If you follow peak oil — and if you don’t, you will be bitchslapped by reality — then you know of Matt Simmons. I was introduced to him several years ago by my former boss at the Energy Department. Back then, Simmons was merely one of the savviest financiers in the oil services business, who was presciently warning all who would listen that natural gas supplies in this country would not respond quickly to increased prices and thus we should expect some serious price spikes.
Today he is “The prophet of $500 oil,” as Fortune described him Monday. Yet, long before he published his 2005 book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, he was a “lifelong Republican” who “helped edit the Bush campaign’s comprehensive energy plan in the 2000 election.” The word “comprehensive,” of course, is a laughable term that I’m sure even Simmons would mock today for a plan that focused almost exclusively on supply.
Still, Simmons remains well-connected to Republicans: “Maine’s Sen. Susan Collins, a Republican who recently began consulting with Simmons on energy issues, says, “I think he’s issuing a clarion call that policymakers need to listen to.”
Simmons was right about natural gas, and he appears to be (mostly) right about peak oil (see below), so the nation should listen closely when he speaks truth to power about his party’s own nominee:
“John McCain is energy illiterate,” Simmons is saying. “He’s just witless about this stuff. As a lifelong Republican, I’m supporting Obama.” A dozen oil and gas men sitting around a conference table in Lafayette, La., chuckle nervously as he continues. “McCain says, ‘Oh, we’re going to wean ourselves off foreign oil in four years and build 45 nuclear plants by 2030.’ He doesn’t have a clue.”
… McCain’s midsummer move to begin campaigning on a platform of more offshore drilling has only hardened Simmons’ position. “What a hypocrite … Here’s a man who for at least the past 15 years has strenuously, I mean strenuously, opposed offshore drilling. And now it’s ‘drill, drill, drill.’ And he doesn’t have any idea that we don’t have any drilling rigs. Or that we don’t have any idea of exactly where to drill.” (As for McCain’s running mate, Sarah Palin, Simmons says: “She’s a very colorful person, but I don’t think there’s a scrap of evidence that she knows anything about energy.”)
OK, Matt, but what do you really think about the GOP ticket?
I doubt we are going to see $500 oil for a long, long time, as I’ve told Matt. Every dollar-a-barrel increase translates roughly to 2.4 cents in the price of gasoline. So that would be $13 gas! The global economy will implode long before then. Even T. Boone Pickens suggested in his interview with me that the $300 a barrel he foresees by 2020 if we don’t adopt his plan would take a wrecking ball to the economy.
Frankly, $200 to $300 oil would be so shocking to the national and global economy, I don’t see much point in worrying about whether or not we could ever get to $500. I’ll look at the implications of even the “lower” prices in a later post.
Kudos to Simmons for calling McCain out (and a shout out to A. Siegel).