Analyst peaks interest on decreasing oil supply
Tim Lajoie
Issue date: 4/27/07 The students of John Carroll's Peak Oil class sat scattered across the rows of chairs in Huddleston Hall's slightly lit ballroom. For them, the issue of peak oil is nothing new, but for most Americans peak oil is a term they have heard of very little.
For Matthew Simmons, who studies the depletion of the earth's natural oil reserves, peak oil is the most important problem the world faces today. Simmons, a banking and investment advisor to the oil industry for approximately 38 years, was the latest speaker in UNH's Discovery program Power to the People, which focuses on energy use. In the past, Simmons served as a key advisor to the Bush administration, as a part of Vice President Dick Cheney's Energy Task Force.
Simmons was introduced by UNH professor of environmental conservation John Carroll, whose class on peak oil is one of few in the country.
"We needed to do all we could to get Matthew Simmons to our campus," said Carroll. "He is the prominent speaker on peak oil. His findings will affect everyone in this audience."
Many, including Simmons, believe that the world's oil reserves will peak soon, or that they already have. This will lead to declining oil production and eventually to a depletion of all oil.
"We have been living for 50 years in an energy dream," said Simmons. "The world faces a real crisis. It's time to remove the rose-colored glasses."
Fossil fuels were not widely used by industrial nations until the 20th century. Throughout the 20th century the United States was the largest energy consumer. The United States, however, supplied most of that energy itself until oil production peaked in 1970, followed shortly by the peak of natural gas in 1973. Simmons sees that as the start of the major peak oil problems.
"Two-thirds of the world's oil producers are in decline," he said. "The United States is now the single largest oil importer in the world. We have no Plan B. Demand is too young and the supply is too old."
While the United States may not have a clear-cut "Plan B" to deal with the peak oil problem, Simmons does believe there are ways to help. He pointed to conservation as the most effective way to combat the energy crisis, but said that it needs global implementation. Also, Simmons believes that many alternative energy sources, such as algae, ocean and bio-waste energy will help the world with clean and efficient power. Simmons warned that other alternative energies may not be as they appear.
"Many alternative energy sources are energy intensive," he said. "Corn-based energy is a scam; it's very energy-intensive." Simmons also pointed out that nuclear power plants must run for 15 years before they can produce enough energy to replace the energy used to build the plant itself.
"New supply sources are important, but they cannot fill the energy gap," Simmons added.
Simmons partially blames the oil industry for the energy crisis resulting from peak oil. The oil industry, he said, was run with an attitude that the oil in the Middle East would last forever. The oil industry also believed that oil would be cheap forever. In reality, peaking was a surprise to most oil firms, as there was little to no data on the issue.
"It was a religion that was faith-based, not fact based," Simmons said. "We're flying blind. Since we don't have the data we stay in the dark."
Simmons noted that oil prices are still relatively cheap at 10 cents a cup, and while there is still a lot of oil in the Middle East, it is of poor quality. The poor quality of the oil results in higher extraction costs, leading to higher prices.
"Peaking does not mean running out," said Simmons. "But it does mean supply will begin to drop."
Although Simmons sees peak oil as the most immediate issue facing the world, many audience members asked questions relating peak oil to other issues, including global warming and the current presidential election.
Simmons responded by expressing his concern that this issue was being ignored. One of the few candidates who have approached Simmons is former Massachusetts governor Mitt Romney, whom Simmons personally met with to discuss the issue. Simmons also mentioned that the former mayor of New York City, Rudolph Giuliani, and New Mexico Governor Bill Richardson have also expressed concern over the issue.
First and foremost, Simmons believes that if the peak oil issue is not addressed, the world could descend into chaos with the "bullies" hoarding resources.
"I can tell you right now that's how wars get started," Simmons said.
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