invention'.
Posted by: Mike Swift
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26-Aug-2005
9074
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I with a few friends had a look at Enencom site regarding what Mike Swift mentioned,what I saw was just amazing.There area lot of fools out there who claim that they have invented a machine that is going to solve the WORLD ENERGY problem.
Looking at Enencom site,I agreed that this company has invented a generator that needs further investigation.Every thing about this INVENTION is positive and should be given the chance to come to the MARKET.Mr Swift I too study Physics and Engineering.
This invention does not claim to put out more energy than it put in.
Posted by: simon watts
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26-Aug-2005
9080
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Mr. Johnson, I understand ENGINEERING and I AM DISAPPOINTED. P. T. Barnum once said :"There is a sucker born every minute." And this is a living proof of it.
Mr. Hoffman,save your $310,000 until you have ask these people (enencom, or rather enenCON?) whether they have a US patent for their invention? If not, then they will have no claim to their invention, and your investment will be a total loss. The US Patent office will not issue a patent for a perpetual motion energy machine, which enenCON'S machine appears to be.
Mr. Watts, go back to study more Physics. Read more about the law of conservation of energy, and about the first and second law of thermodynamic. What form of energy will this invention use, Mr. Watts? Gravitational? What a laugh!!! HE He He
Posted by: Roger Pham
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29-Aug-2005
9134
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Getting toward the end of the book, I strongly recommend it to everyone. I'm not convinced that Saudi oil production has peaked (that really doesn't seem like Mr. Simmon's main point), but I'm fully convinced that I don't want to do business with Saudi Aramco. I had always assumed that the oil industry leaders knew their business. I've really gotten the feeling that they are all looking at their own pieces of the pie without knowing what's going on elsewhere. I had no idea just how little information the OPEC countries divulge. Simply put, they are not good business partners.
Likewise, I didn't realize Saudi Arabia's population growth was still so severely out of control. 6.2 children per woman? They are headed for some truly severe times, even if they can increase production by 50% as they claim.
I particularly like the mention of the two main groups of people interested in peak oil: environmentalists who hope it will happen, and oil industry experts who fear it will happen. Personally, I hope oil production peaks due to decreasing demand, not due to supply shortfalls. That's a much rosier picture.
PS, for anyone who hasn't noticed (it probably isn't apparent to anyone who doesn't speak english natively), all three of the promoters of enencon sound very similar. I would wager that they are all three one person, and that this one person does not speak English natively (the wording is just a little off, despite the all-american names).
Posted by: Steve Erlsten
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29-Aug-2005
9137
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Ah hah!! Thank you very much, Steve (Sherlock) Erlsten. Yes, the three postings promoting EnenCON are from the SAME PERSON non-native English speaker disguising as three all-american persons (Johnson, Hoffman, and Watts) . I shall not disclose what it is, hoping to catch this CONman at work again. And I certainly share your sentiment regarding Saudi Aramco. And Mr. Bill Moore, we hereby would like to report an instance of abuse of your website for the purpose of deceiving the public. Please catch this rascal and send him/her to another parallel universe. Roger
Posted by: Roger Pham
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